Definition
Forward Pricing Rate Agreed-upon indirect cost rates used for estimating costs on proposals and contracts.
Definition
Forward Pricing Rates are projected indirect cost rates negotiated between the government and a contractor for use in pricing proposals during a specified period. Forward Pricing Rate Agreements (FPRAs) establish provisional billing rates and pricing rates that can be used without renegotiation for each proposal. FPRAs are based on the contractor's projected costs, historical experience, and anticipated changes in business base. Having an FPRA streamlines the proposal process since rates are pre-approved. DCAA typically audits forward pricing rate proposals. Without an FPRA, each proposal requires individual rate negotiation. Forward pricing rates are later adjusted to actual rates through the incurred cost submission process.
Also Known As
- FPRA
- Forward Pricing Rate Agreement
- Provisional Rate
Examples
Common Mistakes to Avoid
- ✕Using expired FPRA rates in current proposals
- ✕Not updating forward pricing rates when business base changes significantly
- ✕Confusing forward pricing rates with final audited rates
Who Should Know This Term
Cost accountants, pricing analysts, government auditors, contracts professionals
Official Source
FAR 42.1701
