Redstone Government Consulting Blog | Incurred Cost Proposal Submission (ICP/ICE) (6)

The incurred cost proposal is required for cost type and time and material contracts subject to the FAR 52.216-7, “Allowable Cost and Payment.” Cost type and time and material contracts have a cost reimbursable element that needs to be trued up (i.e. final indirect rates), hence the reason for the incurred cost proposal. There are many subsections, which are listed within the clause (52.216-7(d), thus defining the required schedules for an adequate indirect cost rate proposal.

As if you haven’t noticed, this year has been the year of bid proposals for government contractors. My team at Redstone Government Consulting has been working the last six months straight supporting various government contractors in the development and pricing of cost volume proposals. Fortunately for us, we have a team of consultants that can provide support for cost volume proposals and are 100% dedicated to the effort, without the distraction of other projects or responsibilities. Most small business contractors, however, do not have that luxury and the employees working the bid proposal efforts must also continue to complete their daily responsibilities associated with their already busy, “day” job.

DCAA has recently released a new version of the ICE Model, which is the electronic version of the “Model Incurred Cost Proposal” that provides contractors with a standard ICE submission for preparing adequate incurred cost proposals in accordance with FAR 52.216-7, “Allowable Cost and Payment.”  This version 2.0.1e released in December 2015, may be downloaded from DCAA website.  There were no computational changes to the newly released version, however, additional information will be required for Schedule J.  Schedule J provides DCAA with the Subcontract Information such as contact information, subcontract value, period of performance, costs incurred for each subcontractor, and award type.  In the 2.0.1e version, additional information such as prime contract value and subcontractor’s duns number has been added to the required information for this schedule.  This is the second version of the ICE Model released this year.  ICE Version 2.0.1d released in August 2015, had no computational or functional changes to the previous Version 2.0.1c (June 2012).

Most contractors (those with calendar year ends) have incurred cost proposals (ICP) due to the government on June 30 and we know that preparing the incurred cost proposal can be stressful and time consuming.  We have prepared 10 helpful tips for contractors to consider when preparing their ICP this year to help alleviate stress, reduce the amount of time spent preparing the ICP and most importantly to result in ICP adequacy.

It’s that time of year, books are closed, tax data has (maybe) been sent to the CPAs and you are ready to start a new year. However, as a government contractor with cost-reimbursable contracts, for the next 180 days a cloud called the incurred cost submission (due on June 30, 2015) is looming over head. Will this cloud looming become a thunder storm or beautiful clear skies? Well, my friend, that is up to you. Here are the top 5 things to know about the incurred cost submission that will make this year a success in submitting a timely and adequate incurred cost submission.

In a recent Federal Circuit ruling, KBR found out that “simple negligence” in its calculations of a reasonable price range for subcontractor’s price proposal resulted in a “Gross Negligence ruling” by the courts. Kellogg Brown & Root Services, Inc. (KBR) v. U.S., No. 203-5030, slip op. (Fed. Cir. Feb, 3, 2014).

The Department of Defense issued a final rule revising the DFARS “Proposal Adequacy Checklist” on January 29, 2014 to eliminate question 19 of that checklist which addresses whether the contractor cost proposal, to which the checklist applies, demonstrates that price analysis of costs for all proposed commercial items was performed.  The DOD determined that questions 14 and 17 address price analysis for all proposed materials and subcontracts, commercial or otherwise, therefore making question 19 duplicative and unnecessary. 

Government contractors having undergone DCAA incurred cost proposal audits during this past year have learned several important trends and lessons, some of which will likely continue into 2014, and produce added administrative hardships for most contractors. Some initiatives undertaken by DCAA in conjunction with the DCMA may mitigate the level and duration of audit effort and hasten contract close-outs for some contractors.  For example, more contractors will most likely be subject to low-risk determination criteria and expand the number of companies who could escape those audits.  

DCAA employees have now received their long-awaited letters proposing an 11 day furlough - one day a week from July through September of 2013.   Since this furlough is cumulatively over 80 hours, employees will also lose an accrual of sick and vacation pay.  In addition, according to Jessica Wright, acting undersecretary of Defense for Personnel and Readiness, furloughs may not end in September.  She stated that looking at the FY 2014 budget numbers suggested by the White House and both sides in Congress, DoD may very well have to plan for another round of sequestration and furloughs.  Under the federal process, once an employee receives a proposal for furlough, an individual can present a case to the deciding official on why they feel like they should be excepted from the furlough. Then the deciding official will make a final decision.  Since this is a DoD initiative and exceptions apply to very few DCAA employees, the furloughs are expected to be upheld.