Forward Pricing (FPRP) — Controller Guide
Forward pricing is projecting your indirect rates into the future — what your fringe, overhead, and G&A rates will be next year and beyond — so you can price multi-year proposals and, where the volume warrants it, negotiate a Forward Pricing Rate Agreement (FPRA) with the government. This guide explains forward rates in plain terms, then walks the exact clicks in Arcvue to build a Forward Pricing Rate Proposal (FPRP), defend each number with a justification an auditor will accept, and submit it as a draft. It assumes you run a business but aren't a career government accountant.
For: controllers · Time: ~10 minutes · You'll need: the Accounting module and at least 12 complete months of posted actuals.
Left nav: Accounting → Compliance → Forward Pricing (/accounting/forward-pricing).
The page header reads Forward Pricing Rate Proposal (FPRP). It sits right
below Provisional Rates in the Compliance group, which is deliberate — you
develop your billing rate there and your forward rate here, off the same
actual history.
Part 1 — The ideas you need first (read once)
Three time-horizons of the same rates
You deal with indirect rates at three points in time, and it helps to keep them straight:
- Final (actual) rates — the past: what a completed year's costs actually produced (reported on the ICS, Schedule A).
- Provisional (billing) rates — the present: what you're billing at this year.
- Forward rates — the future: what you expect rates to be next year and beyond, used to price new work.
Forward pricing is about that third one. Arcvue keeps all three on the same pool/base foundation, so a forward number ties back to real history rather than a standalone spreadsheet.
Why forward rates matter
When you bid a multi-year proposal, you commit to prices for work you'll perform in future years — at future indirect rates. Bid too low a rate and you erode margin; too high and you lose the award. A defensible forward rate, grounded in your actual cost trend, is what lets you price competitively and stand behind the number when the contracting officer asks.
FPRP vs. FPRA / FPRR
- An FPRP (Forward Pricing Rate Proposal) is what you build and submit — your projected rates plus the reasoning behind each one. That's what this page produces.
- An FPRA (Forward Pricing Rate Agreement) is what you get when the government negotiates and agrees to those rates for a set period, so you're not re-justifying rates on every proposal. (A unilateral government-set version is an FPRR, a Forward Pricing Rate Recommendation.)
The FPRP is the on-ramp; everything starts with a well-supported proposal.
How Arcvue derives the forecast
Arcvue starts from your trailing-12-month actual indirect rates — the real pools and bases from your last 12 complete months — and, by default, flatly extrapolates that current rate forward across the horizon you choose. That's a deliberately conservative baseline: it assumes next year looks like the last twelve months unless you tell it otherwise.
When you know a future year will differ (a planned raise, a facility move, a hiring wave, a base shift), you enter a per-pool, per-fiscal-year adjustment in percentage points with a written justification. The forecast rate for that pool/year moves by exactly that adjustment, and the justification travels with the number into the DCAA submission packet — so the auditor sees precisely why each forward rate diverges from the flat baseline.
What Arcvue deliberately will not do
- It won't invent a forecast from nothing — the baseline is your own trailing-12 actuals, extrapolated flat.
- It won't let you record an adjustment without a reason — the save action on a row stays disabled until you type a justification.
- It won't move rates silently — every override is labeled override (vs. flat) in the table, and the narrative is preserved on the submitted proposal.
Part 2 — How to run it
Step 1 — Open the FPRP builder
In the left nav, go to Accounting → Compliance → Forward Pricing
(/accounting/forward-pricing). The page header reads Forward Pricing Rate
Proposal (FPRP), with the subtitle "Build a forward-pricing rate proposal
from trailing-12 actuals. Default is flat extrapolation of the current rate;
enter per-pool, per-FY adjustments with justification when the forecast should
diverge. Each row's justification ships in the DCAA submission packet."
Step 2 — Set the as-of date and horizon
At the top of the page is a small control row with two fields and two buttons:
- As of — a date picker, defaulting to today. This is the point from which the trailing-12-month window is measured; leave it on today unless you're reconstructing a proposal as of an earlier date.
- Horizon (years) — a number field, minimum 1, maximum 5, defaulting to 3. This is how many future fiscal years the proposal will cover. Pick the span your bids actually reach (typically the base year plus option years).
Step 3 — Compute the proposal
Click Compute proposal (the accent button; it reads Computing… while it runs). This is a preview — it calculates but does not save anything.
A table appears with one row per pool × fiscal year, with these columns:
- Pool — the indirect pool (fringe, overhead, G&A, and any others your structure defines).
- FY — the fiscal year being forecast.
- T-12 Base — the trailing-12-month actual rate for that pool (the baseline the forecast starts from).
- Adj (pp) — an editable field for your adjustment in percentage points (starts at each row's current adjustment, or 0).
- Forecast — the resulting projected rate (baseline plus any adjustment).
- Justification — an editable field for the reason behind an adjustment.
- Source — flat if the row is the plain flat extrapolation, or override once you've applied an adjustment.
If the table is empty and shows "No pools with sufficient history," the engine couldn't find enough actuals to extrapolate from. It needs posted pool costs and allocation-base activity (direct labor) in the last 12 complete months. Close out your recent months and confirm your pools are posting, then Compute again. (See the Period Close and Indirect Rates guides.)
