Detailed Report on FAR Requirements for Forward Pricing and Billing

This report provides an overview of the Federal Acquisition Regulation (FAR), focusing on its requirements for forward pricing, billing rates, and final overhead rates. The introduction defines the FAR and its role in governing the acquisition process within the United States government. The report then delves into the specifics of forward pricing rate agreements, outlining the procedures for negotiation, the roles of contracting officers and auditors, and the conditions included in such agreements. The report also examines the requirements for billing rates and final overhead rates, including the responsibilities of agencies in determining these rates, their use in contract reimbursement and progress payments, and the importance of compliance with relevant regulations. The report concludes with a list of references.

Running head: FAR REQUIREMENTS
FAR REQUIREMENTS
Name of the Student
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1FAR REQUIREMENTS
Table of Contents
Introduction......................................................................................................................................2
Requriements of Fowarding Pricing Rates Agreement...................................................................2
Requirements of Billing rates and Final Overhead Rates................................................................3
References........................................................................................................................................5

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Introduction
The FAR, which is the Federal Acquisition Regulation, are a set of principles and set of
rules in the Federal Acquisition System. In the given system, the acquisition process is governed
by the FAR System, which comprises of the executive agencies present in the United States who
engage in purchase or leasing of goods as well as services by way of contract and with adequate
funds (Farsite.hill.af.mil., 2018). The given report shall discuss the various requirements of the
given as per the Regulatory body:
Forward Pricing Rates
Billing rates
Final Overhead Rates
Requirements of Forwarding Pricing Rates Agreement
The negotiation of forward pricing rate agreements has to be requested by the officer who
is in a contracting position. The administrative contracting officer should consider the
benefits as well as the costs derived from agreement it is generally sated that they should
negotiate only with certain contractors having previous experience and sufficient orders
by the government.
The officer requires the whole proposal and then invites the particular auditor to
participate in the move and indulge in negotiation with the government move. Only those
parties with maximum experience are chosen (Hull & Basu, 2016). A memorandum is
then prepared. The copies are distributed to all.
The forwarding price agreements tend to provide the conditions with areas like expiration
and data requirements enclosed. When the given is invalided, the contractor tends to

3FAR REQUIREMENTS
submit and negotiate a new proposal to make the given changes. The contracting officer
has the power to make the relevant changes to the Agreement of Forwarding Rates.
Requirements of Billing rates and Final Overhead Rates
The first requirement states that a single agency will be responsible for the determination
of the final indirect cost rates for a particular business unit. It had also been stated that the
agency would not be performing the audit of the indirect costs in cases where the
objectives can be met by accepting the results of an audit, which was previously
conducted by another department (Regulation, 2014).
The second requirement states that the final indirect cost rates and billing rates will be
utilized in the re-imbursement procedure of contracts as well as indirect costs. It shall
also be used determining the progress payments, which come under the fixed price
contracts.
In order to make sure that compliance is made with 10 U.S.C. 2324(a) and 41 U.S.C.
4303(a) the final indirect cost rates shall be utilized for the contract closeout with respect
to a business unit. The particular rate shall be the final and bind for all re-imbursement
contracts in the company. These rates shall also be utilized in negotiation of the final
price with respect to the final price re-determinable and incentive contracts
(Acquisition.gov. ,2018).
It also states that a proposal shall not be taken into consideration unless it has been
certified by the contractor. The agency can also waive the requirement of the certification
in cases where it is considered alright in the interest of the United States
The same contracting officer who is under the responsibility of establishing the final
indirect costs rates shall determine the billing rates as well.

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The billing rates will be established based on the information that has been observed from
past audits, recent views and other relevant experience. He must ensure that all the billing
rates are closer to the final indirect cost rate for the given fiscal period.
It has been stated that these rates may be revised by the mutual agreement of the
contracting officer.

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References
Acquisition.gov. (2018). Subpart 42.17—Forward Pricing Rate Agreements. Acquisition.gov.
Retrieved 19 January 2018, from https://www.acquisition.gov/far/html/Subpart
%2042_17.html
Farsite.hill.af.mil. (2018). FAR -- Part 31 Contract Cost Principles and
Procedures. Farsite.hill.af.mil. Retrieved 19 January 2018, from
http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/far/31.htm
Hull, J. C., & Basu, S. (2016). Options, futures, and other derivatives. Pearson Education India.
Regulation, F. A. (2014). 15.4—Contract Pricing. Acquisition Central.