Schedule I is the most important part of the Incurred Cost Submission and is the single area of great interest for the Government and its auditors. This VLOG will briefly explain the Incurred Cost Submission, the importance of Schedule I, and how to resolve potential issues.
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 the Incurred Cost Submission Schedules?
Within the Incurred Cost Submission, there are many worksheets or tabs in an Excel workbook that are referred to as “schedules.” The contract costs presented on Schedule H and Schedule K and all the indirect rates calculated in Schedules A through E are represented in Schedule I.
What is Schedule I of the Incurred Cost Submission?
This schedule provides useful information for contractors, auditors, and the Contracting Officer. It includes prior year actual costs and current year total actual costs for each cost type and time and material contracts contract to date. The total cumulative costs for those contracts are compared to the cumulative billed amounts to determine the over- or under- billed amount. Essentially, this schedule answers the most important question when managing a cost reimbursable contract – do I owe or does the customer owe me? If over billed then the contractor will need to work with their customer to pay back the costs in excess of what was billed. If under billed then the contractor is owed money for costs that exceed the billed amount. Schedule I is important because it is the place in the Incurred Cost Submission that shows each project’s over- or under-billed amount. As a result, this is the focus area for the Government during an audit and can cause a significant headache if it is not properly completed.
Auditors use this schedule not only to audit the Contractor costs incurred but to assess for penalties against contractors. If a contractor claims a cost that is expressly unallowable per FAR 31 cost principles, then penalties will be assessed for settlement of the proposal. It is important that Contractors perform regular reviews to ensure unallowable costs are properly accounted for in your books of record. Any indirect unallowable costs should be adjusted out in the appropriate schedule and not claimed.
For contracts that are ready to close, Schedule I provides the Contractor with the actual cost information required by the Contracting Officer during contract closeout for each cost reimbursable contract. This schedule and the information include in it assists with the preparation of the final invoice voucher for contract closeout.
At the end of the day, Schedule I is the most important part of the Incurred Cost Submission in the eyes of the Government and they will pay close attention to the presentation of the cumulative costs and cumulative billings for each project. Redstone GCI is available to assist contractor’s in assessing their incurred cost as adequate or inadequate as well as assist in the development of the proposal. Redstone GCI assists 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.
