b) Contract agents use FPRA rates as a basis for pricing all contracts, modifications and other contractual acts to be performed during the period covered by the agreement. Conditions that may affect the validity of the agreement are notified to the ACO without delay. If the ACO finds that an amended condition invalidates the agreement, the ACO informs all interested parties of the extent of its effects and the status of efforts to establish a revised FPRA. 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. The introduction of a FPRA falls within the special costs and FAR 15.407-3 and part 42.17. The FPRA is very useful for contractors who suffer from a considerable volume of government contract proposals. If there is a FPRA in place, the contractor and the government do not need to spend time negotiating contracts to negotiate indirect fee rates – the proposed indirect rates are already settled. Anyone can apply for a FPRA. It can be requested by the contractor or by the bidder or initiated by the 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 deliberate contract management agency is usually the last authority on the date of the establishment of a FPRA.
A FPRA is a written agreement between the government and a contractor. The government will enter into an agreement with a contractor who has a considerable volume of pricing activities with the government. A FPRA can be an effective way to set rates as the underlying values for setting the prices of all contracts, amendments and other contractual measures implemented during the period covered by the agreement. With a FPRA, the contractor and the government save the time needed to develop new estimates for tendering for new work during the term of the contract.