As our CPA friends struggle with the avalanche of filings during “tax season,” our business has a similar and no less intense time of year called “ICP season.”
What's required? An ICP (incurred cost proposal) is typically required if you have a cost-plus or time and material/labor-hour contract. To know for sure, check your contract for the clause 52.2616-7(d)(2)(i) which states:
“The Contractor shall submit an adequate final indirect cost rate proposal (ICP) to the Contracting Officer (or cognizant Federal agency official) and auditor within the 6-month period following the expiration of each of its fiscal years.”
This report is critical for recovering costs under your cost-plus and time and material type contracts. It is also critical that you submit an accurate report and that you not knowingly submit costs explicitly deemed unallowable by FAR part 31. Doing so could expose you to penalties and suspicion of fraud, waste, and abuse.
What if I'm a subcontractor? While it is clear this report is required to be sent to the government for prime contractors, gray areas exist if you are a subcontractor to a prime contractor. In these cases, read your subcontract carefully to assess what your requirement is for reporting. If there’s any question, contact your prime contract subcontract administrator.
ICP deadline? ICPs are due 6 months after your prior fiscal year end, or typically June 30. Unlike filing your income or corporate taxes, there are no late fees or penalties if you miss the deadline. However, you must request an extension from your contracting officer and DCAA auditor.