By Nidah Rasool
Fringe, overhead and G&A explained: what belongs in each pool, which base the FAR and CAS allow, and why unallowable costs must stay in the base. Fringe, overhead and G&A each hold different costs and sit on different bases. The base is the half the regulations actually govern, and it moves the rate more than the pool does. Indirect Rates For Government Contracts Three indirect rates carry almost every federal bid: fringe, overhead, and general and administrative. Each one is a fraction. The pool sits on top, the base sits underneath, and the base decides the number an evaluator reads. Most teams argue for weeks about what belongs in a pool, then choose the base in an afternoon. That order is backwards, because indirect rates for government contracts move further on the base than on the pool. The Federal Acquisition Regulation names no pools at all. FAR 31.203(c) asks only for "logical cost groupings with due consideration of the reasons for incurring such costs". It then wants "an allocation base that is common to all cost objectives to which the grouping is to be allocated". The familiar three-pool structure is convention. Exactly one pool, G&A, carries a base the Cost Accounting Standards prescribe outright. ! Fringe, overhead and G&A pools shown beside the allocation base each one uses, with the G&A base marked as the only prescribed one (https://mhhifytmrlyksfrjacvi.supabase.co/storage/v1/object/public/blog-images/2026/11/indirect-rates-government-contracts-figure.png) The regulations leave two of the three bases to your judgment and prescribe only the third. What Goes In Fringe Fringe holds the cost of employing somebody beyond the wage itself. FAR 31.205-6(m)(1) (https://www.ecfr.gov/current/title-48/section-31.205-6) defines fringe benefits as "allowances and services provided by the contractor to its employees as compensation in addition to regular wages and salaries". The same paragraph lists vacations, sick leave, holidays, military leave, employee insurance and supplemental unemployment benefit plans. Payroll taxes, the employer retirement match and health premiums sit here in most small contractor structures. The base is normally total labor dollars, direct and indirect together. That choice matters more than it looks. Allocate fringe over direct labor alone and every indirect employee's leave and insurance lands on direct work twice, once through fringe and again through overhead or G&A. Auditors catch it. Put every paid hour in the base, including the hours your own accountant works. The Overhead Pool Overhead holds the cost of running the work rather than the company. First-line supervision, project facilities, tools, non-billable technical support and the fringe on those same people belong here. Executive salaries do not. CAS 9904.418-40(c) (https://www.ecfr.
Fringe, overhead and G&A each hold different costs and sit on different bases. The base is the half the regulations actually govern, and it moves the rate more than the pool does.
Indirect Rates For Government Contracts Three indirect rates carry almost every federal bid: fringe, overhead, and general and administrative. Each one is a fraction. The pool sits on top, the base sits underneath, and the base decides the number an evaluator reads. Most teams argue for weeks about what belongs in a pool, then choose the base in an afternoon. That order is backwards, because indirect rates for government contracts move further on the base than on the pool. The Federal Acquisition Regulation names no pools at all. FAR 31.203(c) asks only for "logical cost groupings with due consideration of the reasons for incurring such costs". It then wants "an allocation base that is common to all cost objectives to which the grouping is to be allocated". The familiar three-pool structure is convention. Exactly one pool, G&A, carries a base the Cost Accounting Standards prescribe outright. ! Fringe, overhead and G&A pools shown beside the allocation base each one uses, with the G&A base marked as the only prescribed one (https://mhhifytmrlyksfrjacvi.supabase.co/storage/v1/object/public/blog-images/2026/11/indirect-rates-government-contracts-figure.png) The regulations leave two of the three bases to your judgment and prescribe only the third. What Goes In Fringe Fringe holds the cost of employing somebody beyond the wage itself. FAR 31.205-6(m)(1) (https://www.ecfr.gov/current/title-48/section-31.205-6) defines fringe benefits as "allowances and services provided by the contractor to its employees as compensation in addition to regular wages and salaries". The same paragraph lists vacations, sick leave, holidays, military leave, employee insurance and supplemental unemployment benefit plans. Payroll taxes, the employer retirement match and health premiums sit here in most small contractor structures. The base is normally total labor dollars, direct and indirect together. That choice matters more than it looks. Allocate fringe over direct labor alone and every indirect employee's leave and insurance lands on direct work twice, once through fringe and again through overhead or G&A. Auditors catch it. Put every paid hour in the base, including the hours your own accountant works. The Overhead Pool Overhead holds the cost of running the work rather than the company. First-line supervision, project facilities, tools, non-billable technical support and the fringe on those same people belong here. Executive salaries do not. CAS 9904.418-40(c) (https://www.ecfr.
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