I have heard and seen this several times but have yet to find a specific reference which identifies the issue. When a contractor, working under an agreed upon FPRA, is to issue a credit for deleted work, which rate is to be used? The work item was bid under the old FPRA rates and we are under new rates now. I have always been told to use the current rates, however nobody can seem to show me instruction for the reasoning behind this.
See FAR 15.408 Table 15-2, "Instructions for Submitting Cost/Price Proposals When Certified Cost or Pricing Data Are Required", section III. "Formats for Submission of Line Item Summaries", Table B "Change Orders, Modifications, and Claims." This is the format that applies for the contractor's modification (equitable adjustment) proposal if certified cost or pricing data is required, unless the contracting officer allowed another format. Notice the instructions for column II, "Estimated Costs of all Work Deleted" instructors the contractor to use "the current estimates of what the cost would have been to complete the deleted work not yet performed (not the original proposal estimates), and the cost of deleted work already performed." This makes clear that current, not proposed, rates are to be used.
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The answer to your question, then, will depend on when the work have been performed had it not been deleted and which FPRA would have been in effect during that time period. If the work would have been performed in FY12 then the rates agreed to under the FPRA for that FY would apply. Conversely, if the work would have been performed in FY13 then the rates agreed to under the FPRA for FY13 would apply. Looking at the information provided in the question's background, it appears that the contractor bid the work in FY12 under the FY12 FPRA. However and for whatever reason, the work is actually going to be performed in FY13. FAR Subpart 15.407-3(b) states that CO/KO will use FPRA rates as bases for pricing all contracts, modifications, and other contractual actions to be performed during the period covered by the agreement. DFARS 215.407-3(b)(i) further states that FPRA rates should be used when available unless waived on a case-by-case basis by HCA. If the deleted work to be performed would have occurred in FY13 and the FY13 FPRA would have been in effect during that time period then the FY13 FPRA rates are applicable. This is assuming that the HCA had not waived FY13 FPRA rates. Since we do not have all of the facts particular to your contract, program, and situation, we highly recommend that you consult with your Contracting Officer and Legal Office for further guidance.