Steel Toad Consulting LLC may bill the government up to $185.27 an hour for an IT Security Engineer: the on-site ceiling for a bachelor’s degree and three years’ experience under SIN 54151S on contract 47QTCA20D00BS, an FSS award USAspending dates to 25 June 2020. That category requires no clearance (the price list returns zero hits for “clearance,” “cleared” and “secret”), so it is a floor for the mechanic, not cleared-market pricing. Divide by the illustrative wrap built below (2.1032 before rounding) and $88.09 an hour is left for salary: about $183,227 a year, at a ceiling nobody must pay in full. A recruiter opening that req in 2026 bids against a number settled years earlier. The rate sits still. Wages do not.

What is a wrap rate in government contracting?

A wrap rate is the multiplier applied to one hour of direct salary to reach the price billed to the government: fringe, overhead, G&A, and fee. The term is trade shorthand; the FAR describes the components without using the word.

FAR 16.601(b) prices a time-and-materials contract at “[d]irect labor hours at specified fixed hourly rates that include wages, overhead, general and administrative expenses, and profit”: a wrap rate, minus the name. The candidate’s view is in what the wrap rate decides a contractor can pay you; the recruiter’s in bill rate versus pay rate.

Does the FAR cap what a cleared employer can pay?

No. Part 31 governs whether a cost is allowable, meaning whether the government will accept it in a price or reimburse it, not what you may pay. But paying more is not paperwork-free: revise a compensation plan materially without letting the cognizant ACO review it and you forfeit the presumption of allowability.

FAR 31.000 confines Part 31 to “[t]he pricing of contracts … whenever cost analysis is performed” and “[t]he determination, negotiation, or allowance of costs when required by a contract clause.” Neither is “what a company may pay an employee.” But do not swing past that into “pay what you like.” FAR 31.205-6(a) makes compensation “allowable subject to the following general criteria,” which run (a)(1) through (a)(6). Three govern a raise. (a)(2) is usually quoted only to its first clause: compensation “must be reasonable for the work performed; however, specific restrictions on individual compensation elements apply when prescribed.” So the flat fringe pool below is not uniformly allowable: severance, pension, deferred compensation and post-retirement benefits carry separate limits. (a)(3) requires compensation to “conform to the terms and conditions of the contractor’s established compensation plan or practice followed so consistently as to imply, in effect, an agreement to make the payment.” And (a)(4): “No presumption of allowability will exist where the contractor introduces major revisions of existing compensation plans or new plans and the contractor has not provided the cognizant ACO, either before implementation or within a reasonable period after it, an opportunity to review the allowability of the changes.” Re-band cleared salaries materially without that review and the presumption is gone, on top of FAR 31.201-3(a): “No presumption of reasonableness shall be attached,” and on challenge “the burden of proof shall be upon the contractor.” Recovery, not a salary ban, but not free.

On a schedule order the distinction sharpens. FAR 8.404(d) provides that GSA “has already determined … rates for services offered at hourly rates … to be fair and reasonable,” so ordering activities “are not required to make a separate determination … except for a price evaluation as required by 8.405-2(d).” And under FAR 15.403-1(b), even where certified cost or pricing data cannot be required, the contracting officer “may require data other than certified cost or pricing data … to support a determination of a fair and reasonable price or cost realism.” Part 31 is not the operative constraint there; the ceiling is. Arrive with no cost backup and you concede price.

Everything here is codified FAR at FAC 2026-01 (March 13, 2026) and GSAM Change 200 (June 13, 2026), but the FAR is mid-rewrite. Model deviation text has issued for every part cited here, agencies have adopted it by class deviation since 2025, and OMB proposed rules covering 17 parts on June 25, 2026. Confirm the operative version before citing.

How is a wrap rate actually built?

By stacking indirect pools, each applied to the subtotal beneath it: fringe onto direct labor, overhead onto labor plus fringe, G&A onto that base, fee onto total cost. Compounding is why a 12% G&A rate does not add twelve cents.

The percentages below are illustrative, not a benchmark. Nobody publishes a standard wrap rate for cleared work; indirect rates are company-specific. On cost-reimbursement work they are provisional under FAR 42.704 and true up at settlement. On a fixed-rate MAS order there is no true-up: the awarded rate is the rate, and an overrun is yours.

