We are the employer in an ECC option C (target contract with activity schedule) incorporating secondary option X1 price adjustment for inflation. The contractor has placed its subcontracts under its own bespoke form of subcontract, which does not flow down from the NEC contract we have with the contractor. All of the subcontracts let are fixed-price lump sum plus any variations, and there is no mention of any escalation applying.
They should be included, because the price for work done to date includes the costs of these subcontractors – see clauses 11.2(29) and 11.2(23). Of course the answer you come up with for the price adjustment is not added to the price for work done to date, instead it is added to the total of the prices (i.e. the ‘target’) – see clause X1.5.