It's Time to Prepare Your Provisional Billing Rate (PBR) Submission: What Federal Contractors Need to Know

If you’re a federal contractor working under cost-type contracts, you already know that accurate billing is critical. One of the key tools in ensuring accurate and compliant interim payments is the Provisional Billing Rate (PBR).

At deClermont Consulting, we help contractors prepare supportable, compliant PBR submissions that keep payments flowing and withstand auditor scrutiny. Don’t risk delays—let our team guide you through the process.

What Are PBRs?

Provisional Billing Rates are temporary indirect rates established to approximate a contractor’s final year-end rates (adjusted for unallowable costs). They allow contractors to receive interim reimbursement for indirect costs while ensuring that billing remains reasonable and reconcilable.

Why Do They Matter?

• Without properly established billing rates, vouchers and progress payments may be rejected.

• An adequate accounting system must support billings that reconcile with cost accounts—PBRs help meet that standard.

• They keep cash flow steady until final indirect rates are settled at year-end.

• FAR 42.704 – Billing Rates governs the procedures.

How Are They Established?

• By the contracting officer or the Defense Contract Audit Agency (DCAA), based on prior audits, recent reviews, or reliable cost data.

• Contractors can (and should) submit a billing rate proposal with calculations and supporting documentation to assist in establishing accurate rates.

• PBRs must be monitored and can be adjusted throughout the year to prevent over- or under-billing.

What Should a PBR Proposal Include?

• The basis for the calculations of the rates proposed:

  • Calculations for pool and base, with rationale.

  • Prior fiscal year pool and base.

  • Current year-to-date pool and base.

  • Current fiscal year budget pool and base (if available).

  • Comparative analysis with explanations for significant variances.

When Should PBRs Be Submitted?

• Before the start of the fiscal year (once budgets are complete).

• Anytime the established billing rates are no longer representative of actuals due to unforeseen events.

• At least annually.

Common Pitfalls

• Failing to remove unallowable costs.

• Not adjusting rates when actuals deviate significantly.

• Submitting late or incomplete proposals.

How DCAA Reviews PBRs

The Defense Contract Audit Agency may compare proposed pools and bases to prior years, request supporting data for certain accounts, review audit trends for questioned costs, and ensure unallowables are excluded.

⚡ PBR Cheat Sheet for Contractors

• Purpose: Interim reimbursement of indirect costs until final rates are settled.

• Authority: FAR 42.704 – Billing Rates.

• When to Submit: Prior to fiscal year start, or when rates no longer reflect actuals.

• What to Include: Pool/base calculations, budgets, prior/current year data, explanations for differences.

• Who Reviews: DCAA or the Administrative Contracting Officer.

• Key Tip: Adjust rates during the y

  ear to prevent over/under billing.

• Watch Out For: Unallowable costs and lack of timely updates.

At deClermont Consulting, we help contractors prepare supportable, compliant PBR submissions that keep payments flowing and withstand auditor scrutiny. Don’t risk delays—let our team guide you through the process.