The Incurred Cost Submission: What are Schedules O and the Supplemental A’s?

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. Each previous schedule we discussed led to Schedule I in some way, which is the presentation of cumulative cost incurred, cumulative billings, and the calculation of the over or underbilling amount. However, Schedules O and Supplemental A-1 to A-4 do not tie to Schedule I but are still 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?

The first step to completing Schedule O is to gather all projects whose effort was completed during the fiscal year the ICS represents. If Schedule I is done correctly, then the projects ready to close are identified as such on Schedule I in the “Physically Complete” column. The next step is to segment the projects ready to close by their type, and for Schedule O only Cost Type and T&M projects are used.

Once the projects ready to close are grouped by type, it’s time to enter in the administrative information for the project, which includes: the contract number, the order number or project code, and the period of performance. After that information is entered in, indicate that the project is ready to close by entering “yes” into the ready to close column. Finally, enter in the project ceiling and fee amount (if applicable), as well as the level of effort hours (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 the Government tends to request these schedules after submission. Supplemental Schedule A-1 shows the comparison of the expenses of each final indirect pool from the prior year to the current year. Typically, this tab is for all overhead rates and fringe if fringe is a final rate. The way to complete this schedule is to list the accounts for each pool and enter the prior year balances. After that, link the current year balances from the respective tab in the ICE model. After that, the comparison columns in blue should automatically calculate. The last step is to enter in the intermediate allocations the respective pools receive, which is at the bottom of each pool’s schedule in the ICS.

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. The way to complete this schedule is to use the prior and current year Schedule H, since the groups of direct costs are already totaled there and enter in the direct costs by cost category. Once the direct costs are entered in for the prior and current year, the comparison columns in blue will automatically calculate.

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.