The Short Answer

Government contract labor rates are the fully burdened hourly or annual costs that contractors charge the federal government for each labor category. A fully burdened rate includes base salary, fringe benefits, overhead, general and administrative (G&A) expenses, and profit. In 2026, typical fully burdened rates for IT services range from $85/hour (junior help desk) to $340/hour (senior cybersecurity SME), with wrap rates of 1.85x to 2.45x base salary depending on the contractor's cost structure.

How GSA Schedule Labor Categories Work

The GSA Multiple Award Schedule (MAS) is the government's largest contract vehicle, with $52B in FY2025 sales. Labor rates on GSA Schedules follow a specific structure:

SIN-Based Organization

Labor categories are organized by Special Item Number (SIN). Common SINs for professional services:

| SIN | Description | Typical Labor Categories |

|-----|-------------|------------------------|

| 54151S | IT Professional Services | Program Manager, Systems Engineer, Developer, DBA, Cyber Analyst |

| 541611 | Management Consulting | Senior Consultant, Analyst, Subject Matter Expert |

| 541330 | Engineering Services | Project Engineer, Design Engineer, Engineering Technician |

| 541380 | Testing/QA | Test Engineer, QA Analyst, Test Lead |

| 561210 | Facilities Support | Facility Manager, Maintenance Tech, HVAC Specialist |

How GSA Rates Are Set

When you apply for a GSA Schedule, you propose labor rates based on your commercial pricing. GSA negotiates from there:

**Basis of Award (BOA) customer** -- you identify your Most Favored Customer (the commercial client that gets your best pricing)

**Price Reduction Clause** -- your GSA rates must maintain the same discount relationship to your commercial rates throughout the contract

**Ceiling rates** -- your GSA Schedule rates are maximums; task order pricing can (and usually does) go lower

**Economic Price Adjustments (EPAs)** -- annual rate increases tied to BLS Employment Cost Index or a fixed percentage (typically 2.5-3.5%)

GSA vs Open Market Pricing

| Factor | GSA Schedule | Open Market (Full & Open) |

|--------|-------------|-------------------------|

| Rate transparency | Public via GSA eLibrary | Only visible through FPDS historical awards |

| Price negotiation | Pre-negotiated ceilings; TOs negotiate further | Full price competition on each solicitation |

| Typical discount off commercial | 10-20% | 15-30% |

| Speed of award | 2-4 weeks for task orders | 3-12 months for new contracts |

| Rate changes | Annual EPA modifications | Fixed at time of award with escalation built in |

| Best for | Repeat business, agencies that prefer BPAs | Large single awards, complex requirements |

SCA Wage Determinations

The Service Contract Act (SCA) sets minimum wages and fringe benefits for service workers on federal contracts. If your contract is SCA-covered:

You **must pay at least** the prevailing wage rate from the applicable Wage Determination (WD)

WDs are location-specific -- a security guard in DC has a different minimum than one in Des Moines

Fringe benefit requirements include health and welfare ($4.98/hr in 2025) and paid holidays/vacation

SCA applies to **blue collar and non-exempt white collar** workers; it does not apply to bona fide executive, administrative, or professional employees

Finding the Right Wage Determination

Check the solicitation -- the CO should attach the applicable WD

Search SAM.gov Wage Determinations by location and SCA Directory of Occupations code

If multiple WDs could apply, use the one specified by the CO -- do not assume

How to Calculate Fully Burdened Labor Rates

The formula for a fully burdened rate:

Fully Burdened Rate = Base Salary x (1 + Fringe%) x (1 + Overhead%) x (1 + G&A%) x (1 + Profit%)

Example: Mid-Level Systems Engineer in DC Metro

**Base salary**: $125,000/year = $66.49/hr (1,880 direct hours)

**Fringe (32%)**: $66.49 x 1.32 = $87.77

**Overhead (35%)**: $87.77 x 1.35 = $118.49

**G&A (12%)**: $118.49 x 1.12 = $132.71

**Profit (10%)**: $132.71 x 1.10 = **$145.98/hr**

Wrap rate: 2.20x base salary ($145.98 / $66.49)

Rate Component Definitions

**Fringe**: Employer FICA, health insurance, 401k match, PTO accrual, workers comp, disability, life insurance

**Overhead**: Facilities, IT infrastructure, management/administrative staff not billed direct, B&P labor, IR&D

**G&A**: Executive compensation, finance, HR, legal, corporate insurance, marketing, rent for corporate HQ

**Profit/Fee**: Contractor's return; negotiated based on risk, contract type, and market conditions

Typical Wrap Rates by Industry

| Industry / Contract Type | Typical Wrap Rate | Notes |

|--------------------------|------------------|-------|

| IT Services (OCONUS/remote) | 1.85 - 2.10x | Low overhead from remote delivery |

| IT Services (DC metro, on-site) | 2.10 - 2.45x | Facility costs, cleared workforce premium |

| Engineering / Technical | 2.05 - 2.35x | Lab/equipment overhead; higher fringe for engineering talent |

| Management Consulting | 2.20 - 2.50x | Higher G&A for business development intensity |

| Facilities / Maintenance | 1.70 - 2.00x | Lower salaries but SCA fringe requirements |

| Construction / Trades | 1.65 - 1.95x | Davis-Bacon wages; lower overhead for field operations |

| Healthcare / Medical | 2.00 - 2.30x | High fringe (malpractice insurance); credentialing costs |

