Q. We compute a G&A rate in the 20 percent range and the government always accepts it in pricing our contracts. Is there a need to change it?
A. Why change it – I would be dancing in the street if I could add a 20% mark up to subcontract costs. (Of course you now need to be aware of assertions of excess pass-through costs – see our article above.) The only condition that would give me pause is if I had little to no subcontract costs or other direct costs but most direct costs were direct labor. In that case, you might want to lower the rate applicable to subcontracts and ODCs and increase overhead applicable to direct labor only.
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