Provisional Billing Rates
If you haven't been monitoring your actual indirect costs thru the year, it is not too late to analyze and make an effort to control this before the end of the year. Why is this important? If you have a cost type contract with the Federal Government you will be required to do an Incurred Cost Report 6 months after the end of your fiscal year per FAR 42.705-1(b)(1)(ii). Assuming many companies have a December 31st year end, this means there are only a couple of months left to affect the final indirect cost rate. The contracting officer will then use the final indirect cost rate to adjust the billing on the contract if it differs from the provisional billing rate that the contractor used through the year. This could result in a loss of revenue that the contractor had received on the contract thru the year. By loss of revenue, it usually means that the government offsets these "over payments" against future invoices to the government or uses this in the calculation of the final contract closeout calculation of the contract.