The DCAA Incurred Cost Submission is your Government Contractor “Form 1040”. Like the well known IRS Form that summarizes your personal and family transactions to calculate your taxable Income and tax associated with that income, the DCAA Incurred Cost submission is used to calculate your final fiscal year claimed Indirect Expense Rates.
If you have government contracts that contain references to FAR clause 52.216-7, also known as the Allowable Costs and Payment Clause, you are required to submit an incurred cost proposal within six months of the end of your fiscal year. Contractors prepare this Incurred Cost Submission to document their indirect expense rate structure such as Fringe, Overhead, and G&A rates for a fiscal year.
If requested by the contracting officer, DCAA will audit the Incurred Cost Submission and issue a report including recommended indirect expense rates. Like a complex IRS 1040, the DCAA Incurred Cost submission requires a substantial amount of financial disclosure. Also, there is a significant amount of non-financial disclosure required to complete the submission.
Not submitting your submission in a timely manner could have negative financial implications.
For example, if the submission is six months overdue, DCAA may issue a recommendation on rates or total contract costs. Then, the contracting officer would have to base final indirect rates based on the provisions included in FAR 52.705-1. In this situation, it is highly unlikely that the rates set by DCAA would favor the contractor.
To avoid this situation, contractors can plan ahead and use the specifications set forth by DCAA. In fact, DCAA has developed an Incurred Cost Proposal model that identifies required schedules that must be completed before the proposal is considered adequate.
You can find this model at www.DCAA.mil. Below is an outline of what is included in the model.
What’s included in the Model?
• Schedule A– Summary of Claimed Indirect Expense Rates
• Schedule B – General and Administrative (G&A) Expenses (Final Indirect Cost Pool)
• Schedule C – Overhead Expenses (Final Indirect Cost Pool)
• Schedule D – Occupancy Expenses (Intermediate Indirect Cost Pool)
• Schedule E – Claimed Allocation Bases
• Schedule F – Facilities Capital Cost of Money Factors Computation
• Schedule G – Reconciliation of Books of Account and Claimed Direct Costs
• Schedule H – Schedule of Direct Costs by Contract/Subcontract and Indirect Expense Applied at Claimed Rates
• Schedule H-1 – Government Participation Percentages
• Schedule I – Schedule of Cumulative Direct and Indirect Costs Claimed and Billed
• Schedule J – Subcontract information
• Schedule K – Summary of Hours and Amounts on T&M/Labor Hour Contracts
• Schedule L – Reconciliation of Total Payroll to Total Labor Distribution
• Schedule M – Listing of Decisions/Agreements/Approvals and Description of Accounting/Organizational Changes
• Schedule N – Certificate of Final Indirect Costs
• Schedule O – Contract Closing Information for Contracts Completed in this Fiscal Year
The starting point for completing the submission should be to have your CPA audit completed with all material adjustments recorded in the accounting books of records.
Like tax preparation software, using the SYMPAQ DCAA Incurred Cost template, you can automatically organize and pull the following information directly into your submission:
Schedule H - Direct Costs
Schedule B - G&A Expenses
Schedule C - Overhead Expenses
Schedule D - Intermediate Pool Expenses
Schedule R - Comparative Direct and Indirect Expenses for the Current and Prior Year
Schedule K - Incurred Costs for T&M Contracts
Once these steps are done, you can link up the various components of these schedules using the links provided by the DCAA incurred Cost Submission to complete many of the schedules.
After you prepare the submission, it is best to have a peer review by a person with substantial expertise with this very important submission.
Just like the Form 1040, you must have a person of responsibility sign the submission with the various certifications that are contained being true.