Incurred Cost Submissions Are Just Around the Corner – Are You Ready?

Written by Becky Ramsey, Senior Government Contracts Consultant

One of the requirements that government contractors face is the preparation of an Incurred Cost Submission.  Especially if you are new to government contracting, the thought of preparing this massive Excel workbook can make you feel a little shaky.  BMSS is here to help so have no fear.  Whether it be the first one, or, if you are a seasoned government contractor, we can show you how to plan and prepare using your everyday processes and procedures to simplify the preparation when the time comes for an on-time submission.

Also called the Incurred Cost Electronically (ICE) submission, every government contractor does not have a responsibility to submit an Incurred Cost Proposal.  It is important to read your contracts before signing them and if you don’t understand all the requirements, seek help from the BMSS Government Contracts Group.  We can help you determine whether or not you need to file.

The requirement for the ICE comes from FAR part 52.216-7 Allowable Cost and Payment clause.  This clause can be found in a prime contract or it may be a flow-down clause if you are a subcontractor.  If this clause is in your contract, you are required to submit an ICE.  This is an annual requirement with the submission due six months after your fiscal year (FY) ends.  If all of your work is done on GSA schedules, you do not need to prepare an ICE.

The purpose of the ICE is to provide a formal indirect cost proposal to the government for costs that occurred in the previous year.  The government will review your proposal (also referred to as your claim) to make sure all the proposed costs in your claim are allowable and reimbursable.  Also included in your ICE are your direct costs by contract which serve as the basis for a final indirect rate determination.

The BMSS Government Contracts Group can help you establish best practices that will make the annual preparation of the ICE much easier.  This starts with setting up your accounting system with a chart of accounts conducive to collecting costs in an acceptable way for government contractors.  A government contractor’s accounting system must accumulate costs and other data so that the many worksheets within the ICE workbook can be completed.  Not every accounting software package will work for government contractors, but BMSS can help you find the one that works best for your company.

Next, BMSS can help you establish good Accounting and Contracts Management procedures.  From an accounting perspective, these procedures describe your methods of putting data into your accounting system.  Then, once there, how to reconcile your data for accuracy.  By doing this monthly, you can catch errors and make corrections quickly.  Putting in the work now to ensure your data is accurate and up-to-date will save you a lot of time when it comes to closing your fiscal year and preparing your ICE schedules.

From a contracts perspective, it is not only the law, but also very helpful when it comes to the ICE preparation, to have well-maintained and organized contracts files.  The supporting documentation that is used to prepare the ICE should be complete and easy to find.  Should your ICE be audited by DCAA, all contracts and supporting documentation should be readily available.

Last, if there is a need to change your company’s rate structure, remember, major changes like this are best started in a new fiscal year.  If it must be done during the fiscal year, keep a detailed explanation of what has changed and why the change was made.  Those will be used in your ICE submission.

If you follow these proven best practices, you will have the best opportunity for a successful, on-time ICE submission.  The ICE must be submitted to your ACO and DCAA within six months of your FY ending.  But, if you find yourself in a jam and just can’t get it done, reach out to the BMSS Government Contracts Group.  For those times when you need extra hands that have the knowledge and experience to step in, our team can assist in helping you with any of the needed tasks to get your ICE out the door or just answer your questions when you need some clarification.  Or, if you need extra time, we can also help you get an extension. As always, the BMSS team is here to help and serve our clients in the best and most professional way possible to bring peace of mind. Contact us today at (833) CPA-BMSS or visit our website.