15.407-3 Forward pricing rate agreements
Source: FAR 15.407-3 on acquisition.gov
Forward Pricing Rate Agreements must be fully disclosed, properly updated, and accurately certified in pricing proposals to ensure compliant and efficient contract pricing.
Overview
FAR 15.407-3 outlines the requirements and procedures for the use of Forward Pricing Rate Agreements (FPRAs) in government contracting when certified cost or pricing data are required. FPRAs are negotiated agreements on indirect cost rates, labor rates, or other cost elements that are used to price contracts and modifications over a specified period. This section details how offerors must disclose FPRAs in proposals, how contracting officers use and manage FPRAs, and the certification requirements related to data supporting FPRAs.
Key Rules
- Disclosure and Certification of FPRAs
- Offerors must describe any applicable FPRAs in each pricing proposal and identify the latest cost or pricing data submitted under the FPRA. All data supporting the FPRA, updated as necessary, must be certified as accurate, complete, and current at the time of price agreement.
- Use and Management of FPRAs
- Contracting officers must use FPRA rates for pricing all relevant contracts and modifications during the agreement period. Any conditions affecting the validity of the FPRA must be reported to the Administrative Contracting Officer (ACO), who will notify all parties if the agreement is invalidated.
- Certification Timing
- Certification is not required at the time of agreement for data supporting FPRAs. However, when an FPRA is used to price a contract action requiring certification, the certificate must cover all data supporting the FPRA and the contract action.
Responsibilities
- Contracting Officers: Use FPRA rates for pricing, monitor for changed conditions, and coordinate with the ACO on FPRA validity.
- Contractors: Disclose FPRAs in proposals, update and certify supporting data, and ensure all relevant data is included in certifications.
- Agencies: Oversee FPRA administration and ensure compliance with reporting and certification requirements.
Practical Implications
- FPRAs streamline pricing by establishing pre-negotiated rates, but require careful data management and timely disclosure. Failure to update or properly certify data can lead to compliance issues. Contractors and contracting officers must coordinate closely to ensure FPRAs remain valid and are properly applied.
(a) When certified cost or pricing data are required, offerors are required to describe any forward pricing rate agreements (FPRAs) in each specific pricing proposal to which the rates apply and to identify the latest cost or pricing data already submitted in accordance with the FPRA. All data submitted in connection with the FPRA, updated as necessary, form a part of the total data that the offeror certifies to be accurate, complete, and current at the time of agreement on price for an initial contract or for a contract modification. (See the Certificate of Current Cost or Pricing Data at 15.406-2.)
(b) Contracting officers will use FPRA rates as bases for pricing all contracts, modifications, and other contractual actions to be performed during the period covered by the agreement. Conditions that may affect the agreement’s validity shall be reported promptly to the ACO. If the ACO determines that a changed condition invalidates the agreement, the ACO shall notify all interested parties of the extent of its effect and status of efforts to establish a revised FPRA.
(c) Contracting officers shall not require certification at the time of agreement for data supplied in support of FPRA’s or other advance agreements. When a forward pricing rate agreement or other advance agreement is used to price a contract action that requires a certificate, the certificate supporting that contract action shall cover the data supplied to support the FPRA or other advance agreement, and all other data supporting the action.