Tag Archives: GovCon

Indirect Rates – An Overview of Government Contractor Rate Structure

CTCsquareCercaTrova Consulting provides consultation on the processes and systems required within  your organization and financial management system to facilitate the breakout and calculation of the rates unique to your organization.

The following is a very high level overview of determining the  Direct and Indirect components of your rate structure.

Government Contractor Rate Structure

Direct and Indirect Costs

Direct costs and rates are rates for costs that can eaisly be quantified within a contract. They include the cost of materials, wages of workers directly assigned to a project, subcontractors, etc. while indirect rates are rates that cannot be calculated without great effort.

You may need to calculate an indirect rate if you are awarded a federal contract (or grant) in which cost is reimbursed. It is a manner of assuring fair and equitable reimbursing across different businesses and organizations. Indirect rates are used for Incurred Costs Proposals.

Indirect cost rates are also known as indirect rates or Facility and Administrative rates (F&A rates). Though the Federal Acquisition Regulations (FAR) will recognize indirect rates grouped in any logical manner, they usually fall into one of three categories:

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