Incurred Cost Submissions: A Strategic Tool for Government Contracting Success


To successful government contractors, Incurred Cost Submissions (ICS) are not just a regulatory requirement; they are a strategic tool that, when mastered, can lead to more profitable contracts, enhanced credibility, and a stronger financial foundation for your organization.

In simplest terms, Incurred Cost Submissions are your organization’s financial report card, showcasing how well you have managed and allocated costs on government contracts.

Why Mastering Incurred Cost Submissions is Crucial

At its core, an Incurred Cost Submission is a report submitted to the government, specifically the Defense Contract Audit Agency (DCAA) or other relevant audit agencies, detailing all the costs incurred on a cost-reimbursable contract. The report ensures that the government is only billed for allowable, allocable, and reasonable costs. 

An ICS measures an organization’s performance in the following competencies:

Compliance: A comprehensive understanding of ICS ensures compliance with Federal Acquisition Regulation (FAR) and Cost Accounting Standards (CAS), safeguarding your organization from penalties and fines.

Cash Flow: Timely and accurate ICS submissions can speed cost reimbursement, ensuring that your organization maintains a healthy cash flow.

Credibility: Consistent, accurate, and transparent ICS submissions enhance your organization’s credibility and reputation with government agencies, opening doors for future contracting opportunities.

Profitability: By mastering ICS, you can identify and rectify any cost misallocations, leading to more accurate bids and increased profitability on future contracts.

Strategic Planning: The insights gleaned from ICS can be a valuable resource for strategic planning, helping your organization to optimize operations and cost structures for future government contracts.

Six Keys to Success with Incurred Cost Submissions

The ICS process is mandated by the Federal Acquisition Regulation (FAR), which sets forth the rules and guidelines for government contracting. The process, intricate and nuanced, demands a strategic approach and meticulous attention to detail. There are six essential keys to success, each serving as a cornerstone in building a robust and effective ICS framework. These keys, derived from industry best practices and extensive experience, are designed to guide contractors through the complexities of ICS, ensuring not only compliance but also fostering efficiency and transparency in every submission:

  1. Education and Training: Ensure that your team is well-versed in FAR, CAS, and DCAA requirements. Continuous education and training are paramount.
  2. Meticulous Record Keeping: Maintain detailed and organized records of all costs incurred, ensuring that all costs can be easily traced and justified.
  3. Internal Audits: Conduct regular internal audits of your cost records and ICS process to ensure compliance and identify any areas of improvement.
  4. Effective Communication: Establish clear and open lines of communication with DCAA and other relevant agencies, ensuring that any queries or concerns are addressed promptly.
  5. Leverage Technology: Invest in robust accounting software that is customized for government contracting, ensuring accuracy, efficiency, and compliance.
  6. Be Responsive: Act promptly to address any issues or concerns raised by audit agencies.

Checklist for Incurred Cost Submissions

Navigating the labyrinthine world of government contracting requires not only a deep understanding of industry complexities but also a mastery of the essential practices and procedures that underpin successful contract management. 

Consider using this checklist.

The Art and Science of Incurred Cost Submissions

By embracing the importance of ICS, investing in education, technology, and rigorous financial practices, and adhering to the keys of success outlined above, your organization can transform this complex requirement into a strategic advantage.

The road to mastery may be challenging, but the rewards in terms of compliance, cash flow, credibility, profitability, and strategic insight are well worth the journey.

If you have questions about Incurred Cost Submissions or need help ensuring your proposals are both compliant and competitive, please contact us.

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