What Are Incurred Cost Submission Schedules? Incurred Cost Submission Schedules are the schedules utilized in the Incurred Cost Proposal for government contractors. These schedules provide a detailed breakdown of labor, costs, and indirect rates to demonstrate compliance with FAR requirements and audit readiness for DCAA. For contractors, these schedules are not just a reporting requirement—they […]
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Incurred Cost Submission Services
When it comes to government contracting, Incurred Cost Submissions (ICS) are one of the most critical compliance requirements you’ll face. Missing the deadline, miscalculating rates, or overlooking required schedules can lead to delayed payments, disallowed costs, and even audit findings.
At RKI, we provide Incurred Cost Submission Support that goes beyond filling out forms. We help you prepare, submit, understand, and defend your proposal—while building internal knowledge through Incurred Cost Submission Training so your team is always ready.
Not sure where to start? Download the free ICS Filing Checklist.
What Is Incurred Cost Submission?
The Incurred Cost Submission—also known as the Incurred Cost Proposal (ICP) or more formally the Indirect Cost Rate Proposal —is your annual final indirect cost rate proposal, required by FAR 52.216-7 (Allowable Cost and Payment) for contractors with cost-reimbursable or time-and-materials contracts.
The purpose of the Incurred Cost Proposal is to:
- Reconcile your provisional billing rates with actual incurred costs
- Establish final indirect rates for the fiscal year
- Demonstrate compliance with Federal Acquisition Regulation (FAR) 31 cost principles
- Identify over/under billing variances that require adjustment vouchers to your USG or prime contractor customers
This submission allows the Defense Contract Audit Agency (DCAA) to verify the allowability, allocability, and reasonableness of your costs.
Why Accurate Incurred Cost Proposal Matters
A complete, accurate, and timely ICS can:
- Speed up indirect rate approvals
- Improve cash forecasting by avoiding over/under billings
- Reduce the likelihood of cost disallowances
- Strengthen your compliance record for future bids
- Mitigate future DCAA audit risk
Conversely, an inadequate or late ICS can:
- Delay reimbursement of indirect costs
- Trigger additional audits
- Lead to financial penalties
- Result in DCAA audit findings
Who Is Required to Submit an Incurred Cost Submission?
You must submit an ICS if you have any contract which includes FAR 52.216-7 (Allowable Cost and Payment), which is generally required in all of the below contract-types:
- Cost-reimbursable contracts (Cost-Plus-Fixed-Fee, Cost-Plus-Award-Fee, Cost-Plus-Incentive-Fee)
- Time-and-Materials contracts
Failing to submit on time can result in:
- Withheld payments
- Significant over/under billings
- Disallowed indirect costs
- Increased audit scrutiny
- Internal control findings in your DCAA Accounting system audit
- DCAA audit findings
- Possible False Claims Act allegations for misrepresented costs
Incurred Cost Submission Requirements
To be considered adequate by the DCAA, an ICS must meet specific requirements:
- Complete all required schedules (A–O) per the DCAA Incurred Cost Adequacy Checklist
- Provide accurate supporting data for indirect rate calculations
- Include a signed Certificate of Final Indirect Costs attesting to accuracy
- Present costs in accordance with FAR Part 31 to ensure allowability
- Reconcile billed costs with actual incurred costs
Failure to meet these incurred cost submission requirements can result in the DCAA rejecting your submission, delaying contract closeout, or initiating a formal audit.
ICS Preparation
Our ICS preparation process is designed to minimize risk and maximize compliance:
- Data Collection – We gather all relevant cost, billing, and rate data from your accounting system.
- Preliminary Compliance Review – We identify potential issues before they cause problems in the final submission.
- Schedule Development – We prepare each required schedule with precise calculations, supported by clear documentation.
- Internal Quality Control – Multiple RKI specialists review your ICS for accuracy and adherence to DCAA guidelines.
- Final Review & Submission – We deliver a submission-ready package, including a completed DCAA ICS Adequacy Checklist, and assist in transmitting it to the correct government agency.
This proactive approach ensures your ICS is not only submitted on time but also stands up to the highest levels of audit scrutiny.
When Is the Incurred Cost Submission Required?
Your ICS is due six months after the end of your fiscal year. For example:
- Fiscal Year ends December 31→ ICS due June 30
- Fiscal Year ends September 30→ ICS due March 31
This strict deadline means planning and preparation are essential.
