How To Complete the Incurred Cost Proposal with Success!

Breakout Session # E09Robert E Jones Advisor LeftRobert E. Jones, Advisor, Left Brain Professionals Inc.Suzanne Camden, Accounting, gManager, Colonna's Shipyard, Inc.Tuesday, July 29, 20142:30 PM to 3:45 PM2:30 PM to 3:45 PM

What is the Incurred Cost Proposal?What is the Incurred Cost Proposal?• Annual reconciliation of contractor's cost

incurred including– Direct costs– Indirect costs

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How Do I Know If It Applies to Me?How Do I Know If It Applies to Me?• FAR 52.216-7• If you have, have had, or ever intend to

have cost-reimbursable and flexibly priced y pcontracts, this applies to you.

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How Do I Know If It Applies to Me?How Do I Know If It Applies to Me?

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When Is It Due?When Is It Due?• Six months after the close of the

contractor's fiscal year– For contractor's on a calendar year – June 30

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PitfallPitfall• Late Submission!

TipTip• Prior to the due date, contractors can

contact their cognizant DCAA office incontact their cognizant DCAA office in writing to request an extension to file their submission at a later timesubmission at a later time.

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When Will It Be Evaluated?When Will It Be Evaluated?• Supposed to evaluated for adequacy

immediately

• It is DCAA policy to audit as promptly as possible after submissionpossible after submission

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ResourcesResources• Raytheon ASBCA Case

• http://www.asbca.mil/Decisions/2012/57576_57679%20Raytheon%20Company%2012.17.13%20PUBLISH.pdf

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Takeaway #1Takeaway #1• It's never too early to start!

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What Types of Contracts?What Types of Contracts?• Cost-reimbursable and flexibly priced

receive the most attention• Fixed price contracts are still documented p

in the submission

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Where Is It Submitted?Where Is It Submitted?• Cognizant DCAA Office

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How Is It Submitted?How Is It Submitted?• Preferred method is electronic• Submit in both softcopy Excel and pdf

format

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How Is the ICP Used?How Is the ICP Used?• To determine your final indirect rates for

true-up of billings used in interim billing rates (or forward pricing rate agreements)

• FAR 42.1701 provides for systematic review and monitoring of rates.g

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What Kind of Information is Required?What Kind of Information is Required?• Financial and contract data.• Contractor format is acceptable, though

DCAA does provide the ICE Model, as an p ,example.

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How Are You Going to Help ME?How Are You Going to Help ME?• We cannot cover everything in an hour, but

we will give a brief explanation of each schedule and provide practical tips and tricks you can use in your organization.

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Takeaway #2Takeaway #2• Avoid the pitfalls and pay attention to

common deficiencies• Missing or unidentifiable schedules• Missing documentation

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Start FreshStart Fresh• Download the ICE model from the DCAA

website• Use the Quick Start instructions tab to

complete the Setup tab• Click the “Run Setup” buttonClick the Run Setup button• Compare the set-up version with last

year’s submission to ensure that theyear s submission to ensure that the correct pools are accumulating

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Start FreshStart Fresh

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Schedule ASummary of Indirect Expense Rates• No data entry is required on this schedule• This schedule completes itself with

information populated in other tabsp p• Final rates are developed by formulas

embedded in the spreadsheetembedded in the spreadsheet

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Schedule ASummary of Indirect Expense Rates

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Schedule B, C, DIndirect Cost Pools• B – G&A Pool Costs• C – Overhead Pool Costs (up to 5)• D – Intermediate Pool Costs (up to 6)D Intermediate Pool Costs (up to 6)• It will all keep coming back to your trial

balancebalancePitfall• Missing disclosure of intermediate pools and

R&D and B&P not fully burdened

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FringegSpecial Use Tab

• Used to allocate fringe costs• Used to allocate fringe costs • Enter all fringe accounts and costs on the

h d lschedule

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Schedule EClaimed Allocation Bases• How you allocate your indirect pools

• Total Labor• Direct LaborDirect Labor• Square Footage

# f t k d• # of network drops• No data entry on this schedule.

Common deficiency - unallowable costs not

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yincluded in G&A base

Schedule FCost of Money

• Federal agencies are required to use interest rates computed under the criteria established by the Renegotiation Act of 1971 (P.L. 92-41).

• Contract Dispute Act of 1978 (P.L. 95-563) and the Prompt Payment Act (P.L. 97-177) p y ( )provide for interest due on claims at a rate established by the Secretary of the Treasury y y ypursuant to 31 U.S.C. 3902(a).

