Forward Pricing Rates Agreements Are Written Negotiation Agreements

Sub-part FAR 42.17 – Forward Pricing Rate Agreements (a) Negotiation of Advance Price Agreements (FPRA) may be requested by the contractor or by the contractor or administrator (ACO). When deciding whether or not to enter into such an agreement, the ACO should check whether the benefits of the agreement are consistent with efforts to implement and monitor it. Normally, agreements should only be negotiated with contractors who provide for a large volume of government contract proposals. The contract conscious management authority determines whether a FPRA should be implemented. Contractors should keep in mind that all FPRAs and/or FPAs (Formula Pricing Agreements) must be prepared and supported with accurate, current and complete cost or price data. 15.407-3 Forward Pricing Rate Agreements (a) When cost or price data are required, suppliers are required to describe all early price agreements (TVs) in each specific price proposal for which the tariffs apply and to identify the latest cost or price data already submitted under the agreement. All data submitted under the agreement, updated if necessary, is part of the aggregated data that the supplier certifies as correct, complete and current at the time of agreement on the price of an initial contract or for a modification of the contract. b) The ACO solicits the contractor`s proposal and requires that it contain accurate, complete and up-to-date data on costs or prices at the time of submission. The ACO asks the comptroller of conscious contracts and contracting organizations that have a significant interest in participating in the development of a government objective and in negotiations. Following the negotiations, the ACO establishes a Price Negotiation Memorandum (MNP) (see 15.406-3) and transmits copies of the MFN and FPRA to the auditor and all contract services known to be affected by the FPRA.

There is currently no need to certify current cost or price data (see 15.407-3 (c)). Within 30 days of receiving an appropriate PRPF, the ACO is required to make interest rate recommendations – the RPF must remain in effect until a RAP is reached. For ACOs, with the assistance of a cost controller or an ICAT group, the ACO should negotiate rates within 60 days of receiving an appropriate PRPF.