How to Use This Calculator
- Set your indirect rates — enter your company's current fringe, overhead, and G&A rate estimates as percentages. If you don't know your exact rates, use the typical ranges shown in the FAQ below as a starting point.
- Set your profit/fee — enter the fee percentage you plan to propose. The calculator will flag if you exceed the FAR 15.404-4 statutory ceiling for cost-plus contracts (10% for most work; 15% for R&D).
- Choose a G&A base method — Total Cost Input (TCI) is the most common; Value-Added makes sense when your contracts have large material or subcontractor pass-throughs.
- Add labor categories — enter a label (e.g., "Senior Engineer," "Program Manager") and the base hourly rate (typically the employee's W-2 salary ÷ 2,080 hours). Add up to six categories.
- Read results — the table shows the fully burdened bill rate, wrap multiplier, and a cost breakdown for each labor category.
The Wrap Rate Formula (FAR Part 31)
The standard multiplicative cascade for a three-pool indirect rate structure (fringe, overhead, G&A) as described in the Federal Acquisition Regulation Part 31 and used by the DCAA:
The fringe rate base is direct labor only. Overhead is applied to burdened labor (direct labor + fringe). G&A under TCI is applied to all costs before G&A; under value-added it excludes materials and subcontractor pass-throughs. Fee is always applied to total cost. Rates multiply sequentially — the order matters.
When Do Government Contractors Use This?
Bid & Proposal preparation: Every time you respond to an RFP requiring a cost/price build-up, you need fully burdened labor rates that reflect your actual indirect cost structure. Underpricing loses money; overpricing loses the bid.
GSA Schedule / GWAC rate submissions: Multiple Award Schedules and government-wide acquisition contracts require you to certify fully burdened rates aligned with your disclosure statement.
T&M contract rate justification: Time-and-materials contracts fix your labor rates from award date. Getting them right at proposal time is critical because you can't adjust for cost overruns.
Cash runway / hiring decisions: Knowing your fully loaded cost tells you the minimum bill rate you must charge to break even, informing hiring, subcontracting, and growth decisions.
Incurred Cost Submission (ICS) preparation: Comparing your proposed (target) rates to your actual incurred rates at year-end helps you spot over- or under-absorption before the DCAA audit.
FAQ
A wrap rate is the fully burdened multiplier applied to an employee's base labor rate to produce the total billable rate on a federal contract. It stacks fringe benefits, overhead, G&A, and profit/fee on top of direct labor. For example, a base rate of $50/hr with fringe 30%, overhead 40%, G&A 10%, and fee 8% yields a billable rate of approximately $108/hr and a wrap multiplier of about 2.16×. The term "wrap rate" may refer either to the cost multiplier (before fee) or the price multiplier (including fee); this calculator shows both.
The FAR Part 31 standard cascade is: (1) apply fringe rate to direct labor; (2) apply overhead rate to burdened labor (direct labor + fringe); (3) apply G&A to total cost input or value-added base; (4) apply profit/fee to total cost. The rates multiply sequentially — applying them in the wrong order produces different numbers. Some contractors also have a material handling (M&H) rate; that is not included in this calculator but can be modeled by incorporating it into your overhead or G&A pool.
Total Cost Input (TCI) applies G&A to all costs before G&A — direct labor, fringe, overhead, materials, ODC, and subcontractor costs. It is the most common base for defense and civilian agency work. Value-added (VA) base excludes materials and subcontractors, applying G&A only to labor-based costs. Firms with large material or sub pass-throughs typically prefer VA to avoid inflating G&A on costs that generate little internal administrative burden. Your choice must be consistently applied and documented in your accounting system.
Yes. FAR 15.404-4(c)(4) sets statutory fee ceilings on cost-reimbursement contracts: 15% of estimated cost for experimental/developmental R&D (CPFF R&D), 10% for other cost-plus-fixed-fee contracts, and 6% for architect-engineer services. Fixed-price contracts have no statutory profit cap because the contractor bears full cost risk. In practice, most negotiated service-contract fees fall between 5% and 10%; the weighted guidelines method (DD Form 1547) is used to establish the contracting officer's profit objective on negotiated procurements above the cost or pricing data threshold.
Rates vary widely. IT/services small contractors typically see fringe 25–35%, overhead 20–45%, G&A 8–15%, and fee 5–10%. Engineering firms often run fringe 25–30%, overhead 15–30%, G&A 8–12%. Research organizations may see very different structures. These are rough industry benchmarks only. Your actual rates must reflect your real cost pools under FAR Part 31 and withstand DCAA scrutiny. Misclassified or inflated indirect costs are among the most common audit findings.
Yes. Many contractors maintain two overhead pools: a company-site (home-office) rate and a customer-site (off-site or field) rate, since the overhead consumed by work performed at a client facility differs from in-office work. You can model this by creating two rows for the same labor category with different overhead rates — one labeled "Senior Engineer (Home Office)" and another "Senior Engineer (Client Site)." Some firms also have separate fringe rates for exempt (salaried) vs. non-exempt (hourly) employees.
A cost wrap (or cost multiplier) includes fringe, overhead, and G&A but stops before adding profit or fee — it represents your true fully loaded cost per hour. A price wrap adds profit/fee on top of the cost wrap to produce the final billable rate you charge the government. Most RFPs require you to present cost and fee separately in your build-up. This calculator shows both: the "Fully Loaded Cost" column is your cost wrap, and the "Bill Rate" column is your price wrap.
The base rate is the employee's straight-time direct labor rate — typically annual salary ÷ 2,080 hours for a full-year salaried employee, or the actual straight-time hourly wage for an hourly employee. Do not include fringe benefits, overtime premiums, or any indirect costs in the base rate — those are captured by the fringe and overhead rates. If your company applies an escalation factor for out-year option periods, create separate rows (e.g., "Software Developer — Base Year," "Software Developer — Option Year 1") with the escalated base rates.
Method & source: Calculations follow the multiplicative cost build-up methodology described in FAR Part 31 — Contract Cost Principles and Procedures and reviewed against DCAA guidance. Disclaimer: This tool produces estimates for planning and proposal-preparation purposes only. Actual indirect rates must be derived from your audited cost pool data and reviewed by a qualified government contractor accounting professional before use in a certified cost or pricing submission.