Incurred Cost
Incurred cost submissions that are adequate on the first pass.
Due six months after your fiscal year end under FAR 52.216-7. We prepare the full ICE model so the schedules tie, the rates are supportable, and it does not come back as inadequate.
- 12 years inside DCAA
- 100+ DoD contractors audited
- CPA led
- QuickBooks, Costpoint, SAP & NetSuite
- Remote, nationwide
Incurred cost submission due date, and what is due
If you hold cost-reimbursable or T&M contracts with the Allowable Cost and Payment clause at FAR 52.216-7, you owe the government a final indirect cost rate proposal within six months after the end of your fiscal year. For a December 31 year end, that is June 30.
The submission is commonly prepared using the DCAA ICE model, a linked set of schedules running from A through to the supplemental schedules. The schedules have to reconcile to each other and to your financial statements. In practice this is where most submissions fail, not on the underlying cost.
An inadequate submission gets returned, and the clock does not stop. Chronically late or inadequate submissions can lead to unilateral rate determinations by the contracting officer, which are rarely in your favor, and in serious cases to withheld payments.
What we deliver
The complete ICE model
Schedules A through O and the supplemental schedules, internally consistent and reconciled to your trial balance and financial statements.
Indirect rate computation
Final fringe, overhead, and G&A rates computed on your actual cost, with the pools and bases documented and consistent with your disclosed practices.
Unallowable cost review
A FAR 31.205 review of your accounts to identify and remove unallowables before submission, rather than having an auditor find them for you.
Provisional rate true-up
The reconciliation of what you billed at provisional rates against final actuals, so you know your cumulative position before the government tells you.
Contract close-out support
Identification of contracts ready to close and the schedules needed to close them, which is where a lot of aging receivable quietly sits.
Audit-ready workpapers
The support behind every number, organized the way an auditor will ask for it, because the submission is only the beginning of the conversation.
How we work an ICE engagement
Data gathering and reconciliation
Trial balance, contract briefs, billing history, and payroll. We reconcile first, because everything downstream depends on it.
Pool and base construction
We build the indirect cost pools and allocation bases from your actual structure and confirm they match your disclosed and consistently applied practice.
Unallowable screening
A cost principle review across the accounts most likely to carry unallowables.
Schedule preparation
The full ICE model, with cross-schedule ties checked rather than assumed.
Submission and audit support
We submit, and we stay on for the audit that may follow, including the data requests and findings.
Price
What an incurred cost submission costs
An incurred cost submission starts at $4,000 the first year and $2,500 in later years, for 1 to 3 contracts when the year’s books are already closed and reconciled.
The first year costs more because we build the pools, bases and schedule ties from scratch. After that, we update them. If the year’s books need cleanup first, we quote that separately. That remedial work, not the schedules, is what usually makes a late or messy submission expensive, and it is the practical case for keeping the books current every month. Our GovCon monthly accounting starts at $800 a month, with the submission quoted separately.
Audit support after you submit bills at $160 an hour, with a not-to-exceed cap agreed in advance. We reply to every inquiry within one business day and send a written proposal within two business days after the intro call. Project work starts within five business days of a signed engagement. All GovCon prices are on our pricing page.
The Schedules
What is actually in an ICE submission
DCAA publishes a model Incurred Cost Electronically package. The schedules are interlocking: change a number in one and several others have to move with it. This is where most inadequacy findings come from, not from the underlying cost.
Not every schedule applies to every contractor. What matters is that the ones that do apply are present, internally consistent, and traceable back to your general ledger. A submission missing Schedule L, or with a Schedule G that does not actually reconcile, will be returned regardless of how carefully the pools were built.
| Schedule | What it contains |
|---|---|
| A | Summary of claimed indirect expense rates for the fiscal year. The headline output everything else supports. |
| B | General and administrative expense pool, account by account. |
| C | Overhead expense pool. Multiple schedules where you run multiple overhead pools. |
| D | Occupancy or facilities expense, where you allocate it as an intermediate pool. |
| E | Claimed allocation bases, tying each pool to the base it is spread over. |
| F | Facilities capital cost of money, if you are claiming it. |
| G | Reconciliation of the books of account to the claimed cost. Auditors go here early. |
| H | Direct cost by contract with indirect expense applied at claimed rates. Usually the largest schedule. |
| H-1 | Government participation in each indirect expense pool. |
| I | Cumulative direct and indirect cost claimed versus billed, by contract. |
| J | Subcontract information, including type and value of subcontracts awarded. |
| K | Hours and amounts on time-and-materials and labor-hour contracts. |
| L | Reconciliation of total payroll per the payroll returns to total labor distribution. |
| M | Accounting or organizational changes, and decisions or agreements affecting the year. |
| N | Certificate of final indirect costs, signed by an authorized official. |
| O | Contract closing information for contracts ready to be closed out. |
Adequacy
What gets a submission returned as inadequate
Adequacy is largely a completeness and internal-consistency test, applied before anyone examines whether your cost is allowable. These are the failures we saw most often from the government side.
