Removing the Mystery of Incurred Cost Submissions

If you’re new to government contracting, the process of preparing an Incurred Cost Submission may seem daunting. Even to government contracting veterans, the thought of preparing an Incurred Cost Submission can make even the very bravest of souls feel a little weak in the knees.

We’re here to let you know that there’s no need to worry! With a little knowledge and planning, the preparation for an Incurred Cost Submission can easily become part of your everyday accounting processes.

Let’s start with the basics.

What is an Incurred Cost Submission?

An Incurred Cost Submission—aka, Incurred Cost Electronically (ICE):

  • Is a formal proposal to the government of your indirect cost claim for your fiscal year
  • Provides direct costs by contract and task to the government
  • Serves as the basis for final indirect rate determination

Who needs to file?

In general, if you have prime contract with the FAR “Allowable Cost and Payment” Clause 52.216-7 or you are a subcontractor with flow-down provisions from the prime contractor, you will need to complete an Incurred Cost Submission. 

It is important to read your contracts to understand whether or not you need to file.

A common misnomer is that only contractors with CPFF contracts need to file, but it’s important to understand that is not the case.  Unsure if this means you? We can help you determine whether or not you need to file.

What can I do to prepare?

When it comes to getting your ICE ready, you can never be too prepared. Here are a few tips that have helped our clients get all their ICE ducks in a row.

  1. Ensure that your accounting system is set up to properly accumulate costs and reflect all data required on the ICE. If you need to improve your current accounting system or implement a new accounting system we’re here to help.

  2. Reconcile books and records each month and year end to ensure your data is accurate and up to date.

  3. Incorporate embedded software reporting tools to automate schedule preparation. For example, our clients have found that the Defense Contract Audit Agency (DCAA) reporting section within Deltek GCS is quite helpful.
     
  4. To make the submission process run smoother, use the user-friendly ICE model provided by the DCAA.  
     
  5. Maintain and organize the supporting documentation that was used to prepare your ICE so that, if audited, all supporting documentation is readily available.

Important tips our clients need to know

In addition to careful preparation, we’ve compiled a list of some of the most important takeaways you’ll want to keep in mind before, during, and after you’ve submitted your incurred cost.

  • Running behind? Extensions may be granted in writing by the Authorizing Contracting Officer (ACO). The ACO is assigned by the government to be your company’s representative for all contracts. DCAA does not grant extensions.
     
  • Keep detailed notes! Any change in rate structure must be noted and explained in the submission.
     
  • Working on the GSA schedule? Good news—you don’t need to prepare ICE if all work is done on the GSA schedule.
     
  • Have any questions about ICE? You can find guidance at FAR 42.705.
     
  • Ready to send? Your ICE must be submitted:
     
    • Within six months of the end of the company’s fiscal year.
    • To your ACO and DCAA.
    • With a completed certificate of final indirect costs (this is schedule N in the ICE model).

While it’s important to know as much as you can about Incurred Cost Submissions, we’re more than happy to guide you through at any point along the way—don’t hesitate to reach out