Loaded rates are rates that include direct labor plus one or more of the following rate components in one hourly rate: Fringe, Overhead and General and Administrative (G&A), and Profit or Fee. Fringe, Overhead and G&A are the most common categories of indirect costs included in rate building calculations. The rates are represented as a percentage which is typically calculated by dividing the total of costs in the "pool" by the dollar amount in the "base". It is important to understand that the pool and base are period (annual, quarterly, etc) expenses and are not designed or required to align with project schedules. If your organization utilizes different categories, please substitute those categories for the indirect categories listed below.
The fringe rate is calculated based on non-wage compensations provided to employees in addition to their normal wages or salaries. These may include mandatory elements like; workers compensation, social security and unemployment and non-mandatory elements like; group insurance (health, dental, life etc.), disability income protection, retirement benefits, daycare, tuition reimbursement, holiday and other paid time off (PTO), workers compensation, and social security.
The overhead rate is the means by which overhead costs are spread among all projects within a company, business unit or cost center. Sub-part 31.2 of the FARs contains specific rules and general guidelines regarding what types of overhead costs are considered allowable. Overhead rates include elements like rent, allowable federal, state and local taxes, etc.
The G&A rate, as it is commonly known, is the means by which general management and administrative costs are spread among all of the projects in a pool. For small pools, it may not be necessary to calculate a G&A rate and the overhead separately and G&A may be combined into one indirect rate (the overhead rate). The G&A rate includes elements like; management and planning labor costs, accounting, some legal and marketing expenses.
Profit or Fee
The Profit or Fee rate is calculated as a percentage of total cost and the general requirement is the fee must be reasonable. For all US Federal agencies, the sum of the proposed fee plus costs may not exceed the maximum award amount specified in a solicitation or contract.
Several states charge gross receipts or other types of taxes on the contract revenues of a company, which can be included in the rate charged to the government. It is best to check with state and local tax laws before building a rate as they can have a major impact on the final rate.