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REIMBURSABLE COSTS <br />(1) Reimbursable costs shall include costs which are necessary for the proper and efficient <br />performance of the contract, are reasonable and allocable to the contract and are <br />allowable under the provisions of this exhibit. <br />(2) Reimbursable costs include costs incurred in paying subcontractors for fulfilling or assisting <br />the contractor to fulfill the contractor's obligations to the Department. <br />(a) If the subcontract is price related, the reimbursable cost of the subcontract shall be the <br />share of payments to the subcontractor which equals the usual charge or the <br />customary charge, whichever is less . If the subcontractor has only departmental <br />clients, the reimbursable cost shall be the share of payments to the subcontractor <br />which equal the customary charge. <br />(b) If the subcontract is cost related, the reimbursable cost of the subcontract shall be the <br />share of payments to the subcontractor for subcontractor costs which are necessary for <br />the proper and efficient performance of the contract, are reasonable and allocable to <br />the subcontract and are allowable under the provisions of this exhibit. If the cost- <br />related subcontractor is a for-profit entity, reimbursable costs may also include <br />payments for ordinary profit, provided such profit is computed on a basis other than a <br />percentage of contract costs. Costs used to determine subcontract payments may be <br />either actual costs during the contract period or estimated costs for the contract period <br />based on actual costs in a prior period, and may be either costs of the subcontractor or <br />costs of a class or subclass of facilities providing similar services, activities or <br />procedures. <br />(c) If the subcontract is fee for service, the reimbursable cost of the subcontract shall be <br />the share of the payments based on an established rate structure set by laws , <br />regulation or policy, or may be based on cost information provided by the contractor <br />during a competitive solicitation or contract negotiations. <br />REASONABLENESS <br />(1) A cost is reasonable if, in its nature and amount, it does not exceed that which would be <br />incurred by a prudent and reasonable person under circumstances prevailing at the time <br />the decision was made to incur the cost. <br />(2) In determining the reasonableness of a given cost, the following shall be given careful <br />consideration: <br />(a) Whether the cost is of a type generally recognized as ordinary and necessary for the <br />operation of the contractor or the performance of the contract. <br />Whether the cost was incurred after the contractor complied with sound business <br />practices, including arm's length bargaining . <br />(b) Whether the contractor acted with prudence in the circumstances considering its <br />responsibilities to the organization, its members, employees, clients, the public at <br />large, and the Department. <br />Washington State <br />Health Care Authority Page 73 of90 HCA Contract No. K3924