Forward Pricing Rate Proposal Audit

Scope

Examines proposed indirect cost rates including overhead, general and administrative (G&A), fringe benefits, material handling, and facilities capital cost of money. Reviews the contractor's rate development methodology, projected cost pool compositions, allocation bases, and assumptions about business volume changes.

Frequency

Annually or when the contractor submits new forward pricing rate proposals. Contractors with active government contracts typically submit rate proposals covering a 3-5 year forward period. DCAA schedules these audits based on risk assessment and significance of government business.

What to Expect

Auditors analyze each proposed rate by examining historical costs, projected changes, and the reasonableness of assumptions. They compare proposed rates against historical trends and question significant variances. The audit results in recommended rates that the contracting officer uses in negotiations. The process typically takes 3-6 months.

Key Documents

• Forward Pricing Rate Proposal (contractor-prepared)
• Basis of Estimate documentation
• Historical indirect cost data (3+ years)
• Projected business base and volume forecasts
• Pending rate adjustment explanations

Other pre-award Audits

Other DCAA Audit Types