Incurred Cost Submission (ICS)
An Incurred Cost Submission, or ICS, is the contractor's annual submission of actual cost information for a completed fiscal year. It is commonly required for cost-reimbursement and similar contracts so the government can establish final indirect cost rates and review claimed costs.
What Is an Incurred Cost Submission?
In government contracting, an ICS is the year-end package a contractor submits to support its final indirect cost rate proposal. It shows the contractor's actual costs for the period and gives the government the information needed to evaluate whether those costs are allowable, allocable, and reasonable.
It is especially important for cost-type contractors because final billing and contract closeout often depend on accepted indirect cost rates.
Key Characteristics
Annual submission covering a completed fiscal year
Supports final indirect cost rate establishment
Commonly required for cost-type contractors
Reviewed for adequacy and audit support
Includes schedules, cost data, and supporting information
How It Works in Government Contracting
The ICS is submitted after the contractor's fiscal year ends. It is typically provided to the appropriate government officials for review and possible audit.
It is used by contractors, auditors, contracting officers, and administrative contracting personnel. In practice, the submission includes indirect cost pools, allocation bases, and supporting data needed to establish final rates and reconcile billed costs.
This process helps the government compare estimated costs billed during performance with the contractor's actual costs for the year.
Regulatory Framework
The ICS is tied to the federal cost-reimbursement and indirect cost rate framework. It supports the government's review of actual incurred costs and final rate settlement.
The exact format and supporting detail depend on the contractor's accounting practices, contract requirements, and the types of indirect costs being claimed.
Why It Matters for Contractors
The ICS matters because it affects final indirect rates, cost recovery, audit exposure, and contract closeout. An inadequate or late submission can delay settlement, increase scrutiny, and create financial risk.
It also matters strategically because good ICS preparation supports cleaner audits, stronger documentation, and more predictable financial results on cost-type contracts.
Common Misconceptions
An ICS is just a routine spreadsheet.
It is a formal annual submission that supports final indirect rate review and possible audit.
Only large contractors need an ICS.
Smaller cost-type contractors may also need to submit one if their contracts require final indirect cost settlement.
The contractor only submits it if an auditor asks for it.
The requirement usually comes from the contract terms and cost-rate settlement process.
Frequently Asked Questions
What does ICS stand for?
Incurred Cost Submission.
Who submits an ICS?
Typically contractors with cost-type or similar contracts that require final indirect cost rate settlement.
Why is the ICS important?
Because it helps the government review actual incurred costs and establish final indirect rates.
Can an inadequate ICS cause problems?
Yes. It can delay review, audit, indirect rate settlement, and contract closeout.
Related Government Contracting Topics
DCAA Audit: A financial and compliance review that may examine incurred costs and supporting records.
Final Indirect Cost Rate: The actual indirect rate established after the fiscal year is complete.
Allowable Cost: A cost that may be reimbursed if it meets contract and cost principle requirements.
Cost-Reimbursement Contract: A contract type that pays allowable incurred costs under contract terms.
ICE Model: A common workbook tool used to help prepare incurred cost submissions.
Contract Closeout: The final administrative process that often depends on completion of indirect cost settlement.