Why pools at all? FAR 31.203(c) requires a contractor to “accumulate indirect costs by logical cost groupings,” each allocated over “a base … common to all cost objectives.” The section runs (a) through (i), and the one usually left out hurts: under 31.203(d) “the contractor shall not fragment the base by removing individual elements,” and all items properly in the base “shall bear a pro rata share of indirect costs irrespective of their acceptance as Government contract costs.” You cannot carve one expensive cleared hire out of the base.

What 31.203(e) is not is a permission slip. It says the allocation method “may require revision” on “a significant change in the nature of the business, … or other relevant circumstances.” That is a trigger for when change becomes necessary, not a grant. Permission runs the other way. On CAS-covered work, FAR 30.603-2(a)(1) provides that a contractor “may unilaterally change its disclosed or established cost accounting practices, but the Government shall not pay any increased cost, in the aggregate, as a result.” The condition is notice: 30.603-2(c)(1) requires a description of the change to the CFAO “not less than 60 days (or other mutually agreeable date) before implementation,” and (c)(2) lets the CFAO treat a change made without it as “a failure to follow a cost accounting practice consistently” and process it as a noncompliance under 30.605. Check whether Part 30 reaches you: it covers negotiated contracts and “does not apply to sealed bid contracts or to any contract with a small business concern,” with further exemptions at 48 CFR 9903.201-1(b).

What salary does a published ceiling rate support?

Divide the rate by your wrap, then multiply by billable hours. $185.27 at the 2.1032 wrap is $88.09 an hour: about $183,227 across 2,080 hours, or $165,609 at 1,880.

The clearance caveat from the top governs every figure here: uncleared commercial categories. Cleared work generally prices higher, and CALC+ has a security-clearance filter because some schedule categories carry one. Which category your req maps to sits upstream, as labor category mapping for a cleared req lays out.

Both are conventions, not measurements. The 1,880 variant and a PTO-loaded fringe pool overlap: count the same non-billable hours twice and you set the band too low. OPM’s 2,087-hour federal convention has no place here: different purpose, different basis.

The ceiling is also not the price. GSA states that ceiling rates “are the maximum rates a contractor can propose and should not be accepted automatically as the exact order price,” being set “anticipating the opportunity to discount prices at the order level.” Apply an illustrative 10% discount (no source names a typical magnitude) and the billed rate becomes $166.74, salary falls to $79.28 an hour, and the year lands at $164,904: roughly $18,323 of headroom gone. Deeper discounts are common and cut further.

Now the column most write-ups skip. GSA notes that “[c]ontractor worksite rates are usually higher than customer worksite rates due to higher overhead costs,” and the price list shows both.

On the IT Security Engineer line the gap is $12.09 an hour, or 6.5%. Price from the column matching where the work happens: the customer’s SCIF is the lower, your own accredited facility the higher. No published figure splits cleared performance between the two, and contractor-owned accredited space is ordinary, so defaulting to the customer-site rate out of habit gives up $12.09 an hour you could have proposed.

Why does a rate bid in 2024 not pay 2026 wages?

Because one side of the equation is frozen and the other is not. GSA states that a vendor’s Prices Proposed Template “is good for the life of the vendor’s scheduled contract and only changes if a contract modification has been processed by the GSA MAS CO.”

One caveat cuts against the frozen-ceiling framing: some schedule price lists pre-negotiate a step-up per contract year, and CALC+ displays current, +1 and +2 prices where they exist. This one does not, and any step-up is set at award, not by the market. The BLS Employment Cost Index puts the current-dollar wages and salaries index for private industry at 166.3 in Q1 2024 and 177.672 in Q1 2026, a rise of 6.8%; every 12-month change from Q1 2025 landed between 3.3% and 3.6%.

A second caveat cuts against us, hard. Q1 2024 is arbitrary, not this contract’s award quarter: USAspending dates that to 25 June 2020, and the ECI ran 140.9 in Q2 2020 against 177.672 in Q1 2026. That is 26.1 percent, not 6.84, so measured from the real award the squeeze below is understated. Use your own award quarter.

That index tracks the whole private economy, not cleared labor. No published wage index exists for clearance-holding roles, so read it as direction of travel, not your market. It is a Q1 2026 reading released April 30, 2026; the Q2 release lands July 31, 2026.

