Incurred Cost submission time is fast approaching (as well as some much needed down time for many government contractors). On the other side of the new year is the great unknown, the void of time in man a compliance and accounting staff in GC known as the IC preparation time. For those who haven’t seen or done an incurred cost submission, imagine your 1040 with a few extra pages, a lot more certification, the risk of losing money, and no TurboTax or TaxACT software to help you figure it out. Sure, there are some tools out there, but it can be daunting to say the least. Then add in DCAA taking a little more of a robust approach to its responsibilities and you have a recipe for lots of fun.
I recently read about a small policy change from the DCAA that could impact the bottom line of a small business. I noticed a contractor received a notice from the DCAA that indicated there will be more emphasis on subcontracts. Specifically this emphasis will be on reviewing policies and procedures related to subcontracting. Two areas of concern were outlined on monitoring subcontractors and on requiring subcontractors over $700K to submit Incurred Cost Submissions either to the prime or to the ACO in accordance with FAR 52.216-7. This has significant impact for many small businesses.
Preparation of an Incurred Cost Submission can be daunting enough, let alone monitoring your subcontractors – especially if you are a small or mid-size business (just a reminder that an Incurred Cost Submission is due within 6 months from the end of a company’s fiscal year per FAR 52.216-15).
So there are basically 2 action items required:
1. You may need to review your Policies and Procedures to make sure you have the proper documents in place for your subcontracts and control of your subcontractors. You should at least review and do some “gap” analysis. Then fill in these “gaps” to handle these situations. A lot of content, research tools, and training opportunities are available to help ensure these policies and procedures are working properly to be compliant.
2. You may need help with preparing your Incurred Cost Submission. Now is not too early to start getting ready even though it may not be due for 6 months. DCAA recommends using the Incurred Cost Electronically (ICE). Completing your ICE early can also help improve your positive cash flow.
In today’s government contracting environment you don’t want to do this wrong. Errors in Incurred Cost submissions can take money from your bottom line. Happy New Year!