- Pricing has never been easy for the person who bids contracts. Their educated guess can be the difference between a no profit or low-profit job. In some cases (bidding to high) might cost the job itself. And lately, Government contracting has only been getting more difficult.
- LPTA or Lowest Price Technically Acceptable is a bidding practice that encourages cut-throat competition among contractors. It's known as "the great race to the bottom" in government contracting. With prices going down and competition growing, labor pricing and bidding have never been more important in government contracting.
- So how can fringe accounting and benefit management be an advantage in your pricing?
- Many use a Wrap Rate - a calculated cost per hour per man on the job. This is done by averaging out the total wages on the job. Then add the current government fringe rate ($4.27/hr) plus G&A, and overhead / fees related to the labor on set project.
Wrap Rate Equation
- The result being a flat rate per manpower on the job, which is what a wrap rate is. Finally, take the Projected Number of Man-hours on the Job X Wrap Rate and you've got your labor pricing.
- The easiest way to lower your labor rate in the above wrap rate equation is to 1. decrease the number of hours you plan to spend on the job, therefore, lessening your price / performance, or 2. skirt some of those wage and fringe rates on the contract. While they might be "easier", neither are good for the health of your business.
- We at Axim Fringe Solutions Group recommend you attack a different part of the wrap rate equation. An approach that helps you keep more of your current contract awards while becoming more competitive on new ones.
Maximizing Your Fringe Spend
- Partnering with a compliance/fringe management subcontractor will reduce G&A and overhead from your wrap rate and bottom line. This service counts as a part of your fringe spend, meaning no additional cost while guaranteeing that your compliance.
- Axim Fringe Solutions is a compliance and fringe management subcontractor. We help contractors lower wrap rates, decrease G&A and overhead, and qualify for set aside credits as an SDVOSB. (service-disabled veteran-owned small business)
- With the advantages we offer our partners, we can put you and your company 2-3 steps ahead of the competition right from the start, and we'll continue finding innovative solutions to help improve your business, because, simply put- that is our business.
- Three Common Service Contract Act Compliance (SCA) Stumbling Blocks
- How Cash-in-lieu Opt-Outs Increase Costs for Federal Contractors
- The Government Contractor’s Guide to Service Contract Act (SCA) Compliance
- How “No Change” to the SCA Health & Welfare Benefit Rate Impacts Government Contractors
- SCA Compliance Checklist Part 8: Fringe Benefits
- SCA Compliance Checklist Part 7: ACA Compliance
- SCA Compliance Checklist Part 6: Subcontractor Compliance
- SCA Compliance Checklist Part 5: Fringe Rate
- SCA Compliance Checklist Part 4: Base Wages
- SCA Compliance Checklist Part 3: Labor Categories