How to Price a Federal Service Contract (SCA + Rates)

The fastest way to lose money in federal contracting isn't losing a bid — it's winning one you priced wrong. Underbid a Service Contract Act job and you're locked into five years of work that costs more than you're paid. Overbid and you never win.

Pricing is where small service contractors live or die. Here's how to do it right.

The quick version

Start at the SCA wage floor — the legal minimum you must pay labor.
Stack your indirect rates on top — fringe, overhead, G&A, then fee.
DCAA only audits cost-type contracts — most service work is fixed-price, so the risk is mispricing, not an audit.
Anchor to the market — winning bids already bake in competitors' rates.

Step 1 — Start at the legal floor (SCA)

Most federal service work — janitorial, grounds, security, facilities — is covered by the Service Contract Act (SCA). For each locality, the Department of Labor issues a wage determination setting the minimum you must pay:

A base hourly wage per labor category (e.g., "Janitor," "Groundskeeper").
A Health & Welfare (H&W) fringe on top of the wage.

This is a floor, not a target. You can't legally bid labor below it. Your real direct-labor cost is (wage + fringe) × hours — the foundation everything else sits on.

Watch out: rates vary a lot by county. Always pull the wage determination for the exact place of performance.

Step 2 — Stack your indirect rates

"Direct" costs trace to one contract (cleaners' hours, supplies). "Indirect" costs are shared across all your work and get spread as a percentage. The three to know:

Fringe — payroll taxes, insurance, PTO, workers' comp (SCA H&W lives here). Often ~30–40% of direct labor.
Overhead — supervision, vehicles, equipment, uniforms, job-site costs. Often ~15–25% of direct labor.
G&A — running the company: owner pay, accounting, rent, software, BD. Often ~8–15% of total cost.

The price build-up

Direct labor (at or above the SCA floor)
+ Fringe
+ Overhead
- Supplies & equipment (direct)
= Subtotal
+ G&A
= Total cost
+ Fee / profit (often ~7–12%)
= Your bid

These percentages are company-specific — there's no single "correct" overhead rate. Use the ranges to sanity-check, not as gospel.

Step 3 — Know the DCAA rule (and when it doesn't apply)

You'll hear warnings about DCAA auditors "ripping apart your overhead allocations." True — but only for cost-type contracts (cost-plus, T&M), where the government reimburses your actual costs plus your indirect rates and therefore audits them. Cost-type work needs a compliant accounting system before you bid.

Most small service contracts are firm-fixed-price (FFP). You bid one number and keep the difference — DCAA generally doesn't audit your indirects. The risk there isn't an audit; it's mispricing. Know which contract type you're bidding.

Step 4 — The shortcut: price to where winners land

Here's the insight that saves you from guessing rates in a vacuum:

The winning bid on comparable contracts already reflects competitors' indirect rates.

If similar contracts in your area win around a certain price per year, that number bakes in their fringe, overhead, and margin — calibrated by a real, competitive market. So anchor to it:

Pull comparable awards for the same NAICS, locality, and scope.
Look at the range, not the average — a band from the low to high end of recent winners.
Aim between the 25th and 75th percentile — competitive on LPTA, but covering your labor.
Sanity-check that your build-up (floor + indirects + fee) lands inside that band.

FedRange does this automatically — a P10–P90 pricing band from real comparable awards, with the SCA wage floor flagged, so you price to win without underpricing labor.

Frequently asked questions

How do I find the SCA wage determination?

It's published by the Department of Labor and referenced in the solicitation, tied to the place of performance (county). Always price from the exact locality's rate.

What's a typical overhead or G&A rate?

Rough ranges: ~15–25% overhead (on direct labor), ~8–15% G&A (on total cost). Your real rates depend on your cost structure.

Do I need a DCAA-approved accounting system to bid?

Only for cost-type contracts. Firm-fixed-price service work — most janitorial, grounds, and facilities contracts — doesn't require it, though you still must cover your real costs.

How do I know if my price is competitive?

Compare against what similar contracts actually won (same NAICS, locality, scope). A pricing band beats a single guess every time.

Keep reading

How to Win Federal Janitorial Contracts (NAICS 561720)
Federal Contract Recompetes
The Federal Pricing Guide (2026) and free janitorial calculator go deeper.

FedRange shows the real P10–P90 pricing band for federal service opportunities — built from comparable awards, with the SCA wage floor flagged — so you bid to win without losing money on labor. See pricing for your opportunities →