With respect to DCAA compliance and competitive strategy, it’s important to know how to calculate and defend your wrap rate to ensure you are best positioned to win that proposal, whether it’s directly with an agency or with a prime contractor.
Some primes will attempt to dictate what your wrap rate should be, or from another angle, try to tell you what your ultimate billing rate should be for each labor category in the contract. You want to be sure that your calculated wrap rate covers all your costs — which is a best practice regardless of what industry you’re in — and then adding your target profit will set the stage for your ultimate bill rate for each labor category.
Ask us if you need assistance with:
- Learning the right way to calculate your wrap rate in compliance with DCAA and FAR regulations, and
- How your wrap rate compares to businesses of similar size and industry.
Libby King, CPA