Indirect Rates for Government Contractors

Your indirect rates decide how much of your overhead the government actually pays back. Get the pool structure right and every contract carries its fair share of cost. Get it wrong and you either leave money on the table or invite a DCAA questioned cost. We build indirect rate structures for government contractors for a living, and the pattern we see most often is a contractor billing provisional rates all year with no plan for the final rate reconciliation that closes the books.

This center walks the full lifecycle in the order it actually happens. Start with the fundamentals: what separates a direct cost from an indirect one, how the three classic pools of fringe, overhead, and G&A are built, and how the math produces a rate. Move to setting and defending your rates, from provisional billing rates to forward pricing proposals to the levers that genuinely lower a rate without gaming the base. Then close the year correctly, from cutoff through the incurred cost submission to the final indirect rate agreement that locks your recovery.

Read top to bottom if you are standing up a rate structure for the first time, or jump to the stage you are wrestling with now.