Forward Pricing Rates Agreements (FPRA) provide negotiated rates that represent reasonable projections for:

Forward Pricing Rates Agreements (FPRA) are critical in establishing the rates contractors will use in estimating future indirect costs, particularly for labor, overhead, and other indirect expenses when preparing proposals for government contracts. These agreements are negotiated between the contractor and the government before incurring the costs, ensuring that both parties have a mutual understanding of what the rates will be.

This forward-looking nature allows for predictable budgeting and cost controls, helping contractors to avoid disputes over indirect costs in final billing. By providing a framework for how indirect cost rates will be applied in future contract pricing, FPRA plays a key role in mitigating financial risk on both sides of the negotiation.

In contrast, the other options do not accurately capture the essence of what FPRA represents. Product pricing is more directly tied to the specific items being sold, while funding requests typically relate to the overall funding process rather than the specific rates being estimated for indirect costs. Cost overruns represent expenses that exceed the estimations and are not determined by FPRA, as they reflect actual costs rather than the projected rates established in advance. Thus, the focus of FPRA on projected rates for labor and indirect costs makes it the correct choice.