Step 4 — Enter adjustments where the future differs
For any pool/year you expect to diverge from the flat baseline:
- In that row's Adj (pp) field, type the shift in percentage points (the field steps in 0.1 increments; use a negative number to lower the rate). The Forecast column reflects the change.
- In the same row's Justification field, type why — the placeholder reads "Why this adjustment? (required)." This text is your DCAA audit trail, so be specific ("3% merit increase effective Q1 FY next," "vacating the annex, overhead facilities drop").
- Click the row's save link at the far right. It stays disabled until the justification is non-empty — no reason, no save, by design. Saving persists the adjustment and re-computes the table, and the row's Source flips from flat to override.
Repeat for each pool/year that needs a documented departure from the baseline. Rows you leave alone stay on the conservative flat extrapolation.
Step 5 — Submit as a draft
When the forecast and every justification read the way you want, click Submit as draft (the success-colored button; it reads Submitting… while it runs).
This button is disabled until you've run Compute — you can't submit a proposal you haven't previewed. It saves the computed forecast (with your adjustments and narratives) as the tenant's filed FPRP.
After it submits, the Last submitted FPRP section appears (or refreshes) near the bottom of the page, listing each Pool, FY, the Proposed rate, and the Narrative (your justification text). That's your record of what was filed and the reasoning that accompanies it into the DCAA packet.
Step 6 — Download the DCAA package
Download DCAA package writes the submission as a workbook with two sheets. The first is the proposed rate matrix — pool down, fiscal year across — the numbers a negotiator quotes back at you. The second is the basis behind every one of them: the trailing-12 actual it started from, any adjustment in percentage points, the resulting rate, how it was derived and the written justification, with adjusted rows shaded because they are the first ones a reviewer turns to. A proposed rate without its basis is an assertion, not a submission, which is why the second sheet is the one that matters.
The button stays disabled until a computed proposal has rows. In the file, a pool-year with no proposed rate is left blank, never 0.0 — a zero rate would be a real, quotable number — and an adjusted rate with no recorded justification says so in its cell rather than leaving the one row a reviewer asks about empty.
Part 3 — When something looks wrong
| Symptom | What it means / what to do |
|---|---|
| "No pools with sufficient history" and an empty table | The engine has no trailing-12 actuals to extrapolate. It needs posted pool costs and direct-labor base activity in the last 12 complete months. Close recent months and verify pools are posting, then Compute proposal again. |
| A forecast rate jumps sharply off the trailing-12 baseline | Compare the Forecast to the T-12 Base in that row. If Source is override, an adjustment is driving it — read the Justification and confirm it's intended and defensible. If Source is flat, the baseline itself moved; trace it to the pool's actual rate (see the Indirect Rates guide). |
| The row's save link is grayed out and won't click | The Justification field is empty. Every saved adjustment requires a reason — type one and the save link enables. |
| The Submit as draft button is disabled | You haven't computed yet. Click Compute proposal first; Submit as draft enables once a preview exists. |
| My forward rate doesn't match what a proposal is bidding | They should be consistent. If a bid uses a different rate than your submitted FPRP, someone overrode it downstream — reconcile which is intended. Bidding off an unsupported rate is exactly the exposure forward pricing exists to prevent. |
| How is a forward rate different from my provisional rate? | Provisional is what you bill at this year (developed on Compliance → Provisional Rates); forward is what you expect for future years (this page). They legitimately differ — provisional reflects the current-year plan, forward reflects the projected trend. Don't use one where the other belongs. |
One-line summary
Open Accounting → Compliance → Forward Pricing, set your As of date and Horizon, click Compute proposal to flat-extrapolate your trailing-12 actuals, enter per-pool per-FY Adj (pp) with a required Justification and save each one, then Submit as draft and Download DCAA package — a defensible, per-row-justified FPRP that ties back to real history and ships its reasoning into the DCAA packet.
Related
- Watch computed-vs-provisional drift and file final rates → Indirect Rates
- Develop this year's billing rate → Provisional Rates
(
/accounting/rates/provisional) - Get your closed-year actuals solid first → Close a Month (Period Close)
- Deliverable lines on a pricing proposal (FP&A → Pricing → Deliverables: Line, Qty, Unit price, Extended, Unit cost, Gross profit, GP %; Manufacturer, Part number, Vendor part number, Unit of measure, CLIN (optional), List price ($), Discount (%), Cost basis (optional), Quote reference, Term (months), Service start, Service end) are burdened with material handling and G&A at the proposal's own snapshotted rates -- forward rates developed here do not re-price them
Starting a justification from the close
Each pool's row carries Use confirmed rate stories. Arcvue explains, on the close page, why each indirect rate moved month to month — the pool-cost effect and the base effect, with the entries cited — and the controller confirms or writes that explanation as each month closes. This control fills the justification field with those confirmed explanations for the last twelve months, newest first, so the forward-looking reason starts from what the books already said rather than from a blank line. It only fills the field: edit it into the reason for the adjustment, then press save as before. It is disabled for a pool that has no confirmed story yet; confirm them on the close page (Why the rates moved) as each month closes.