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Schedule FCost of Money• Rates are published in the Federal Register

• http://www.fms.treas.gov/prompt/rates.html• COM rate posted twice a year. Use the p y

average for the FCOM calculation• Average NBV of assets * COM / allocationAverage NBV of assets COM / allocation

base = FCOM• Optional Add an F 1 tab to include the• Optional – Add an F-1 tab to include the

NBV calculations and detail

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Schedule GBooked and Claimed Direct Costs• Direct labor• Materials• TravelTravel• ODC

S b t t• Subcontracts

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Schedule HDirect Costs by Contract at Claimed Rates• Direct costs by contract type. Spreadsheet

applies OH and G&A based on your claimed amounts.

TipTip• Populate your database with task name,

contract or PO number and company taskcontract or PO number, and company task during set up.

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Schedule H-1Government Participation by Pool• The purpose of this schedule is to provide

a general overview of the extent that cost-type and flexibly priced contracts participate in the absorption of indirect expenses.

• Populated by data from other schedules.

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Schedule ICumulative Allowable Cost Worksheet• All claimed and unsettled direct and

indirect costs for contracts that cross years.

PitfallPitfall• Government participation not calculated

for all indirect ratesfor all indirect rates

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Schedule JSubcontract Information• Detailed information on all subcontracts

PitfallPitfall• Physically complete contracts not listed

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Schedule KHours and Amounts on T&M Contracts Pitfall• Invoiced hours do not add up and/or

balanceTip• Institute an invoicing format for T&M• Institute an invoicing format for T&M

invoices that includes cumulative totals for both hours and amounts for each laborboth hours and amounts for each labor category for the period, contract, and year

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Schedule L Payroll Reconciliation • Reconciles all labor accounts to 940/941

filings• Make sure all labor accounts are marked

as such to allow easy identification for this reconciliation.

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Schedule LPayroll ReconciliationPitfall• Most difficult of all the schedules to

balance• Accounts that do not balanceTipTip• Make sure accounts that are not labor are

l k d th t th t t l blocked so that they cannot accept labor.

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Schedule MAccounting/Organization Changes• Significant changes to accounting

organization or system such as new or redefined cost pools, implementation of new software, mergers and acquisitions, approved billing rates, etc.

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Schedule N Certificate of Indirect Costs• Certification by VP or CFO• This page has to be printed, signed, and

added to the scanned copy of the pysubmission

PitfallMi i tifi ti• Missing certification

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Schedule OContract Closing Information• Information on T&M and Cost Type

Contracts• Requires a closing date be established.q g• No links to any other schedules.

Pitfall• Failing to report a contract closed

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Supplemental SchedulesSupplemental Schedules• Supplemental Schedules A, B, C, and D

are Optional• They are not required for the submission of y q

the ICE• The information is required to complete theThe information is required to complete the

audit• The schedules are a helpful means to• The schedules are a helpful means to

provide the data in a useful format

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Supplemental SchedulesA-1 to A-4• Comparative analysis of indirect expense

pols detailed by account to prior fiscal year and budgetary data

• A-1 Overhead• A-2 G&AA 2 G&A• A-3 Indirect Cost Pools

A 4 Di t C t• A-4 Direct Costs

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Supplemental B

• General organizational information and executive compensation for the five most highly compensated executives

• Not required for public companies as it fallsNot required for public companies as it falls under FPDS. FAR 52.204-1

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Supplemental C

• Identification of prime contracts under which the contractor performed as a subcontractor

• Lists of ACOs and PCOs for each flexibly priced contractp

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Supplemental OContract BriefingsTip• Consider adding this schedule to the

contract kick-off process. It will greatly aid p g yin completing this process at year end.

• Good standard information for a contractGood, standard information for a contract folder in a consolidated format

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PenaltiesFAR 42.709• Claiming expressly unallowable items

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Takeaway #3Takeaway #3• Start with the end in mind!

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Resources

• DCAA ICE Model • http://www.dcaa.mil/ice_model.html• DCAA Guidelines for ICE AdequacyDCAA Guidelines for ICE Adequacy• http://www.dcaa.mil/Guide_for_Determin

ing Adequacy of Contractor Incurred Coing_Adequacy_of_Contractor_Incurred_Cost_Proposal.pdf

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ResourcesContinued• Help for Small Businesses• http://www.dcaa.mil/small_business/Incu

rred Cost Submissions.pdf_ _ p• DCAA Memo - Treatment of Delinquent

Final Indirect Rate ProposalsFinal Indirect Rate Proposals• http://www.dcaa.mil/mmr/14-PPD-

002 pdf002.pdf

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3 Takeaways3 Takeaways• It's never too early to start• Avoid the pitfalls and pay attention to

common deficiencies• Start with the end in mind

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QuestionsQuestions

Robert E. Jonesrobert@leftbrainpro.com(513) 728-1163( )

Suzanne Camdensuzannecamden@hotmail comsuzannecamden@hotmail.com(757) 572-1716

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