Learn the essentials of the ICE model, common mistakes to avoid, and why having a partner like Team 80 can make all the difference.
Key Takeaways:
- The DCAA Incurred Cost Submission (ICS) is required for cost-reimbursable contracts and details all direct and indirect costs for the year.
- The ICS helps ensure transparency, compliance with FAR Part 31, and accurate cost reporting to protect taxpayer dollars.
- The ICE (Incurred Cost Electronically) model is the DCAA’s standardized template for submitting your ICS, including key schedules like indirect cost rates and cumulative costs per contract.
- Demonstrating DCAA compliance shows your commitment to transparency and accountability, fostering trust with government agencies and partners.
- Submissions are due six months after your fiscal year-end—missing this deadline can lead to penalties or audits.
- Common mistakes to avoid include sloppy documentation, inaccurate indirect rates, and claiming unallowable costs.
- Team 80 simplifies DCAA compliance with services like cloud-based accounting systems, timekeeping solutions, and ongoing audit support.
- Partnering with Team 80 means you can focus on your business while experts handle the complexities of government contract accounting.
Government contracts are a goldmine—but proving you earned every dollar is part of the deal. When federal officials come asking for receipts, things can get complicated fast.
The DCAA (Defense Contract Audit Agency) is responsible for auditing contracts involving federal funds. They see that government contractors’ costs are allowable, reasonable, and fully compliant with all regulations. Essentially, the DCAA ensures taxpayer dollars are appropriately spent and contractors accurately bill the government.
You’re not alone if you’re sweating bullets over your Incurred Cost Submission (ICS). Missing the mark on compliance can turn your contract win into a bureaucratic nightmare.
In this guide, we’ll break down the DCAA Incurred Cost Submission, why it’s required, and how to prepare one without falling to pieces. Let’s simplify this beast together.
What is a DCAA Incurred Cost Submission?
A DCAA Incurred Cost Submission (ICS) is your annual reality check. If you’ve got a cost-reimbursable contract (think cost-plus-fixed-fee, cost-plus-award-fee, or time-and-material contracts), the government needs a detailed breakdown of how you spent their money. This includes direct costs (like labor and materials), indirect costs (like overhead and general expenses), and the final indirect rates for the year.
Now that you know what an ICS is, let’s talk about why it’s required—and why getting it right matters.
Why are they required?
The government isn’t in the business of handing out blank checks. When you work on a cost-reimbursable contract, you’re billing Uncle Sam for actual costs incurred. The DCAA Incurred Cost Submission is how you prove those costs are legit, fair, and in line with the contract terms.
The submission ensures three things:
- Transparency: The government knows exactly where its money went.
- Compliance: Your costs follow federal regulations (such as FAR Part 31).
- Accuracy: Final indirect rates are settled, so no one’s over- or under-billed.
The bottom line: It protects taxpayer dollars and keeps contractors accountable. No submission, no final payment. It’s as simple as that.
Let’s get into the submission by breaking down the ICE model—the standardized format the DCAA expects and the key to getting your Incurred Cost Submission right.
What is the ICE model?
The ICS is submitted using the ICE (Incurred Cost Electronically) model, a standardized template designed by the DCAA to make sure you’re reporting everything the right way. It typically includes key schedules, like:
- Schedule A: Summary of indirect cost rates
- Schedule B: General and administrative expenses
- Schedule I: Cumulative costs claimed by contract
Think of it as your financial report card. Submit it accurately and on time (six months after your fiscal year-end), and you stay in the good graces of the DCAA. Mess it up, and you’re looking at delays, penalties, or an audit that digs deeper than you’d ever want.
Now that you know the format, let’s walk through the step-by-step process of preparing an Incurred Cost Submission—and how to get it right the first time.
How to Prepare an Incurred Cost Submission Step-by-Step
Now it’s time to actually prepare for an ICS. Here’s a clear game plan to get it done right—and stay on the DCAA’s good side.
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1.
Gather Your Data
You’ll need all your financial records—direct costs, indirect costs, labor, subcontractor expenses, and anything else you billed to the government. The more organized your records, the smoother this DCAA ride will be.
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2.
Complete the ICE Schedules
Fill out the key schedules in the ICE model:
- Schedule A: Your summary of indirect cost rates
- Schedule B: Breakdown of your G&A expenses
- Schedule I: Costs claimed per contract
Cross-check these numbers like your contract depends on it—because it does.
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3.
Calculate Final Indirect Rates
Crunch the numbers to calculate your final overhead, G&A, and other indirect rates. These rates are the key to proving your costs are fair and accurate.
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4.
Reconcile Everything
Match your claimed costs to your general ledger and financial statements. If things don’t align, fix it before the DCAA flags it later.
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5.
Review for Compliance
Double-check your costs against FAR Part 31 to ensure everything is allowable, reasonable, and allocable. This is where costly mistakes hide, so dig deep.
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6.
Certify Your Submission
Sign the Certificate of Final Indirect Costs—your official statement that everything is accurate and complete. Don’t sign it unless you’re sure. The DCAA doesn’t take kindly to fudged numbers.
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7.
Submit On Time
Submit your ICS no later than six months after fiscal year-end. Submissions must be on time to avoid payment delays and audits.
Common Mistakes and How to Avoid Them
Even with a solid game plan, it’s easy to stumble. Let’s look at contractors’ most common mistakes—and how to sidestep them.
- Missing the Deadline: The DCAA doesn’t care if you “lost track of time.” Your ICS is due six months after your fiscal year-end. Submit late, and you risk payment delays or worse—an audit.
- Sloppy Documentation: If your records are a mess, your submission will be too. Keep your direct costs, indirect costs, and supporting documents organized. The DCAA expects receipts (and lots of them).
- Inaccurate Indirect Rates: If your indirect rates are off, you’re opening the door for a full-blown audit. Double-check your calculations, and make sure they match your financial statements.
- Claiming Unallowable Costs: FAR Part 31 spells out what you can and can’t claim. Things like alcohol, entertainment, and fines? Hard no. Don’t pad your submission with costs that aren’t allowed.
- Skipping Reconciliation: Your ICS needs to match your general ledger and financial reports. If the numbers don’t line up, the DCAA will notice—which will stop the entire process.
- Rushing the Certification: The Certificate of Final Indirect Costs isn’t just a formality. Signing it means you’re vouching for every dollar. Review everything before you sign, or you’re on the hook for any mistakes.
Why partner with Team 80 for DCAA compliance?
DCAA compliance is a maze of regulations, audits, and paperwork. One wrong turn, and you’re stuck dealing with delays, penalties, or even lost contracts. Team 80 makes sure that doesn’t happen. We specialize in helping small businesses and entrepreneurs secure government contracts by making DCAA compliance simple, seamless, and stress-free.
Full-Spectrum DCAA Compliance Support
From setting up a cloud-based, government-compliant accounting system to managing indirect cost rates and timekeeping systems, Team 80 covers every inch of your compliance needs.
Expertise You Can Count On
We know the ins and outs of government contract accounting. Whether you’re preparing for an SBIR award or handling an incurred cost submission, Team 80 has the know-how to keep you aligned with FAR regulations and DCAA standards.
Personalized and Affordable
Get a dedicated accountant who knows your business and stays on top of your compliance. Plus, with transparent pricing, you get high-value, full-service accounting without the sticker shock.
Stay Focused on What You Do Best
Innovation is your job. Compliance is ours. Partner with Team 80, and free yourself from the headaches of DCAA audits, cost submissions, and endless reporting. We keep you compliant so you can keep moving forward.
