Wrap rate
Also called: fully burdened rate, loaded rate, indirect rate, overhead rate, G&A rate, fringe rate, multiplier
A wrap rate is the multiplier applied to an employee's base hourly wage to produce the fully burdened billing rate, folding in fringe benefits, overhead, general and administrative expense and profit.
The pieces are the indirect rates: fringe (paid leave, payroll taxes, health insurance), overhead (facilities, supervision, equipment that supports direct labor) and G&A (the cost of running the company), each expressed as a rate on the base it allocates to. On cost-type work the structure must follow the cost principles in FAR Part 31 and survive DCAA review; on fixed price and T&M bids the wrap is your own business, but it has to be consistent across bids and realistic to the evaluator.
What to check: what your actual indirect costs were last year divided by your direct labor, what the labor category's market wage is, what the wage determination requires as a floor, and what rates competitors bid (bid tabs and released schedule price lists tell you). A wrap that is high because the company is small is the most common reason new services firms lose on price.
What it is not: a fixed industry number. Two firms doing the same work can have different wraps, and the evaluator only sees the result.
See also: Labor category, Price volume, Cost-reimbursement (cost-plus) contract, Defense Contract Audit Agency (DCAA)
Questions that use this term
Search allA wrap rate is an hourly rate that combines your direct labor cost with all your indirect costs and profit, giving you a comprehensive price for...
My firm is a staffing agency, and we usually work commercial contracts. We received an RFQ for an IT services contract with the state of Maryland....