General and Administrative Expenses(G&A)
Overhead costs that support the overall organization rather than direct contract performance.
Overview
General and Administrative (G&A) expenses are indirect costs required to run a business — executive salaries, legal, accounting, human resources, facilities, and other support functions. They are allocated to contracts via an established rate base (e.g., total cost input or value-added).
Why It Matters in GovCon
G&A rates are negotiated with the government (often DCAA) and must be consistently applied. Incorrect G&A allocation can lead to unallowable costs, audit findings, and contract disputes. Understanding rate structure is critical for pricing and compliance.
Key Details
- Rate Base: G&A can be applied to total cost input, value-added, or single-element bases.
- Allowability: FAR Part 31 defines allowability; unallowable costs must be excluded from the base.
- Forward Pricing: G&A rates are proposed and negotiated for future periods.
- Multiple Pools: Some contractors have separate G&A and overhead pools.
Related Terms
- Indirect Cost
- Overhead
- DCAA
- Forward Pricing Rate Agreement (FPRA)
More Finance Terms
A guarantee submitted with a bid that ensures the bidder will enter into a contract if selected and provide required performance and payment bonds.
The government's internal estimate of what a procurement should cost, used to evaluate the reasonableness of contractor proposals.
The projected cost to finish remaining work on a contract or project based on current status.
Costs that cannot be traced to a single contract but are allocated across projects via indirect rates.
The total cost of owning, operating, maintaining, and disposing of a system or product over its entire useful life.
Costs that can be identified specifically with a contract or project but are not labor or materials — such as travel, subcontracts, or specialized services.
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