Friday, December 12, 2014

Forward Pricing Rate Proposal Adequacy Checklist - Final

A year ago May, DoD published a proposed rule requiring contractors who submit forward pricing rate proposals, to include a completed checklist along with that proposal in order to ensure that the proposals were submitted in an acceptable form. This proposed rule followed an initiative from DCAA (Defense Contract Audit Agency) about six months earlier when it published its own forward pricing rate agreement checklist. The two were very similar but not exactly the same.

Yesterday (December 11, 2014), DoD published its final rule on this matter along with a revised checklist. That checklist, in Word format, can be downloaded here. There are substantive differences between the proposed and final checklists, most notably the removal of references to FAR Table 15-2 to remove "... any misunderstandings of the intent and content of the table submission items". Table 15-2 pertains to forward pricing proposals, not to forward pricing rate proposals.

Negotiation of forward pricing rate agreements (FPRA's) may be requested by the contracting officer or the contractor or initiated by the administrative contracting office (ACO). In determining whether or not to establish such an agreement, the ACO should consider whether the benefits to be derived from the agreement are commensurate with the effort of establishing and monitoring it. Normally, FPRA's are reserved for contractors having a significant volume of Government contract proposals (see FAR 42.1701).

Under this new rule, whenever a DoD contractor submits a forward pricing rate proposal, the contracting officer will also require it to complete and submit the new Forward Pricing Rate Proposal Adequacy checklist with its forward pricing rate proposal. Note, the forward pricing rate proposal is a FAR provision and applies to all Government contractors. The "checklist" is a DoD FAR Supplement provision and applies only to DoD contractors.

The purpose of the checklist according to DoD is to ensure submission of thorough, accurate, and complete proposals, provide consistency, and communicate common expectations to prevent rework and improve the efficiency of the negotiation process. Establishment of common expectations for contractors and the Government will promote adequate initial submissions of proposals, which should shorten the acquisition cycle making for more efficient negotiations for both contractors and the Government. The checklist is not geared to stimulate a contractor to create documentation other than the basic information that both the Government and contractor need to support and negotiate fair and reasonable rates. The checklist identifies those elements that would typically be included in a well-supported and complete forward pricing rate proposal.

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