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We are putting a proposal together for an SCA H&W FFP contract, that has hazardous pay differential applied to a greater portion of the hours. I think that we need to use the hazardous pay in our fringe calculation, and that overhead, G&A and fee should also be applied to it for the proposal. It will be awarded as a FFP contract with only 2 clins Labor and travel. According to the Secretary of State website “danger pay allowance shall be included in gross income for Federal income tax purposes”, therefore I think FICA taxes should be applied to it, hence its inclusion in the fringe calculations. There is a different opinion in the office that “Hazard Pay does not affect the fringe rate, and we do not pay FICA on it. They suggest it is simply an “add on”. In other words they say it’s like an “ODC in Reverse”, we bill for it, the customer pays us and we pass it along to our employees. The cost of doing this invoicing and distribution is paid for in our G&A.” I don’t even understand what they are talking about. It’s going to be FFP, so we can’t bill it as an add on. This will be wages to the employee (who is not a military member, so those special military hazard pay rules don’t apply here) and I feel FICA both employee and employer portions apply. So my questions are how do we handle this hazard pay in our proposal? Does it affect our fringe rate? Can we apply overhead, G&A and fee to it? Your help is appreciated. I’m lost on this one.