b) The COA shall obtain the contractor`s proposal and require that it contain cost or price data that is accurate, complete and up-to-date at the time of submission. The COA invites the auditor and procuring entities with a significant interest to participate in the development of a government objective and in the negotiations. At the end of the negotiations, the COA prepares a Price Negotiation Memorandum (MFN) (see 15.406-3) and forwards copies of the MFN and FPRA to the grateful auditor and to all contract offices known to be affected by the FPRA. A certificate of current costs or price data is not required at this time (see 15.407-3(c)). A forward pricing rate proposal (FPRP) is submitted by a contractor to the government to certify their cost and labor rates over a period of time. The government is responsible for conducting appropriate reviews of contractors` cost proposals to establish well-substantiated negotiating positions and to negotiate effectively to ensure that contract prices are fair and reasonable. This negotiation resulted in a forward price rate agreement (FPRA). FPRA are very useful for contractors with a large volume of government contract proposals. When an FPRA is in place, the contractor and the government do not have to spend time haggling over indirect cost rates during contract negotiations – the proposed indirect rates are already settled. (d) If an FPRA is not valid, the contractor shall submit and negotiate a new proposal that takes into account the modified conditions. If an FPRA has not been established or declared invalid, the COA issues a Forward Pricing Rate (RPF) recommendation to purchasing activities with documentation to assist negotiators. In the absence of an FPRA or FPRR, the COA includes support for the tariffs used.
In each price proposal, contractors must accurately describe the FPRA, if any, to which the rates apply. Contractors must also identify the latest cost or price data that has already been submitted under the agreement. Contractors should note that all FPRA and/or FPA (Formula Pricing Agreements) bids must be prepared and supported by cost or price data that is accurate, current and complete. c) The FPRA sets specific conditions for the procedure, application and data requirements for systematic monitoring to ensure the validity of tariffs. The agreement provides for termination at the option of one of the parties and obliges the contractor, the COA and the identifiable contract auditor to submit any material changes in cost or price data. e) The COA may negotiate ongoing updates of the FPRA. The FPRA will provide specific conditions for notification, enforcement and data requirements for systematic monitoring to ensure the validity of tariffs The government and the contractor are responsible for determining whether the conditions that affect the validity of the agreement, tariffs and estimates change. (b) Contract agents shall use the FPRA tariffs as a basis for fixing the price of all contracts, amendments and other contractual measures to be performed during the period covered by the agreement. Conditions that may affect the validity of the contract must be communicated immediately to the ACO. If the COA determines that an amended condition invalidates the agreement, the COA informs all interested parties of the extent of its impact and the status of efforts to introduce a revised ARPF. Anyone can initiate an FPRA request.
It can be requested by the client or contractor or initiated by the COA. When deciding whether or not to enter into such an agreement, the COA should consider whether the benefits to be derived from the agreement are proportionate to the efforts made to justify and monitor it. Normally, PEAs should only be negotiated with contractors who have a large volume of government contract proposals. The competent contract management body is usually the last authority when an FPRA is established. (a) Where cost or price data is required, suppliers are required to describe the Forward Pricing Agreements (FPRA) in each specific price proposal to which the tariffs apply and to identify the most recent cost or price data already submitted in accordance with the Agreement. All data transmitted under the contract and updated if necessary are part of the aggregate data that the supplier certifies as correct, complete and up-to-date at the time of the price agreement for a first contract or for a contract modification. 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 for a rate review or analysis. A forward price rate agreement (FPRA) is an agreement between a contractor and a government agency that sets certain indirect rates for a specific period of time.
These rates are cost estimates and are used to price contracts and contract changes. Using an FPRA can speed up the contracting process, as rates no longer need to be reviewed or analyzed. The Administrative Contracting Officer (ACO) is responsible for monitoring the contractor`s rates. All questions regarding rates should be directed to the COA. Once an FPRA has been concluded, each subsequent proposal must include a copy of the agreement. (c) Contract agents do not require certification at the time of the agreement for data provided in support of the FPRA or other previous arrangements; Where a collective forward price agreement or other pre-arrangement is used to evaluate a contractual action that requires a certificate, the attestation in support of that contractual action shall include data provided in support of the FPRA or other prior arrangement and any other data in support of the action. As a contractor who enters into an FPRA, you are also responsible for keeping cost or price data up to date through constant disclosure to the Administrative Contracting Officer (ACO). Since this data is not certified at the beginning of the FPRA, you must ensure that you have adequate controls in place to understand what cost or price data has been disclosed and whether the data is current, complete and accurate. This obligation can potentially expose your business to government claims for erroneous prices, so you need to be extremely careful. .
