Forward Pricing
Stop re-arguing your rates on every single bid.
A forward pricing rate proposal, and ideally an agreement, settles your indirect rates for future pricing. We prepare and negotiate them, having audited them for years from the government side.
- 12 years inside DCAA
- 100+ DoD contractors audited
- CPA led
- QuickBooks, Costpoint, SAP & NetSuite
- Remote, nationwide
What forward pricing rates do for you
Every time you submit a cost proposal, the government has to satisfy itself that the indirect rates in it are reasonable. Without an established forward pricing position, that question gets re-opened on every bid, and each time it costs you time, audit effort, and negotiating leverage.
A Forward Pricing Rate Proposal is your submission of projected indirect rates for future periods. When the government accepts it and formalizes the outcome, you have a Forward Pricing Rate Agreement, a binding understanding of the rates both sides will use in pricing. Where the government does not agree, the contracting officer may issue a Forward Pricing Rate Recommendation instead, which is unilateral and generally less favorable to you.
The practical benefit is speed and predictability. Proposals price faster, fact-finding is narrower, and your pricing team stops rebuilding the same justification every quarter. For a contractor with meaningful proposal volume, that is a significant reduction in cost of sale.
What goes into a credible FPRP
Forward pricing is a projection, and a projection is only as good as the reasoning behind it. This is exactly what an auditor tests.
Business base forecast
Projected direct labor, revenue, and headcount by period. This drives everything downstream, and an unsupported base is the fastest way to have the whole submission discounted.
Pool projections
Fringe, overhead, and G&A cost projected element by element, with the significant movements explained rather than trended blindly from history.
Historical bridge
A reconciliation from actual historical rates to the proposed forward rates. Reviewers want to see the path, not just the destination.
Escalation assumptions
Documented, sourced escalation for labor and material. “Three percent” with no basis is an invitation to be challenged.
Headcount and hiring plans
Growth assumptions tied to real staffing plans, because a base that assumes hiring you cannot evidence will not survive review.
Sensitivity analysis
What happens to your rates if the base comes in materially under plan. Knowing this before you commit protects your margin.
How we run an FPRP engagement
Assess whether you need one
Not every contractor should file. We look at your proposal volume, contract mix, and how often rates are being challenged, and tell you honestly whether the effort pays for itself.
Build the base and pool projections
Working from your operating plan, not from a mechanical extrapolation of last year.
Document the assumptions
Every material assumption gets a written, sourced basis at the time it is made.
Submit and support the audit
We prepare the submission and handle the data requests and fact-finding that follow.
Negotiate and monitor
Support through negotiation to agreement, then monitoring against actuals so you know early if the agreement needs revisiting.
Looking for something else?
Forward pricing rates are not billing rates
If you landed here searching for provisional billing rates, you probably want a different page. Forward pricing rates price work you have not won yet. Provisional billing rates are what you invoice at while performing, established under FAR 42.704, and they settle against final rates after the incurred cost submission.
Those are covered on indirect cost rates and provisional billing rates. If you are not sure which one applies to you, the guide on provisional, forward pricing and final rates lays all three side by side.
Questions
Frequently asked
What is the difference between an FPRP, an FPRA, and an FPRR?
The proposal is what you submit. The agreement is the negotiated, bilateral outcome both parties are bound to use. The recommendation is what the government issues unilaterally when no agreement is reached, and it is typically less favorable to the contractor than a negotiated agreement would have been.
Are we required to have an FPRA?
No. It is a tool, not an obligation. It becomes worthwhile when you are pricing frequently enough that re-litigating rates on every proposal is costing you more than maintaining the agreement does.
What if our actual rates come in different from the agreed rates?
An FPRA governs pricing, not final settlement. Actual cost still flows through the incurred cost process and final rate determination. If your business changes materially, the agreement should be revisited rather than quietly ignored.
How long does an FPRA last?
Typically it covers a defined forward period, often one to three years, and it can be cancelled or revised if the underlying assumptions change significantly. Monitoring against actuals matters for exactly this reason.
We are small. Is this relevant to us?
Often not yet. For a contractor submitting a handful of proposals a year, well-supported provisional rates are usually enough. We will tell you if you are below the threshold where this makes sense.
More
Related services
Provisional billing vs forward pricing vs final rates
Three indirect rates, three purposes. Which one bills, which one prices, which one settles, and what confusing them costs.
How to calculate indirect rates for a small business
Fringe, overhead and G&A with a worked example for a ten-person firm, and what must come out of the pool first.
DCAA-compliant accounting systems
Design, configure, and document a system that meets DFARS 252.242-7006 and survives a system review.
SF 1408 pre-award surveys
Get your accounting system judged adequate so you can accept a cost-type award.
Incurred cost submissions
Adequate ICE submissions filed on time, with schedules that reconcile the first time.
Indirect cost rate structures
Pool design, allocation bases, provisional billing rates, and the annual true-up.
Contract pricing & proposal support
Cost volumes and basis of estimate for FFP, cost-reimbursable, and T&M solicitations.
Government audit support
Preparation and representation for DCAA and DCMA audits and buying command cost analysis.
CAS Disclosure Statements
Form CASB DS-1 preparation, cost impact analysis, and disclosed practice compliance.
Post-award & business system reviews
DFARS 252.242-7006 reviews, material weaknesses, payment withholding, and corrective action.
Terminations, REAs & claims
Termination settlement proposals and requests for equitable adjustment. Frequently underclaimed.
Tired of defending your rates on every proposal?
Tell us your proposal volume and how your rates are being treated today. We will tell you whether a forward pricing agreement is worth the effort for you.