How to Price Labor for Government Contracts

Start with the required pricing structure

Labor pricing differs by contract type and solicitation. Read labor categories, rate instructions, hours, evaluation, wage obligations, and any required supporting data before using a standard rate sheet.

Build the estimate

1. 01Define roles, qualifications, location, and realistic hours.
2. 02Estimate compensation and applicable benefits or labor requirements.
3. 03Apply appropriate indirect-cost assumptions consistently.
4. 04Account for recruiting, supervision, training, equipment, and subcontract costs.
5. 05Evaluate escalation, fee or profit, and material delivery risks.
6. 06Map the result to the buyer's requested format.

Avoid double counting

Ensure costs are assigned consistently and not included in both direct charges and indirect pools. Separate a billing rate, employee pay, and fully burdened cost; they are not the same number.

Check realism and sustainability

A low price that cannot support qualified staffing can create performance problems. Understand whether the buyer evaluates price, cost realism, or other factors under the actual method.

Use qualified accounting and pricing support for complex estimates. Pricing is not simply a competitor's rate minus a discount; it should support compliant, reliable performance.