Navigating Incurred Cost Submissions
An incurred cost submission isn’t just about reporting numbers. Its main goal is to establish your final indirect expense rates for the year, while also validating every claimed direct contract cost, from internal labor to subcontractor charges.
Preparing an “adequate” submission that meets the Defense Contract Audit Agency’s ICS Adequacy Checklist can be demanding. The process tests your organization’s ability to:
- Separate direct and indirect costs accurately
- Allocate indirect costs to the correct cost pools and final cost objectives
- Remove unallowable costs in accordance with FAR 31.205
- Comply with all cost reimbursement contract terms
- Identify which contracts are ready for close-out
The stakes are high, errors can lead to withheld payments, over/under billings, penalties for expressly unallowable costs, DCAA audit findings, or in extreme cases, False Claims Act allegations. That’s why successful ICS preparation isn’t handled by finance alone. It requires coordination between contracts, purchasing, project management, HR, and leadership to ensure every figure is defensible.
At RKI, our incurred cost submission support helps clients navigate this process from start to finish, combining technical compliance knowledge with practical, hands-on support so your submission is complete, accurate, and audit-ready.
What’s Included in an Incurred Cost Submission?
Your ICS typically includes Schedules A through O, covering:
- Indirect Cost Rate Calculations – Overhead, G&A, fringe, material handling, subcontract admin, etc.
- Direct Cost by Contract – Labor, materials, ODCs
- Subcontract & Inter-Organizational Transfers – Compliance with flow-down clauses
- Certificate of Final Indirect Costs – Required signature affirming accuracy
The DCAA’s Incurred Cost Submission Adequacy Checklist outlines exactly what must be included.
Preparing Your ICS Submission?
Download the free ICS Filing Checklist to help identify required documentation, reduce filing errors, and prepare for upcoming submission deadlines.
Our Incurred Cost Proposal Support Services
RKI offers a complete solution for Incurred Cost Submission support:
- Full ICS Preparation
- We prepare every required schedule, calculation, and supporting document.
- Data validation to ensure accuracy before submission.
- ICS Review & Adequacy Assessment
- Review of your prepared ICS against the DCAA adequacy checklist.
- Identification and correction of compliance gaps.
- Indirect Rate Development
- Calculation of final indirect rates based on your actual costs.
- Advice on optimizing rate structures for profitability and compliance.
- Audit Support
- Guidance through the DCAA audit process.
- Assistance in responding to requests for supporting documentation.
- Incurred Cost Submission Training
- On-site or virtual training for your accounting and contracts team.
- Step-by-step guidance on preparing compliant submissions.
Frequently Asked Questions
The Incurred Cost Submission (ICS) is due within 6 months after the end of your fiscal year. For most contractors, this means a June 30 fiscal year requires a December 31 submission, while a calendar year (Dec 31) requires submission by June 30.
An ICS is required annually for any contractor with cost-reimbursement or T&M contracts that include indirect cost billing. If you billed provisional rates, you must submit an ICS to reconcile actual costs.
The incurred cost audit may take place at any point after your ICS is submitted, often occurring several months or even years later.
Because of this delay, it’s critical to keep all supporting data well-organized and easily accessible. Proper preparation ensures you’re ready when the audit begins. Watch the video below for best practices on preparing for an incurred cost audit while building your ICS.
Because of this delay, it’s critical to keep all supporting data well-organized and easily accessible. Proper preparation ensures you’re ready when the audit begins. Watch the video below for best practices on preparing for an incurred cost audit while building your ICS.
The statute of limitations is generally 6 years from the date of submission. During this period, the government can audit and adjust claimed costs.
No, the DCAA ICE Model is not required. However, the information it contains is required. Contractors can use their own format or template, as long as all required schedules and data are included.
The checklist is available on the DCAA website and is used to determine if your ICS includes all required schedules, supporting data, and documentation before audit.
Failure to submit your ICS on time can result in withheld payments, penalties, and potential contract issues. The government may also unilaterally establish indirect rates, which can negatively impact profitability.
Yes. A proactive review helps identify errors, ensure adequacy, and reduce the risk of audit findings or delays.
Yes. The DCAA can reject an ICS if it is incomplete, inaccurate, or missing required schedules. A rejected submission delays the audit process and may impact payments.
STEPS TO SUCCESS
Incurred Cost Submission Support, Done Right
From accurate indirect rate calculations to full FAR compliance and DCAA audit readiness, we ensure your incurred cost submission is complete, compliant, and built for success.
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