The DCAA ICE Model is recommended by DCAA auditors as it helps government contractors comply with all guidelines provided by the Federal Acquisition Regulation. Government contractors are required to submit an incurred cost submission (ICS) once every fiscal year, and the most recommended way of submitting the incurred costs is by using the DCAA ICE Model. This review provides an in-depth review of the model and why it is recommended for incurred cost submissions.
The DCAA ICE Model is the recommended version of preparing and submitting incurred cost proposals to the Defense Contract Audit Agency (DCAA). The ICE model, which is provided by the DCAA, is not required, but it helps to ensure that the contractor is able to comply with the Federal Acquisition Regulation (FAR) guidelines.
What Is An Incurred Cost Submission (ICS)?
The DCAA requires government contractors, specifically those that are subject to FAR 52.216-7, to submit an incurred cost submission, also called an incurred cost proposal or ICS, at the end of every fiscal year. This includes most (if not all) cost reimbursable contracts and time and materials (T&M) contracts.
The incurred cost submission includes all costs associated with work the contractor has completed with the government. Based upon the submission, the government may either pay the remaining unpaid balance that is owed to the contractor or the contractor may owe the government money if the payments received exceed the incurred costs reported in the ICE Model.
What An Incurred Cost Submission Includes
There are various parts to an incurred cost submission. The DCAA ICE model includes all the required parts of the submission in an easy-to-use spreadsheet, which is why the DCAA recommends it for government contractors. An incurred cost submission is broken down into schedules, which range from Schedule A to O. They include (but are not limited to):
- Indirect cost pool and base components
- Direct costs by contract
- Cumulative costs/billing
- Presentation of time and material contracts
- Certification of final indirect costs
Each part of the DCAA ICE model should be filled out in its entirety to avoid not being compensated for work or products that your company provided for a government agency.
The Importance Of An Incurred Cost Submission
An incurred cost submission works similarly to an income tax return; it shows the government how much your business has done for the government, how much you have been paid, and what is still owed by either your company or the government. When properly filed, an incurred cost submission can ensure you are compensated whatever you are still owed by the government.
A failure to submit an incurred cost submission the proper way could lead to lost wages as the DCAA auditor may not be able to verify your incurred costs. In other instances, an improper submission of your incurred cost could put your ability to receive future contracts from government agencies in jeopardy. Due to the importance of proper ICS submission, the DCAA, in addition to accounting professionals, recommends using the DCAA ICE Model as it makes following FAR guidance much easier.
Why Should I Use The DCAA ICE Model For Incurred Cost Submissions?
Government contractors are not obligated to submit incurred cost submissions to the DCAA with the ICE model. However, the DCAA ICE model streamlines the incurred cost submission process. This can save you time and help avoid any crucial mistakes or omissions that could impact the auditor’s assessment of your incurred costs while working on government contracts.
Reviewing FAR Compliance And How It Relates To The DCAA ICE Model
The ICE Model was created to ensure compliance with FAR 52.216-7, “Allowable Cost and Payment.” There are various parts of the incurred cost proposal, and each part has a unique section within the DCAA ICE model. It is important to properly record your incurred costs in each section to ensure optimal FAR compliance. Otherwise, you could have issues procuring government contracts in the future due to a damaged reputation with the DCAA.
Why You Should Work With A Professional CPA
Although the DCAA ICE Model is designed to make the incurred cost submission process easier for government contractors, handling this accounting and bookkeeping task can still be a major challenge as it is typically not the contractor’s expertise.
By working with a reputable and experienced certified public accountant (CPA), you can help ensure that the incurred cost submission process goes smoothly without any setbacks and without any costly mistakes. It is crucial for government contractors to protect their standing with the DCAA and government agencies and working with a certified public accountant can help you maintain a pristine reputation as it relates to the accounting for your government contracting business.