- March 8, 2018
- Posted by: Hope Davis
- Category: Accounting, Government Contracts
By: Taylor Bailey
As the new year begins and the prior year’s books are finally being closed, it is time to look forward to the next looming deadline. For many Federal Government contractors, the Incurred Cost Submission will have to be prepared in the coming months.
Contractors need to be on the lookout for the FAR clause 52.216-7 in their contracts. This is the “Allowable Cost and Payment” clause that triggers the requirement to file the Incurred Cost Submission. FAR 52.216-7(d)(i) states that “The Contractor shall submit an adequate final indirect cost rate proposal to the Contracting Officer (or cognizant Federal agency official) and auditor within the 6-month period following the expiration of each of its fiscal years.” For companies with fiscal years ending on December 31st, this means that the submission will be due on June 30th.
The Incurred Cost Submission is a proposal of final indirect rates to the government. These rates are determined by taking actual costs for the year and allocating them across all contracts. DCAA provides a useful template for preparing the Incurred Cost which can be downloaded here.
Because of the complexity of the calculations, and the complete reconciliation of costs, the preparation of this submission can be time consuming for many companies. For that reason it is recommended to begin your preparation as soon as your reporting period financials are finalized.
Hall Albright Garrison & Barnes offers many Incurred Cost services including full preparation, final review, and general advice. If your company has recently won a contract that has FAR 52.216-7, or if you have filed the submission for many years but need more bandwidth, we can help. Also, be on the lookout for periodic training seminars that we host on Incurred Cost preparation. Don’t let your Incurred Cost requirement sneak up on you this year. Give us a call, we would be glad to help.