When bidding for a government contract, one of the best lenses for viewing your competition is a WRAP rate. In our work, WRAP rates are a piece of a Competitive Assessment because they show the natural ranking of companies. WRAP rates are also used in Competitive Pricing and Price to Win analysis. Companies have various ways to estimate WRAP rates; sometimes they try to do it internally, and sometimes they hire outside firms.
In Pricing, WRAP rates are applied to recoup the indirect costs companies incur during the normal course of business. These costs include occupancy of buildings, plant equipment, fringe benefits, holiday and sick pay, health insurance, and salaries of non-billable employees. If contractors only charge direct labor plus fee, they will go out of business. According to the Federal Acquisition Regulation (FAR), a multiplier (or WRAP) is applied to labor to cover these expenses.
Our WRAP rate product is designed to be used by a Competitive Intelligence analyst, a Price to Win analyst, or a Pricing analyst. We offer three types of WRAP rates – Services, Development, and Manufacturing – due to their different cost pools. Development, for example, can include building and developing software and systems. Services, on the other hand, might include servicing and supporting those systems. Because the work is different, the costs are different, and our models enable us to tease out these differences. Development WRAP rates are normally higher due to higher overhead and fringe costs, whereas Services are normally lower. Manufacturing rates are different altogether because the additional labor cost in a manufacturing plant gets charged back to the government when systems are delivered.
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