A Forward Pricing Rate Agreement (FPRA) is an agreement between a contractor and a government agency in which certain indirect rates are established for a specified period of time. These rates are estimates of costs and are used to price contracts and contract modifications.
Purpose of Forward Pricing Rate Agreement (FPRA)
The purpose of an FPRA is to ensure that contract prices are fair and reasonable which can speed up the contracting process by eliminating the need to audit or analyze the rates.
Forward Pricing Rate Proposal (FPRP) Submission
A Forward Pricing Rate Proposal (FPRP) is submitted by a contractor to the government for the certification of their cost and labor rates over a period of time. The Government has a responsibility to perform appropriate reviews of contractor cost proposals to establish well-supported negotiation positions and to negotiate effectively to ensure that contract prices are fair and reasonable. This negotiation leads up to a Forward Pricing Rate Agreement (FPRA).
Forward Pricing Rate Proposal (FPRP) Format
Contractors that submit cost or price proposals generally must do so in a format that is consistent with Table 15-2 of Federal Acquisition Regulation (FAR) 15.408 and the checklist in DFARS at 215.403-5.
Forward Pricing Rate Proposal (FPRP) Administration
The Administrative Contracting Officer (ACO) is responsible for monitoring the contractor’s rates. Any questions concerning the rates should be directed to the ACO. Once a FPRA has been reached, any subsequent proposal should include a copy of the agreement. The establishment of a FPRA is covered under the special cost and pricing areas of FAR 15.407-3 and Subpart 42.17.
AcqLinks and References:
- DCAA Adequacy Checklist for Forward Rate Proposals
- DCAA Forward Pricing Rate Proposal Audit
- DCMA Manual “Forward Pricing Rates”
- Website: DFARS SUBPART 215.4–CONTRACT PRICING
- Website: FAR Subpart 42.17 – Forward Pricing Rate Agreements
- Website: FAR 15.407 – Forward Pricing Rate Agreement