Rose Report: Issue 19

Preparing for Your Incurred Cost Submission

issue19-pic-story1Attention government contractors: The deadline for submitting incurred cost proposals, also known as ICE submissions, is coming quickly. Due six months after the end of a contractor’s fiscal year, these submissions to the government provide the detail that supports the actual indirect rates incurred throughout the year.

There are several steps that contractors can take in advance to prepare for this important, detail-laden task. First, contractors can find a copy of the latest model of the incurred cost proposal on the DCAA’s web site. A lot of meticulous information is required, and this model, in Microsoft Excel, will tell contractors exactly what their submissions should include and how the information should be prepared.

Another important step contractors can take throughout the year is to stay organized. It’s key that a contractor know exactly what kind of contract they have—for example, time and materials or cost-plus fixed fee—and bill in accordance with that contract. Projects should be monitored on a monthly basis, if not more frequently, to ensure that proposed indirect rates line up with actual rates. And because ICE submissions are cumulative, contractors should keep their historical billing data organized and easily accessible—they’ll need it to show the government what they billed in prior years.

A contractor’s accounting system should be set up and maintained in the right way in order to capture all of the necessary data. An accounting system should have the ability to track billings and job costs in accordance with indirect rates. Costs have to be assigned to the right buckets—typical pools might be direct labor, fringe benefits, and overhead costs.

Some accounting systems have built-in ICE sections that help facilitate this capture of information. For example, Deltek and Quickbooks (through an add-on module called eFAACT) have a set of reports designed specifically to support ICE submissions. It’s also possible to design custom reports that would be able to pick up this information. Regardless, it’s worthwhile to bring in a consultant who can evaluate your reports and ensure that you are maximizing your accounting system’s functionality.

“If all the information comes directly out of your accounting system, you are going to be in great shape,” says Rose Financial Services partner Jeanne McMillen.