General and Administrative Rate (GAR)

An indirect cost rate used to allocate company-wide management and administrative expenses across contracts, projects, or other cost objectives.

What Is a G&A Rate?

In government contracting, a G&A Rate represents the share of overall business support costs that are assigned to contract work. These are costs related to running the company as a whole, not just performing one specific contract.

Examples often include executive management, accounting, legal, human resources, and other general business operations.

Key Characteristics

An indirect cost rate

Covers company-wide administrative expenses

Applied across contracts or cost objectives

Separate from direct labor and direct material costs

Commonly used in pricing, accounting, and cost reimbursement

How It Works in Government Contracting

A G&A Rate is used during pricing, budgeting, accounting, and contract performance. Contractors calculate the total pool of general business expenses and allocate those costs over an approved base, depending on their accounting structure.

It is used by finance teams, accountants, pricing teams, contract managers, and auditors. The rate helps spread overall business management costs fairly across the work the company performs.

In practice, G&A is often one of the final indirect layers added when building a fully burdened cost or labor rate.

Regulatory Framework

G&A Rate is part of the broader government contract cost-accounting and cost-allocation framework. Its acceptability depends on whether the costs are reasonable, allocable, consistently treated, and properly supported.

The exact calculation method may vary depending on the contractor's accounting practices and contract type.

Why It Matters for Contractors

G&A Rate matters because it affects pricing, profitability, and cost recovery. If the rate is too low, the contractor may fail to recover important business operating costs. If it is too high, pricing may become less competitive.

It also matters strategically because accurate G&A treatment helps contractors build realistic proposals and maintain stronger financial control.

Common Misconceptions About G&A Rate

G&A is the same as overhead.

Overhead usually relates more directly to contract performance support, while G&A covers broader company-wide administrative costs.

G&A only applies to large businesses.

Businesses of many sizes may use a G&A Rate if they allocate company-wide indirect costs.

G&A is optional in pricing.

It is often necessary to capture the full cost of running the business.

Frequently Asked Questions

What does G&A stand for?

General and Administrative.

What kinds of costs are included in G&A?

Common examples include executive management, accounting, legal, HR, and other overall business support functions.

Why is G&A important in government contracting?

Because it helps allocate the company's general operating costs across its contracts and projects.

Who uses the G&A Rate?

Finance teams, pricing staff, accountants, contract managers, and auditors.