(a) Aggregate amount of covered costs. The sponsor's aggregate amount of covered costs shall be reduced by any amounts that are determined to be either excluded or not covered.

(b) Amount of Department share of covered costs. The Department share of covered costs shall be adjusted as follows:

(1) No excess recoveries. The share of covered costs paid by the Department to a sponsor shall not be greater than the limitations set forth in §950.27(d).

(2) Reduction of amount payable. The share of covered costs paid by the Department shall be reduced by the appropriate amount consistent with the following:

(i) Excluded claims. The Department shall ensure that no payment shall be made for costs resulting from events that are not covered under the contract as specified in §950.14; and

(ii) Sponsor due diligence. Each sponsor shall ensure and demonstrate that it uses due diligence to mitigate, shorten, and to end the covered delay and associated costs covered by the Standby Support Contract.