Incurred cost submissions are required for many government contractors; early planning, accurate reconciliation, and proper review ensure compliance, avoid penalties.

If you hold flexibly priced government contracts that include FAR 52.216‑7, the Allowable Cost and Payment clause, you are required to file an Incurred Cost Submission (ICS), also known as an Incurred Cost Proposal (ICP). This applies whether you are a prime or a subcontractor with cost‑type or T&M contracts, so now is the time to review your contracts and confirm whether FAR 52.216‑7 is present. If it is, an ICS is required.

An ICS is a detailed package that summarizes your actual incurred costs and the indirect costs allocated to your contracts for a given fiscal year. It includes a core set of required schedules plus supplemental schedules (such as contract briefs) that may not be requested at the outset but are commonly required during an audit. The government uses this package to establish your final indirect cost rates for that year.

Your ICS is due six months after your fiscal year-end, which means a June 30 deadline for calendar year‑end contractors. Contracting Officers may grant extensions for an ICS, but you should not assume they will.  Failure to file an ICS can result in unilateral rate determinations by your Contracting Officer, that often include decremented rates.  Those unilateral rates can materially impact your cost recovery and cash flow.

You will submit your ICS to your cognizant CO/ACO and auditor using the submission method they specify—i.e. uploading through DCAA’s Contractor Submission Portal (CSP).  Make sure you know your customer’s preferred submission method before the deadline so you are not left scrambling.

DCAA uses your ICS to verify that your claimed costs are allowable, allocable, and reasonable under FAR Part 31 and the terms of your flexibly priced contracts.  A large part of the ICS process is simply reconciling costs through your indirect rates back to your general ledger.

The DCAA ICE model is a free, Excel‑based tool federal contractors can download and use to prepare incurred cost proposals. Using the ICE model is optional, but it is often beneficial because it is structured around DCAA’s expectations and includes all of the standard required schedules. In addition, the DCAA ICS Adequacy Checklist is a useful resource to incorporate into your internal review process before you submit; using it helps reduce the risk of receiving an “inadequate” determination and having to revise and resubmit.

The Unanet support site includes a helpful article that explains how to leverage Unanet reports to populate various ICE schedules. This can save considerable time and reduce manual errors by pulling consistent data directly from your system rather than keying information by hand.

Action Items

• Review all Cost‑Plus and T&M contracts and subcontracts to identify if any contain FAR clause 52.216‑7 requiring you to file an ICS.
• Determine a timeline and action plan for your ICS preparation and review.
• Will you prepare and review in‑house?  If your accounting department is chronically overworked, consider outsourcing your ICS preparation or review.
• Start early; build calendar reminders and internal deadlines that fall well before the official due date.

Tasks that you can start now:

• Review your pools and remove any unallowable costs.
• Ensure revenue and direct costs in your project ledger (job cost) reconcile to your general ledger.
• Reconcile your labor costs to your quarterly Form 941s for the year (this supports Schedule L).
• Begin populating Schedule J (subcontractor information). Use general ledger detail for subcontractor expense accounts to quickly identify subcontractors that may need to be listed.

By putting these steps in motion now, you can turn “incurred cost season” from a stressful scramble into a controlled, repeatable process that supports both compliance and good financial management.

If you’d like an experienced second set of eyes, GovCon Synergies can assist with ICS preparation, review, or readiness assessments. Whether you need full support or just a final quality check before submission, we help ensure your submission is complete, accurate, and aligned with DCAA expectations. Contact us to start the conversation.