Calculating SBIR Phase II Indirect Rates (Provisional Billing Rates)

Provisional Billing Rates & Calculating Indirect Rates for SBIR Proposals

Have you ever wondered what to put for your indirect rates in a proposal, or how to get monthly invoices approved on your new SBIR Phase II CPFF contract? The answer is Provisional Billing Rates, or PBRs for short. A PBR is simply the calculation of your projected indirect rates for the upcoming fiscal year, and it requires an estimated budget for 12 months.

If you have been awarded an SBIR Phase II, CPFF contract with a DoD agency, it is likely that you have FAR clause 42.704 in your contract (this is the FAR clause that requires provisional billing rates). Getting approved provisional billing rates allows you to invoice using those estimated indirect rates for the year, until you have established your final indirect rates. Each year, you will submit a new provisional billing rate request and use the new indirect rates for that year of invoicing.

Even if you don’t have the requirement to submit provisional billing rates, calculating your projected indirect rates can be extremely valuable to your company. If you submit cost proposals regularly, you should be including indirect rates. Some may use historical actual rates; some use safe or de minimis rates, and some use projected rates. If you are new to government proposals, you may not have historical rates to use, or they may not represent your fast-growing company in the next year. Taking the safe or de minimis rate seems like the easiest step to take in this situation, but without understanding your actual or projected rates, can create substantial cash flow difficulties for your company. To avoid disastrous impacts to your bottom line, creating a PBR can save you a lot of trouble and empower your strategic business decisions.

ReliAscent® can help you with your provisional billing rates, whether you need it to support the rates in your proposal or you need to establish those rates for invoicing. Annual PBRs for approved billing rates are typically due Jan 31 for that year. To help get started, we would need an income statement for the previous year, the previous year PBR, the cost proposal requesting support for indirect rates, or an established rate structure, if applicable.

The process for each service is relatively simple and can be completed in just 3-5 hours (in most cases). Small businesses simply provide the information listed above, sign an NDA and MSA, and pay a one-time, $1,500 retainer which we bill against and do not exceed without authorization (most businesses will have several hundred dollars remaining which can be used on other consulting services, or towards the setup of a DCAA compliant accounting system once the Ph II is awarded).

To learn more about our Provisional Billing Rates and Proposal Pricing services, contact us today! 


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