What is the Incurred Cost Submission? What is Schedule O? What are the Supplemental A Schedules? This VLOG will briefly explain the Incurred Cost Submission, how to complete Schedules O and the Supplemental A Schedules, and the importance of those schedules.
What is the Incurred Cost Submission (ICS)?
The incurred cost submission goes by many names/acronyms including final indirect rate proposal, incurred cost electronic submission, indirect cost rate submission, incurred cost proposal, ICES, ICS or ICP. Regardless of name, it is simply the mechanism for the true up of your actual indirect cost to the indirect costs provisionally billed for in a single contractor fiscal year. An ICS must be submitted for each business unit of a contractor that holds applicable contracts subject to the Allowable Cost and Payment clause (FAR 52.216-7) and is required to be submitted 6-months after fiscal year end.
What are Schedules L, O, and the Supplemental A’s?
Within the Incurred Cost Submission, there are many worksheets or tabs in an Excel workbook that are referred to as “schedules”. Previously, we discussed the importance of Schedules B through Fringe, Schedule H, Schedule I, Schedule J, Schedule K, and Schedule L. Schedules O and Supplemental A-1 to A-4 are important schedules in the Incurred Cost Submission.
Schedule O is the schedule of contracts and projects that are ready to close as of the fiscal year end that the ICS represents. The Supplemental A schedules show the dollar and percent change in indirect and direct costs from the prior fiscal year to the current year.
Why are Schedules O and the Supplemental A’s important?
Schedule O is important because it is the place in the Incurred Cost Submission that shows the contracts and projects that are ready to close in the fiscal year the ICS represents. This schedule is important because it signals to the contractor what contracts are ready to begin the closing process.
Supplemental Schedules A-1 through A-4 are not explicitly required for ICS adequacy; however, we highly recommend contractors complete them. These schedules provide a comparison for all indirect pools and direct project costs for the prior fiscal year and current year and can provide contractors with details behind indirect or direct cost changes.
How is Schedule O Completed?
Schedule O should include cost type and time and material contracts that are ready to close. This schedule provides contract information including period of performance, contract ceiling amount, and the contract fee. If there is level of effort associated with a time and material contract that is ready to close, then the required cumulative hours and actual cumulative hours for the contract should be included, if applicable.
How are Supplemental Schedules A-1 through A-4 completed?
There are four Supplemental A Schedules in the Incurred Cost Submission. They are not required to be completed to have an adequate submission; however, we recommend completing them and having them ready because these schedules will be requested during audit. Supplemental Schedule A-1 shows the comparison of the expenses of each final indirect pool from the prior year to the current year.
Supplemental Schedules A-2 and A-3 are similar to A-1, with the only difference being which pools are included. Supplemental Schedule A-2 is for the G&A pool comparison from the prior year to the current year. Supplemental Schedule A-3 is for the intermediate pool comparison, which are pools that don’t allocate directly to contracts like facilities or occupancy.
The last supplemental schedule is Supplemental Schedule A-4, which is the comparison of the direct project costs from the prior year to the current year.
At the end of the day, Schedule O and Supplemental Schedules A-1 through A-4 are important because Schedule O shows what contracts are ready to close, and the Supplemental A schedules show the year-over-year indirect rate expense comparison. If you’re not sure if your Incurred Cost Submission is completed correctly, Redstone GCI is here to help. Redstone GCI is available to assist contractors in assessing their incurred cost submission as adequate or inadequate, as well as assist in the development of the proposal. Redstone GCI assist contractors throughout the U.S. and internationally with understanding the Government’s expectations in applying FAR Part 31 Cost Principles and completing incurred cost proposal requirements.
Adam is a Senior Consultant with Redstone Government Consulting, Inc. based in our firm’s Huntsville office. Adam supports our government compliance group and his role includes production of pricing models for cost volume proposals, the preparation of complex incurred cost submissions, data modeling and analysis related to indirect rates, and unallowable cost testing. Adam works closely with our directors and managers in performing testing and assessments of DFARS Business Systems, specializing in the accounting system. He also works with other team members to assist clients with compliance requirements of the U.S. Government. Education Adam holds a B.S. degree in Economics from The University of Alabama with minors in Computing Technology & Applications and Management Communication.