The first step to having success in the field of federal contracts is understanding the lingo. This forum will allow you to find definitions for basic words related to the field and suggest concepts to be defined. Like the rest of the site, it’s a resource so let us know how we can make it easier for you!
As we post new tips we will develop a Fed-ology or a glossary of new terms we introduced:
• Business Development—FAR prefers the use of the term business development which are the activities you use to identify opportunities to deliver goods or services from attending small business trade fairs to visiting potential customers and the cost of developing proposals. The federal government operates on very strict ethical policies so you can not generally take potential customers to lunch or treat them to attending games as they must pay for their own to remain independent and objective in fact or appearance
• Cost pools—these are the summaries of your annual projected costs for fringe benefits, overhead, G&A that you use to calculate your FBR. FAR outlines how you calculate your Wrap Rate or Multiplier
• Wrap rate or multiplier—This is the additive rate that occurs once you follow the formula developing a rate based on your direct labor pool that then is added to the fringe and the you calculate your overhead and likewise that is added to calculate your G&A rate and then your fee. If this sounds complicated get an professional who specializes either as an outside firm or hire someone pricing is an exact science and there is no room for weaknesses
• Fully Burdened Rate (FBR)—your direct labor rate per hour times your Wrap Rate or Multiplier
• DCAA—the agency that is authorized to audit your costs to determine they are in compliance with FAR
• FAR—Federal Acquisition Regulations provide guidelines on pricing as well as defines the procurement process from the issue of a solicitation to the evaluation and award process