STUDENT 1 (Ricardo):

The use of Forward Rate Pricing Rate Agreements (FPRA) can be useful for a short period of time to speed of government contracts to eliminate analyzing any contracting estimations. Audits would be eliminated here but the risk can be if the cost estimations are not accurate to current cost of items can become a problem. The FPRA can be beneficial and risky at the same time dependent on the contract. They can speed up the cost estimation process by eliminating the fact checker to validate these costs. Yes eliminating additional work through FPRA can speed up process but can add risks if the FPRA are not cost effective for the time being. According to AcqNotes (2019) FAR 15.407-3 and Subpart 42.17 mentions that FPRA are useful for contractors involved with an abundant amount of government contract proposals. The challenge for the FPRA is the ability to negotiate and come to terms with the FPRA in other words it has to be agreed upon by both parties. Now, the FPRA can become invalid and require an additional negotiation which can become a risk on the contract. According to Oyer (2012) the FPRA do not protect from the Truth-In-Negotiations-Act (TINA) which can be a major risk to any government contracting parties (p.139). I will say that FPRAs can help plan a program if the cost estimation on the direct and indirect costs are accurate while being reasonable, that is the gamble with it which time itself will tell when things either workout or don’t.

AcqNotes. (2019, February 1). Forward Pricing Rate Agreement (FPRA). Retrieved from acqnotes.com: http://acqnotes.com/acqnote/careerfields/forward-p…

Oyer, D. J. (2012). Forward Pricing Rate Agreements. In D. J. Oyer, Cost-Based Pricing: A Guide to Government Contractors (p. 139). Tysons Corner: Management Concepts Press, Inc.

STUDENT 2 (Jena):

According to Oyer (2012), “Forward Pricing Rate Agreements (FPRAs) are negotiated, advance agreement on direct labor and indirect cost rates” (p. 139). FPRAs are not commonly utilized due to the difficultly on agreements on rate due to inflation or escalation factors. FPRAs may be requested by either the contractor or a contracting officer. Before pending a request, contracting officers should do their due diligence to determine whether the benefits of a FPRA is worth the effort of establishment and monitoring. On average, FPRA are usually only negotiated with contract that have a large amount of government contract proposals. Upon FPRA establishment, contracting officer must obtain pricing rate proposal with required accurate cost or pricing data. Oyer (2012) further explains, “Upon completing negotiations, the contracting officer prepares a price negotiation memorandum and forwards copies of the memorandum and FPRA to the cognizant reviewer and to all contracting officer that are known to be affected by the FPRA” (p. 139).

I do think that FPRA can be useful for contractors that have high volume of Government Contract Proposals. FPRA can potentially speed up the contracting process by eliminating the need to analyze thing such as indirect expense rates since they are already settled. However, I do think the contractor or contracting needs to determine whether the FPRA would be useful on the contract. As almost all contracts have different needs and requirements. I do think that FPRA can be risky because rates do not reflect inflation or escalation factor. They also do not protect from TINA issues when volumes are increasing or from understated rates when business volume is decreasing (Oyer, 2012). I do believe that FPRA can be helpful in planning a program. Standard audit programs can assist CO in the planning and performance of forward pricing rate proposals.

References

Forward Pricing Rate Agreements (FPRA). (2019, February 1). Retrieved from http://acqnotes.com/acqnote/careerfields/forward-p… Pricing Rate Agreements (FPRA),a specified period of time.&text=FPRAs are very useful for,volume of Government contract proposals.

Oyer, D. J. (2012). Cost-Based Pricing: A Guide for Government Contractors. Management Concepts Press

STUDENT 3 (Amy):

Forward Pricing Rate Agreements (FPRAs) are agreements that are negotiated in advance of a contract award. Direct labor rates and indirect costs are included in FPRAs. Negotiations on these rates in advance can be difficult since the market and business volume may fluctuate and are not always able to be predicted accurately. Agreeing on rates for future contracts can also be risky. Inflation could be incorrectly accounted for as well as other unforeseen factors (Oyer, 2012).

When an FPRA is requested by either the contractor or the contracting officer, the contracting officer is the entity responsible for reviewing the request and determining if the FPRA is a good fit for the contract. If the decision has been made to move forward with the FPRA process, the contractor must include supporting documentation with the agreement. The supporting documentation must include pricing and cost data to support the details contained in the FPRA. However, if there is a significant change in the pricing or cost data that was submitted in support of the agreement, the contractor must submit those altered details to the contracting officer for review. This also includes any other variables that might affect the terms set in the agreement. If deemed necessary, changing conditions may require that a new FPRA be established. The contractor or the contracting officer also have the ability to cancel the agreement (Oyer, 2012).

The benefit for a government contractor utilizing an FPRA is that it can speed up the contract process especially when many contract proposals are involved. The FPRA allows for the opportunity for contractors to skip contract negotiations when an FPRA is already in place since rates have already been agreed upon (Manning, 2019). FPRAs can be risky if incorrect rates were estimated or if inflation is not accounted for. Close monitoring of the agreements and making changes when necessary can help reduce the risk involved.

References

Manning, B. (2019, February 1). Contracts and Legal: Forward Pricing Rate Agreements (FPRA). Retrieved from AcqNotes: http://acqnotes.com/acqnote/careerfields/forward-pricing-rate-agreements-fpra#:~:text=These%20rates%20are%20estimates%20of,audit%20or%20analyze%20the%20rates.&text=FPRAs%20are%20very%20useful%20for,volume%20of%20Government%20contract%20proposals.

Oyer, D. (2012). Cost-Based Pricing: A Guide for Government Contractors. Vienna, Virginia: Management Concepts. Retrieved from http://web.a.ebscohost.com.ezproxy1.apus.edu/ehost…