Paragraph (d)(2) of the contract clause FAR 52.216-7 Allowable Cost and Payment specifies the mandatory and other data submitted as part of your Incurred Cost Proposal (ICP). The DCAA also publishes a guide that can be used to help prepare for your ICP/DCAA Incurred Cost Submission.

Incurred Cost Proposals can be complex and often confusing so ReliAscent provides expert incurred cost support.  Just like having a professional help you with your tax return, having a professional help with your ICE Submission can save you money in the long run.

Incurred Cost Proposal Support

An exhaustive explanation of how to produce your ICP is impractical in this space. However, there are a number of best practices that will insure an acceptable Incurred Cost Report:

  • Reconcile job costs (ICP Schedule H) to the general ledger
  • Reconcile total allowable costs calculated in the ICP to your P&L
  • Use an independent model to validate ICP indirect rate calculations

Aggressively screen all accounts for potential unallowable costs, bearing in mind these DCAA hot buttons:

  • Travel costs over Joint Travel Regulation per diem rates
  • Unapproved costs incurred beyond contract end dates or cost limits
  • Consulting or contract services not having an agreement in place
  • Subcontracts over $700,000 or having cost-reimbursable terms
  • Company parties, gifts, or souvenirs (including shorts with company logos)
  • Anything expressly deemed unallowable in FAR Part 31
  • Costs deemed unallowable should still be included in the appropriate base
  • Any otherwise allowable cost that doesn’t pass the laugh test, or as FAR 31.201-3 explains; “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person in the conduct of competitive business.

Costs deemed unallowable should still be included in the appropriate base. Use the latest DCAA checklist to make sure your ICP is acceptable for audit.

Remember: Start Early

Since the ICP is due to the DCAA and your contracting officer six months after your fiscal year ends, it’s always best to start the process early. There may be some adjustments or calculations that need to be performed by others (consultant or CPA) to update your financials. If you fall behind, “Reasonable extensions, for exceptional circumstances only, may be requested in writing by the Contractor and granted in writing by the Contracting Officer.” (ref: FAR 52.216-7(d)(2).)

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, for a free evaluation on Incurred Cost Support!
  • Download and review any of our free Incurred Cost checklists on this and our White Paper pages.
  • 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).