Overhead versus G&A
Indirect rates (burden) and Indirect Pools often confuse the non-accountant. The bad news is: Your organization can make the Indirect Rate structure very complex. The good news is: Regardless of labels (like Overhead versus G&A), so long as expenses are recorded in the same account, consistently, in like circumstances, the label or pool name might not matter. Specific descriptions for many indirect rates or pools are in the Definitions Article. The difference between Overhead and G&A depends on how your company, consistently records a type of expense.
The employer-paid portion of payroll taxes logically belongs in a Fringe Pool that is allocated on a base of Labor (usually dollars, but sometimes hours or even headcount). Employer-paid fringe benefits also correlate to Labor. In a small business, if Overhead is caused by and allocated on a base of all Labor, these Fringe expenses can be included in the Overhead Pool, instead of a separate pool for Fringe. Note that G&A Labor absorbs its fair share of Fringe Pool expenses.

The base (divisor) for each indirect rate has a causal or beneficial relationship to expenses in the pool.
In a large enough company, a more complex indirect rate structure uses a separate rate for Fringe (allocated on the Labor that causes it) from Overhead. Then, Overhead expenses benefit multiple projects or contracts – but not the company as a whole. If multiple contracts require a SCIF, the expense of maintaining that SCIF can be included in the Labor Overhead versus G&A Pool. If multiple Jobs require CAD software, that can be included in the Labor Overhead versus G&A Pool. This Overhead is typically allocated on some Labor-related or Direct cost, such as Direct Labor. Alternatively, expenses for oil, shop rags, and other machine shop supplies logically belong in a Material Overhead Pool that is allocated on a base of Direct Material. Most service providers do not have a separate Material Overhead, only a Labor Overhead (usually just called Overhead).
If the DCAA ICE model seems confusing, remember that this tool applies to every kind of organization – large, small, service provider, product deliverer, with or without an allocation from a headquarters. To use the ICE model, first find the one tab or spreadsheet that most closely aligns with the Indirect Rate structure for your organization; if Overhead versus G&A represents the only rates for your organization – ignore the tabs or spreadsheets with rates and (separate) pools that do not apply. The difference between Overhead and G&A accounts depends on how your unique company structures G&A expense versus Overhead.
Indirect expenses, such as General and Administrative or G&A, are those that benefit the organization as a whole. The salary of the Human Resources Director benefits all current and future company sales, even if the company happens to only have one Job at the time of rate calculation. Time that the President invests on the Mission Statement and all-hands (State of the Organization) staff meetings is G&A Labor caused by the needs of running the business as a whole; time that the President spends working hands-on to complete a Statement of Work or Performance Work Statement benefits one particular award as Direct Labor.
G&A expenses typically include facilities, information technology (for employees, not for deliverables to a customer), telephone and cell phone (services and equipment for employee use), accounting, legal, insurances (except fringe benefits), allowable taxes/licenses/fees, and professional training (not solely required for a particular contract). Any of these examples might need its own pool and rate – depending upon a] significance (i.e., high dollar amount) of the pool expenses, and b] uniqueness (i.e., not used for any other indirect rate) of a correlating base.
Indirect expenses may be separated into many pools/rates, each with a different divisor or base. One pool for all indirect expenses, commonly called an Indirect Cost Rate (ICR) simplifies explanation.
What about Independent (company-paid) Research and Development (IR&D)? What about Bid and Proposal (B&P) costs? For awards funded by the U.S. Government, each of these can be (initially) charged to one or more segregated Job – just like a customer-funded Job. Labor, materials, and other costs can be charged to an internal B&P Job – just like a customer-funded Job. The total cost of the IR&D and B&P Jobs are – when Indirect Rates are calculated – usually added to the G&A Pool, but not charged there initially in a comingled G&A Job. By segregating IR&D and B&P as separate Jobs, management makes better use of reports from the General Ledger. If B&P costs gobble up a significant portion of sales dollars, the company should better target winnable solicitations. If the costs for B&P are commingled with other G&A costs, this information would not be readily available.
What about shipping? If shipping benefits the organization as a whole, the account belongs among the G&A accounts. If shipping is always charged to the Job or contract for which it is incurred, the account belongs in direct Cost of Goods and Services Sold. The key is consistency. A routine practice might be charging directly to a contract for shipping of packages in excess of two pounds and charging indirectly to G&A for shipping of packages of two pounds or less. In this case, a formal policy and procedure is approved by appropriate management, disseminated to staff, and followed consistently. This procedure defines the “like circumstances” when one practice applies, as opposed to the other.
Based on the shipping example, a particular transaction might affect a direct account, an Overhead account, or a G&A account. Often, a supportable argument can be made for a particular expense being caused by or benefitting from Direct Labor (Overhead Base) and, alternatively, Total Cost Input (G&A Base). The difference between Overhead and G&A depends on procedures of your unique company. Regardless whether Overhead versus G&A – so long as expenses are recorded in the same account, consistently, in like circumstances – the label or pool name might not matter.