Your wrap rate against published ceiling rates
GSA publishes the hourly rates companies may charge on its schedules. Set beside your own wrap rate, they show whether your price for a role is in the market before a buyer tells you.
each pool sits on the total under it, which is why the order is not a style choice
What a wrap rate is
A wrap rate is the number that turns what you pay a person into what you charge for them. Take the direct labor cost of an hour. Add fringe benefits. Add overhead. Add general and administrative expense. Add fee. Divide the result by the direct labor you started with. If an hour of direct labor at $50 bills at $110, the wrap rate is 2.2.
Each pool is applied to a base that includes the ones before it, so the order matters. Two companies with the same percentages can arrive at different rates if they define the bases differently. The definitions your accountant uses are the ones to use.
What the published rates are
GSA publishes the hourly labor rates awarded on its Multiple Award Schedule contracts in a tool called CALC. Each row is one labor category on one company's contract: the title, the company, the contract number, the minimum years of experience, the education level, whether a clearance is required, the worksite, the size of the business, and the price for the current contract year and the two after it.
These are ceiling rates. GSA has determined them fair and reasonable, and they are the most the company may charge under that contract. A ceiling rate is a price per hour to the government, so everything the company has to recover is already inside it. That makes it comparable to your direct rate multiplied by your wrap rate, and to nothing else. Comparing a ceiling rate with a salary is the first mistake people make.
How to compare
- Match the role, not the title. Find the labor categories that fit on duties, experience and education. A senior engineer with a decade of experience and one with four years are different rows.
- Match the worksite. A rate for work at the customer's site leaves out the cost of space that a rate at the contractor's site has to carry. Compare like with like.
- Read the spread, not one number. Take the median and the middle half of the rates that match.
- Place your number. Multiply your direct rate for the role by your wrap rate and see where it falls in that spread.
- Do it role by role. A total can sit in the middle of the market while one role inside it sits far outside.
What the comparison does not tell you
- A ceiling is not a price paid. The price on an order can be lower. The FAR lets an ordering office ask for a price reduction on any schedule order, and requires it to seek one when the order exceeds the simplified acquisition threshold.
- A ceiling is not a floor. On a service contract, the minimum wage and fringe benefits for many job classes are set by a Department of Labor wage determination attached to the solicitation. That is a separate document. It binds what you pay your people, not what you charge.
- Schedule rates are one market. They are the rates on GSA schedule contracts. An agency's own contract for the same role may run above or below them.
- Titles are not standard. Every company names its own labor categories. Two rows with the same title can describe different jobs, which is why the experience and education columns matter more than the name.
When your number is outside the spread
If a role comes out above the top of the spread, there are three levers and no others: a lower direct rate, a lower wrap rate, or a labor category that fits the work with less experience. Changing the wrap rate means changing an indirect rate or the fee, and only the fee is yours to change this afternoon.
If a role comes out well below the spread, check your own arithmetic before you celebrate. Confirm the direct rate meets the wage determination, that fringe is in, and that no pool was left out. A rate far under the market raises the question of whether you can hire and keep the person at it.
What to do on Monday
Write down your wrap rate and how it is built. For the five roles you bid most often, find the matching ceiling rates and note the median and the middle half. Mark each role as inside, above or below. That page is worth having before the next solicitation arrives, because the first thing it settles is which roles you can lead with.
In LastAwarded, Labor rates gives the median, the middle half and the ninetieth percentile for each role from these ceiling rates, with the companies that hold them. The bid worksheet works out your wrap rate from the percentages you enter and checks each role's billed rate against the band for that role.
Three years of prices on every row
Each row gives the price for the current contract year and for the next two. Compare your first-year rate with the current price and your option-year rates with the later ones, or your escalation will look like overpricing.
Related pages
- Labor ratesThe band for each role, from the schedule ceiling rates.
- Bid worksheetYour wrap rate, worked out and checked role by role.
- What it goes forThe same question at the level of the whole contract.
- Pricing a government bidHow a federal price is built, step by step.
See who was last awarded in your NAICS
Every code, every buying office, every vendor and every recompete, organized from the federal record and read nightly. Open it with a plan.