DCAA INCURRED COST PROPOSALS & ICE SUBMISSIONS

WHAT IS A DCAA INCURRED COST SUBMISSION?

A DCAA Incurred Cost Submission (also called an Incurred Cost Proposal or ICE Submission) is an annual report required for federal contractors performing cost-type or time-and-materials contracts. The submission reconciles the actual indirect costs incurred during the fiscal year with the provisional rates used to bill the government throughout the year.

Per FAR 52.216-7, contractors must submit their incurred cost proposal within six months of the end of their fiscal year. For contractors with a December 31 fiscal year end, this means the submission is due June 30th.

The submission is typically prepared using the DCAA ICE (Incurred Cost Electronically) model, which includes multiple schedules reconciling financial statements, job cost reports, billed costs, and indirect rate calculations.

To learn more about Incurred Cost Proposals, tips on the DCAA's ICE schedules, and how different government agencies handle their own version of an incurred cost proposal, read our blog: Incurred Cost Proposal Overview and FAQ for Government Contractors.

WHO MUST SUBMIT AN INCURRED COST PROPOSAL?

Cost type contracts and T&M contracts with cost elements are required to have an ICP/DCAA ICE Submission because a government contractor uses their provisional billing rates to determine the indirect cost rates that they can charge the Federal Government throughout the fiscal year. However, as estimated budget amounts are used to calculate the company’s provisional rates, the actual rates are often going to differ from the estimates made throughout the year. Thus, the purpose of the Incurred Cost Proposal is to “true up” the actual indirect costs to the indirect costs that were provisionally billed throughout the year (i.e. the Federal Government wants to make sure they are paying their fair share of your indirect costs, and not a penny more). When the contractor then submits the ICE/their incurred cost proposal, this determines their (final) actual indirect cost rates incurred. These rates are then compared to what was billed, and the contractor may end up owing the government money to “settle” the contract for the year (the government may also owe YOU money, so there is another incentive beyond compliance). 

WHAT IS THE DCAA INCURRED COST ELECTRONICALLY (ICE) MODEL?

ICE MODEL SCHEDULES OVERVIEW

The Workbook’s Table of Contents (TOC) is linked to all Schedules. Schedules A through O are generally the required schedules for the incurred cost proposal however, depending on your accounting practices you may not need all schedules (i.e., if your company does not have any intermediate pools then you will not be completing Schedule D since this schedule is used to provide details of intermediate pool costs). Here are the required schedules:

• Schedule A – Summary of all Claimed Indirect Rates
• Schedule B – General and Administrative (G&A) Expenses (Final Indirect Cost Pool)
  • You will enter your G&A data from your accounting data into this schedule. You will also enter your unallowable expense. The adjustment column is to reverse out the unallowable amounts.

• Schedule C – Overhead Expenses (Final Indirect Cost Pool)
• Fringe – Fringe Pool
• Schedule E – Claimed Allocation Bases by element of cost used to distribute indirect costs
• Schedule G – Reconciliation of Books of Account and Claimed Direct Costs
• Summary Sched H – Summary Schedule H of Direct Contract/Subcontract/IR&D/B&P
• Schedule H – Schedule of Direct Costs by Contract/Subcontract and Indirect Expense Applied at Claimed Rates
  • On this schedule you will list all of your contracts by contract type. Here you enter all of your contract costs by Labor, Travel, Materials, ODC and Subcontracts.
• Schedule H-1 – Subsidiary Schedule of Government Participation Percentages
• Schedule I – Schedule of Cumulative Direct and Indirect Costs Claimed and Billed by Contract and Subcontract
  • This is the reconciliation schedule the DCAA uses when they are closing your contracts. It is vital that prior year data be carried forward correctly and all costs are tracked on this schedule correctly.
  • This schedule must tie out to Schedule H.
• Schedule J – Subcontract Information
• Schedule K – Summary of Hours and Amounts on Time and Material/Labor Hour Contracts
  • This schedule is only required if you have contracts that were T&M or Labor Hour
• Schedule L – Reconciliation of Total Payroll per IRS Form 941 to Total Labor Costs Distribution
• Schedule M – Listing of Decision/Agreements, or Approvals Affecting Direct/Indirect Costs and Description of Accounting or Organization Changes
• Schedule N – Certification of Final Indirect Costs
• Schedule O – Schedule of Contract Closing Information for those Contract which Work Effort was Completed
  
  
  To learn more about the ICE Model, visit our blog: Incurred Cost Proposal Overview and FAQ for Contractors.
  
  
  
  

INCURRED COST SUBMISSION TRAINING

Although we typically only offer ICE prep and submission support to our clients or other contractors on an as-needed basis, ReliAscent's experts can also provide Incurred Cost Submission training services to companies and their accounting departments. In most cases, this involves a review of the accounting system to determine gaps in DCAA compliance, and may require personnel travel to your facility.

More often than not, issues with Incurred Cost Proposals are due to misunderstandings or discrepancies with how labor flows. Common Incurred Cost Proposal Training topics and steps covered include:

• Making sure the ICP ties out to the independent rate calculation
• Making sure all tabs tie back to the income statement (through Schedule H)
• Making sure schedule H ties to COGS
• Making sure schedule I billed ties to invoicing
• Making sure schedule I total claimed costs match job cost reports
• Making sure schedule K (if applicable) ties to hours and costs for T&M projects
• Making sure schedule L is reconciled and has appropriate adjustments listed

Reviewing the Accounting System for proper ICP preparation and submission:

• The accounting system must be reviewed for DCAA compliance
• Labor Distribution process must match timekeeping
• The system must have proper job costing
• The system must have proper accrual accounting
• The system must have a proper way of identifying and segregating unallowable costs

To learn more about our ICP training and support services, contact us today.

To learn more about preparing and submitting your ICP / ICE, visit the following pages:

INCURRED COST PROPOSAL PREPARATION

INCURRED COST SUBMISSION

DCAA ICE AUDITS

HOW TO START AN INCURRED COST PROPOSAL

It’s never too early to get a head start! There are a number of ways you can be proactive:

• Call ReliAscent® today at 303-999-3808 (or email our Marketing Director at tlink<at>reliascent.com).
• Download and review any of our free ICE checklists and white papers found on our ICE and White Papers library.
• Send us an email that includes some basic information: your company's size, number of employees, number of government jobs and type of contracts, the type of accounting software you use, whether or not you did provisional rates last year, and the type of rate structure you've used in the past (1, 2 or 3 rate system).

INCURRED COST PROPOSAL RESOURCES