Here is the squeeze. Take the $88.09 the ceiling supported at the 2.1032 wrap and grow it by the two-year 6.8%: $94.11. Hold the $185.27 ceiling unchanged, because nothing modified it, and the wrap you can afford drops to 1.97: thirteen points out of overhead, G&A or fee. That is when recruiters lose offers and crossover recruiting looks attractive. It is a symptom, not a cure.

Which levers actually exist?

Four: the economic price adjustment clause, the indirect-rate structure, the fee, and the labor category. Which apply depends on your vehicle. A MAS ceiling moves only by modification; cost-reimbursement billing rates are revised by agreement and settled at year end (FAR 42.704(c)); on competitive fixed-price work the government may test realism but “offered prices shall not be adjusted as a result” (FAR 15.404-1(d)(3)).

The EPA clause is narrower than its reputation. GSAR 552.238-120 binds FSS and MAS schedule contracts, not a cost-type DoD contract, a GWAC task order or a subcontract. Paragraph (g) limits approved requests to “orders issued on or after the effective date of the contract modification,” so nothing reaches back. But read its second sentence: “Blanket Purchase Agreements (BPAs) may be modified by the ordering agency in accordance with the terms and conditions of the BPA.” Multi-year cleared support is often bought on a BPA, a different door. Its five exclusions at (c) include adjustments required by statute, executive order or regulation, with Service Contract Labor Standards named explicitly, which run separately. If a wage determination moved your costs, SCA wage determinations is the right door.

One regulation pushes the other way, and it matters if you are tempted to bid a thin wrap by squeezing direct labor. Under FAR 22.1103, a contracting officer must insert FAR 52.222-46 in solicitations for negotiated contracts expected to exceed $900,000 where services require “meaningful numbers of professional employees” as defined in 29 CFR 541. Four scope elements, all load-bearing: solicitations not awarded contracts, negotiated buys, above the threshold, professional labor. Where it applies, proposals “envisioning compensation levels lower than those of predecessor contractors for the same work” are evaluated against program continuity, and failure to comply “may constitute sufficient cause to justify rejection of a proposal.” That lands on your bid, not on any employee, and creates no entitlement a candidate can claim, but it makes a lowball wrap an evaluation risk before a retention risk, the trap on a recompete.

The honest conclusion from a company selling cleared hiring services: no sourcing channel fixes a wrap-rate problem. If the ceiling will not carry the salary, a better job board does not help, and ours is no exception. A polygraph seat is usually filled by a targeted recruiter or an incumbent referral, not a posting.

The practical move is unglamorous. Put your awarded rate table and salary bands in one spreadsheet and compute the implied wrap for every labor category you are hiring against. Where that number has fallen below what your indirect structure delivers, recruiting will not fix it: those are pricing problems with a modification attached.

Frequently Asked Questions

What is a typical wrap rate for cleared staffing?

There is no published benchmark; any article quoting one invented it. On cost-type contracts FAR 42.704 billing rates are provisional and expressly not “determinative” of the final settlement; on a fixed-price schedule order nothing settles later. The 2.10 above is illustrative; use your own.

Is the wrap rate the same as the bill rate?

No. The wrap rate is a multiplier; the bill rate is a dollar per hour, equal to direct labor times wrap. A published GSA ceiling rate is a third thing: the maximum a contractor may propose, which GSA expects to be discounted at order level.

Can I raise an awarded ceiling rate mid-contract?

On a schedule contract the main route is an economic price adjustment modification under GSAR 552.238-120, running forward only: paragraph (g) limits an approved increase to orders issued on or after the modification’s effective date. It is not the only door. The same paragraph lets an ordering agency modify a BPA on its own terms, and the exclusions at (c) route statutory and regulatory adjustments, Service Contract Labor Standards wage determinations above all, elsewhere.

Do I need permission to restructure my indirect rates?

On CAS-covered work, no: FAR 30.603-2(a)(1) lets a contractor unilaterally change its disclosed or established cost accounting practices, though the government “shall not pay any increased cost, in the aggregate.” What you need is notice: 60 days to the CFAO before implementation under 30.603-2(c)(1), or the change can be processed as a noncompliance.