Schedules that do not tie to each other
The rates on Schedule A do not agree with the pools and bases on B, C, and E. This is the single most common reason a package comes back, and it is entirely preventable by checking the ties rather than assuming the spreadsheet handled it.
No reconciliation to the financial statements
Schedule G has to bridge from your books to the claimed cost, with every reconciling item explained. A bridge with an unexplained plug in it invites a much deeper look at everything else.
Missing supplemental schedules
Executive compensation detail, the listing of decisions and agreements, and the payroll reconciliation are frequently left out. Their absence signals a rushed package and slows everything down.
Unallowable cost still sitting in the pools
FAR 31.205 unallowables left in G&A or overhead do more than get questioned. They raise a fair question about whether your screening process works at all, which widens the audit.
An unsigned or improperly signed certificate
Schedule N must be signed by an individual with authority to bind the company. An unsigned certificate makes the submission incomplete on its face.
Rates that cannot be traced
If an auditor cannot follow a claimed rate from the general ledger through the pool and base to Schedule A without asking you to explain it, the package is not adequate yet.
Consequences
What happens if you file late, or not at all
Missing the six-month deadline is more consequential than most contractors expect, and the consequences compound rather than sitting still.
The contracting officer may establish indirect cost rates unilaterally. These are determined without your input and are generally set conservatively, which in practice means lower than the rates you would have claimed. They then apply to your billings.
Beyond that, payments can be withheld, contract close-outs stall, and a pattern of late filing affects how your business systems are viewed generally. It also colors the relationship with your contracting officer at exactly the moment you may need goodwill on something else.
If you are already behind, the answer is not to wait until you can do it perfectly. It is to get defensible submissions filed for the open years and re-establish a track record. We have taken contractors through several back years at once, and it is a solvable problem.
- Unilateral rate determinations by the contracting officer, typically unfavorable
- Withheld or suspended payments on cost-reimbursable billings
- Contract close-out delays that tie up retainage and final payments
- Increased audit scrutiny across your other business systems
- A weaker negotiating position on everything else in front of that contracting officer
Questions
Frequently asked
Is there an incurred cost submission template?
Yes. DCAA publishes the ICE model, a free Excel workbook with the standard schedules, on dcaa.mil. You are not required to use it, but it is the format DCAA expects and the fastest way through an adequacy review. Our incurred cost submission guide explains each schedule.
Which FAR clause requires an incurred cost submission?
FAR 52.216-7, Allowable Cost and Payment. Paragraph (d)(2) requires the final indirect cost rate proposal within six months after your fiscal year end and lists what it must contain.
When exactly is our submission due?
Six months after your fiscal year end. December 31 year end means June 30. Extensions must be requested in writing from the cognizant contracting officer before the deadline passes, and they are not automatic.
What happens if we are late or have never filed?
This is more common than you would think and it is fixable. We have taken contractors through multiple back years. The priority is getting a defensible submission in and re-establishing credibility with the contracting officer before unilateral rates get set.
What makes a submission “inadequate”?
Most often schedules that do not reconcile, missing supplemental schedules, rates that cannot be traced to the books, or unallowable cost left in the pools. Adequacy is largely a completeness and internal consistency test, which is why careful preparation matters so much.
Will we be audited on it?
Not necessarily. DCAA applies risk criteria and sampling, and many submissions are accepted without a full audit. You should still prepare as though you will be audited, because the workpapers are the difference between a smooth audit and a painful one.
Can you do multiple years at once?
Yes, and if you are behind, that is usually the right approach so the rate history is consistent across years.
How much does an incurred cost submission cost?
Ours starts at $4,000 the first year and $2,500 in later years for 1 to 3 contracts with closed, reconciled books. Cleanup is quoted separately, and audit support after you submit is $160 an hour with a not-to-exceed cap.
More
Related services
Guide: incurred cost submission
Due date, every ICE model schedule from A to O, how to submit, and what makes a submission inadequate.
DCAA-compliant accounting systems
Design, configure, and document a system that meets DFARS 252.242-7006 and survives a system review.
SF 1408 pre-award surveys
Get your accounting system judged adequate so you can accept a cost-type award.
Indirect cost rate structures
Pool design, allocation bases, provisional billing rates, and the annual true-up.
Contract pricing & proposal support
Cost volumes and basis of estimate for FFP, cost-reimbursable, and T&M solicitations.
Government audit support
Preparation and representation for DCAA and DCMA audits and buying command cost analysis.
Forward pricing rates (FPRP & FPRA)
Forward pricing rate proposals and agreements so every future bid prices faster and with less argument.
CAS Disclosure Statements
Form CASB DS-1 preparation, cost impact analysis, and disclosed practice compliance.
Post-award & business system reviews
DFARS 252.242-7006 reviews, material weaknesses, payment withholding, and corrective action.
Terminations, REAs & claims
Termination settlement proposals and requests for equitable adjustment. Frequently underclaimed.
Have an incurred cost submission due?
Tell us your fiscal year end and where you are in the process. If you are behind on prior years, say so; it is a solvable problem and we have done it before.