Is the contractor reducing indirect rates by proposing unrealistic business growth?
Business growth may decrease a contractor s proposal by decreasing the indirect rates. Speculation of growth is not enough to substantiate a change in rates. Business growth estimates should be based on actual awards to the company, actual awards to a prime contractor with which the company has a binding contract, or the prospect of contracts where the company has a history of sole source procurements. Further, historical data may be used to determine if there is a trend toward business growth or decline. The best step a firm can take to ensure that its projected business growth will be deemed realistic is to include as much detail as possible. The firm should show that it has carefully considered the probability of growth and the impact growth will have on indirect rates. • What role does an FPRA play in cost realism? An FPRA can be used to evaluate cost realism. In some cases, the solicitation will specifically state that a FPRA will be used in the evaluation. When reviewing rates, t