Overhead, G&A, and Profit Rate Benchmarks

Based on DCAA audit data and industry surveys:

|-----------|----------------|--------|-----------------|

| Fringe | 28% | 33% | 38% |

| Overhead | 22% | 32% | 42% |

| G&A | 8% | 13% | 18% |

| Profit (FFP) | 7% | 10% | 14% |

| Profit (CPFF) | 5% | 7% | 8% |

| **Total Wrap** | **1.85x** | **2.15x** | **2.45x** |

These benchmarks shift by company size. Large contractors ($500M+ revenue) tend to have lower overhead percentages due to scale but higher G&A due to corporate complexity. Small businesses ($5-50M) often have higher overhead but lower G&A.

How DCAA Audits Rates

The Defense Contract Audit Agency (DCAA) audits contractor indirect rate structures and proposed pricing. Here is what they review:

Incurred Cost Audits

Annual audits of your actual indirect rates vs. your provisional billing rates. DCAA examines:

**Allowability** -- every cost in your pools must be allowable under FAR 31.2 (unallowable: entertainment, lobbying, alcohol, fines/penalties, certain executive comp above the cap)

**Allocability** -- costs must benefit the cost objective they are charged to

**Reasonableness** -- costs must be what a prudent businessperson would pay

**Consistency** -- you must treat similar costs the same way year over year

Forward Pricing Rate Audits

When you propose rates on a new contract, DCAA may audit your forward pricing rate proposal:

Compare proposed rates to historical actuals

Evaluate trend data and projections

Assess reasonableness of labor rate escalation assumptions

Verify base salary data against current payroll records

Avoiding DCAA Red Flags

**Do not reclassify unallowable costs** -- DCAA auditors know the FAR 31 exclusions

**Maintain a documented accounting system** -- adequate systems per DFARS 252.242-7006

**Segregate direct and indirect costs consistently** -- changing your allocation methodology year-to-year triggers scrutiny

**Cap executive compensation** at the current benchmark ($625,000 in 2025 under FAR 31.205-6(p))

Labor Category Examples with Rate Ranges (2026)

|---------------|-------------------|-------------------|------------------|

| Help Desk Analyst (Tier 1) | $55 - $80/hr | $50 - $75/hr | +$8-12/hr for Secret |

| Systems Administrator | $90 - $130/hr | $85 - $125/hr | +$12-18/hr for TS |

| Software Developer (Mid) | $110 - $160/hr | $100 - $155/hr | +$15-22/hr for TS/SCI |

| Cybersecurity Engineer | $140 - $200/hr | $130 - $195/hr | +$20-30/hr for TS/SCI w/poly |

| Cloud Architect | $155 - $220/hr | $145 - $215/hr | +$18-25/hr for TS |

| Program Manager (PMP) | $130 - $185/hr | $120 - $180/hr | +$15-20/hr for TS |

| Data Scientist | $120 - $175/hr | $110 - $170/hr | +$15-25/hr for TS/SCI |

| Senior Subject Matter Expert | $180 - $280/hr | $170 - $270/hr | +$25-40/hr for TS/SCI w/poly |

| Administrative Assistant | $45 - $65/hr | $40 - $60/hr | +$5-8/hr for Secret |

| Technical Writer | $70 - $105/hr | $65 - $100/hr | +$10-15/hr for TS |

These rates reflect 2026 market conditions. DC metro rates run 15-25% above national averages; OCONUS rates vary significantly by location. Use Fed-Spend to pull location-specific pricing benchmarks from actual FPDS award data.

FAQ

How do I find a competitor's labor rates on their GSA Schedule?

Go to GSA eLibrary (gsaelibrary.gsa.gov), search by contractor name or SIN, and download their price list. GSA Schedule rates are public information. Compare their published ceiling rates to historical task order awards (available through FPDS or Fed-Spend) to estimate their actual billing rates, which are typically 5-15% below ceiling.

What is a good wrap rate for a small business government contractor?

For a small business ($5-50M revenue) performing IT or professional services in the DC metro area, a wrap rate of 2.00-2.25x is competitive. Below 2.0x is aggressive and may indicate thin margins or understated indirect costs. Above 2.3x puts you at a disadvantage in LPTA competitions and makes it harder to win price-sensitive task orders. Focus on keeping overhead below 35% and G&A below 15%.

Do GSA Schedule rates include profit?

Yes. GSA Schedule rates are fully loaded -- they include base salary, fringe, overhead, G&A, and profit. When you negotiate your GSA Schedule, you propose rates that already incorporate your full cost structure and desired margin. The government does not separately negotiate profit on GSA Schedule orders unless the task order exceeds $25M and is cost-reimbursement.

[Research labor rate benchmarks by NAICS →](/search)

[Compare contractor pricing on GSA Schedules →](/dashboard/competitors)