Hello -

I am currently preparing for negotiations with a large defense contractor for the next phase of my CPFF contract.  Certified cost or pricing data will not be required.  There is no FPRA on file for this contractor, but DCMA has provided me with a FPRR.  There have been multiple iterations of the FPRR from the time the contractor first submitted their FPRP to now.  The contractor wishes to negotiate.  My question is:   is there anything that requires the contractor to be bound by an FPRR?  The only thing in the FAR I found is  41.1701(d) which states "If an FPRA has not been established or has been invalidated, the ACO will issue a forward pricing rate recommendation (FPRR) to buying activities with documentation to assist negotiators."

Thus, how would you go about getting the contractor to accept the FPRR vs their FPRP that they submitted?  

Thanks in advance for your input!   

1 hour ago, tranceaddict said:

My question is:   is there anything that requires the contractor to be bound by an FPRR? [Forward Pricing Rate Recommendation]

No. So you'll have to fact-find, develop an objective, and then negotiate.

Thanks for the input Vern!

When I (a contractor) and the government cannot reach agreement on an FPRA, I use my FPRP rates as my bid rates. The government counters with its FPRR rates. Often, negotiations are challenging because, if we could have reached agreement earlier, I would already have an FPRA. 

You are negotiated estimated contract cost. Actual allowable costs will be actual costs and will be billed, sooner or later (see 52.216-7). Insistence on using rates that are lower than the contractor expects generally leads to a request for additional funding IAW 52.232-20 or -22.

If you want to check the validity of the contractor's position, ask for an analysis that compares FPRP rates submitted versus actual costs submitted in the certified final billing rate proposal for the past three years. If the contractor is not accurately forecasting future costs, you can use the FPPR rates with confidence. However, if the contractor shows a good track record in being able to forecast future costs (and associated indirect rates), then you may want to believe it this time around.

here_2_help, I appreciate your voice of common sense.  The negotiation is not for the amount the Government will pay, but rather is only a negotiation to established agreement on an estimated cost -- actual costs, including indirect costs, will be established and settled later.

1 hour ago, here_2_help said:

If you want to check the validity of the contractor's position, ask for an analysis that compares FPRP rates submitted versus actual costs submitted in the certified final billing rate proposal for the past three years. If the contractor is not accurately forecasting future costs, you can use the FPPR rates with confidence. However, if the contractor shows a good track record in being able to forecast future costs (and associated indirect rates), then you may want to believe it this time around.

Since the OP appears to be with DOD, they might want to discuss DFARS PGI 215.406-1(b) with their supervisor. H2H's post might be interpreted to mean that the CO has discretion to negotiate a rate higher than the FPRR. That might not be the case in all offices at all times.

ACOs and auditors can be touchy about agreements and object to those, including agreements about billing rates, that exceed their recommendations. While the CO has the final say on paper, that might not be the case in fact.

4 hours ago, Vern Edwards said:

Since the OP appears to be with DOD, they might want to discuss DFARS PGI 215.406-1(b) with their supervisor. H2H's post might be interpreted to mean that the CO has discretion to negotiate a rate higher than the FPRR. That might not be the case in all offices at all times.

ACOs and auditors can be touchy about agreements and object to those, including agreements about billing rates, that exceed their recommendations. While the CO has the final say on paper, that might not be the case in fact.

Yes, that's the voice of experience. I hear you.