Your wrap rate takes a person's base pay and wraps in everything else it actually costs you to employ and support them, fringe benefits, overhead, general and administrative expense, sometimes profit, into one number you can price against. Price using only base salary and you will look competitive right up until you start losing money on every hour billed. Getting your wrap rate right, and defensible, matters as much on a fixed-price bid as it does on a cost-reimbursement one, because a bad estimate does not become a good outcome just because the price is locked.

In a sentence

"The offeror's proposed wrap rate did not appear to account for the labor category's actual burden." That is an evaluator, or your own accountant, telling you the math behind your price does not add up, and it is much cheaper to catch that before you submit than after you win.