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    Is using FAR 15.408, a mispplication of the FAR when used in connection with an initial Forward Price Rate Proposal? Is requiring the contractor to comply with any of the provisions of FAR 15.408 including Table 15-2 relative their FPRP inappropriate?


    Answer

    Great question since the preparation of a contractors proposal for an FPRA is an area of little guidance. Typically, the ACO will work with the contractor and determine the best approach and utilize a method that is not overly
    burdensome on the contractor.

    FAR 15.408 Table 15-2 is the approach required when a contractor is submitting a pricing proposal in response to an RFP using Contracting by Negotiation (Best Value) techniques, either tradeoff or lowest price technically
    acceptable, when cost or pricing data is required (FAR 15.403). The information would be very specific for the work being proposed and would include cost elements such as materials, labor, other direct costs, travel, etc., the basis of those estimates, and the data supporting those estimates. Indirect costs would be only one of the elements and would include trends and budgetary data to provide a basis for the proposed rates, the rates used in the proposal, and appropriate explanations (Table 15-2, II. C.). According to DCMA Instruction Folder Number: 41, Forward Pricing Rate Agreements, there is no prescribed approach for contractor preparation of FPRA proposals, but the options presented require much less than what would be required under FAR 15.408 Table 15-2 and requires different types of data. For example, under paragraph 5., the proposal review would include determining that the contractor's bases of estimates are reasonable; the supporting cost or pricing data are accurate, complete and current; the contractor's estimating practices comply with the contractor's disclosed or established cost accounting practices; projected business volume, allocation bases, and indirect costs are reasonable and in consonance with contractor and customer business projections; rate data are valid and correct; and, rate computations are mathematically correct. Requiring a contractor to comply with FAR 15.408 Table 15-2 in preparation of an FPRP is a misapplication of FAR 15.408.  It would also likely be overly burdensome on the contractor, and would not yield the type of data required for DCMA to evaluate the FPRP in accordance with DCMA's own procedures/instructions.

    I suggest you consult with your DMCA chain of command and/or policy office to
    ensure fairness and consistency in application of DCMA instructions.

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