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What is the definition of fully burdened rates versus fully loaded rates?


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I have seen both terms fully burdened rates and fully loaded rates used by the Government and in government contracting, but I am not sure if they are used interchangeably or if they mean different things.

Someone believed that one of the terms referred to rates inclusive of direct costs and indirect costs, whereas the other term referred to rates inclusive of direct costs, indirect costs, and fee. It was just hearsay - are there definitive definitions for the terms?

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The terms might be identical in the minds of some practitioners, or different in the minds of others.  It might depend on the circumstances.  I do not think you will find a perfect answer.  But whenever anyone uses either of these terms, maybe you should ask that person both for his or her definition and a citation for the definition?  You might find that person doesn't even know, notwithstanding his or her use of the term.

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I don't think there is a definitive answer to the question, and I like ji20874's response. I also hear "wrap-rate" used frequently--though interpretations of that term vary.

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Neither term is defined in the FAR.  However, in regard to T&M/LH contracts, FAR 16.601 states "

A time-and-materials contract provides for acquiring supplies or services on the basis of-

           (1) Direct labor hours at specified fixed hourly rates that include wages, overhead, general and administrative expenses, and profit."

Also, see FAR 52.232-7.

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The phrase "fully burdened" appears in 57 board of contract appeals decisions going back to 1973. The phrase "fully loaded" appears in 88 going back to 1957 and in 144 GAO protest decisions. They are mostly applied to labor.

The phrases indicate that the costs of employee benefits, applicable indirect costs, and profit are to be, or have been, added to a direct cost rate, usually a labor rate. The phrases appear to be interchangeable.

What "fully" means in any given case depends on the person using the phrase. See: https://www.amalytics.co/blog/4-different-interpretations-of-the-term-fully-loaded-cost

According to the Oxford Dictionary of Business and Management, burden means "overheads."

"Load" sounds like slang, but it appears to be used more often than burden. Accountants appear to favor the word "burden."

Google "burdened rate" and "loaded rate."

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