The Incurred Cost Submission (ICE): Who Files, When, and What Breaks

If you hold a cost-reimbursement or T&M contract with the FAR 52.216-7 Allowable Cost and Payment clause, you owe the government an annual Incurred Cost Submission — commonly called the ICE (Incurred Cost Electronically) submission after the DCAA model format most contractors use to build it. It’s one of the least glamorous recurring obligations in government contracting, and also one of the easiest to get flagged as inadequate if you treat it as a once-a-year scramble instead of a year-round data discipline.

Who Actually Has to File

The trigger is contract type, not company size. Any contractor holding a cost-reimbursement contract, or most T&M contracts, that includes the Allowable Cost and Payment clause is required to submit. A purely firm-fixed-price contractor generally doesn’t have this obligation at all — so before you assume you need an ICE submission, confirm the clause actually appears in your contract.

The Deadline Is Firm, and the Extension Process Isn’t Automatic

An adequate incurred cost submission is due within six months of your fiscal year end — June 30 for most contractors on a calendar fiscal year. If you genuinely can’t make that date, you need to request a written extension from the DCMA before the deadline passes, not after. Miss the deadline with no extension on file, and the DCAA auditor can issue unilateral rate recommendations that you have far less leverage to contest than a submission you controlled.

The Schedules That Actually Make Up the Submission

The DCAA ICE Model organizes the submission into three groups of schedules. Schedules A through F cover your indirect cost pools — the actual expenses that make up overhead, G&A, and fringe for the year. Schedules G through K cover contract costs, tying your indirect pools back to specific contracts and task orders. Schedules L through O cover other required contract information. Using the DCAA’s own ICE Model template, rather than building your own format from scratch, is the easiest way to make sure you’re not missing a schedule the auditor expects to see.

Where Submissions Actually Get Rejected

A handful of recurring mistakes account for most adequacy rejections: Schedule N not signed by an authorized party (your CFO or someone with equivalent authority, not a bookkeeper); costs claimed without being shown as reasonable, allocable, and allowable; unallowable costs not separately identified as voluntary deletions, with no explanatory notes; unallowable expense accounts not reflected as reductions in your general ledger on Schedule B; missing contract ceiling figures on Schedule I; and Schedule I not indicating whether each contract is subject to the FAR 52.242-3 penalty clause. Nearly all of these are catchable with a careful internal review before submission, not technical accounting problems.

The Real Fix Is a Year-Round Habit, Not a June Scramble

The contractors who submit cleanly aren’t the ones with better accountants in May — they’re the ones whose accounting system tracks direct and indirect costs correctly by contract all year, so the ICE submission is closer to a compilation exercise than a reconstruction project. Our government cost proposal guide and wrap rate calculation guide cover the related cost structure work that makes both your proposals and your incurred cost submissions more defensible.

The Penalty You Risk by Including the Wrong Costs

Submitting an incurred cost proposal isn’t just a paperwork exercise — claiming the wrong costs on it can trigger an actual monetary penalty on top of simply losing the cost. FAR 52.242-3, Penalties for Unallowable Costs, and the related FAR 42.709 procedures spell out what happens when an indirect cost proposal includes a cost that is expressly unallowable under a specific FAR or agency cost principle — things like certain entertainment costs, alcoholic beverages, lobbying costs, or federal income taxes, each of which FAR Part 31 flatly disallows rather than merely questions.

When DCAA or your contracting officer catches an expressly unallowable cost in your proposal, the penalty is the disallowed amount allocated to your covered contracts, plus interest on whatever portion of that amount the government already paid you. That’s painful but recoverable. The penalty doubles — to twice the disallowed amount — if the same cost was already found unallowable for your company in a prior year and you were notified of that determination in writing before you submitted the current proposal. In other words, claiming a cost once might be treated as an honest allocation error; claiming it again after being told it’s unallowable looks like something else entirely.

These penalties are explicitly in addition to, not instead of, any other administrative, civil, or criminal remedy available under law. That matters because knowingly including costs you’ve been told are unallowable can also expose you to False Claims Act liability, since each improperly loaded invoice or voucher built on that rate can be treated as a separate false claim with its own treble-damages exposure.

The practical fix costs nothing: separately identify anything questionable as a voluntary deletion with a short explanatory note rather than quietly folding it into your pools, and keep your general ledger showing unallowable accounts as reductions, not omissions.

Key Takeaways

• The ICE submission is triggered by contract type (cost-reimbursement or T&M with the Allowable Cost and Payment clause), not by company size.
• It’s due six months after your fiscal year-end; request a written DCMA extension before the deadline if you can’t make it, not after.
• The DCAA ICE Model organizes the submission into indirect cost pool schedules (A-F), contract cost schedules (G-K), and other information schedules (L-O).
• Most adequacy rejections come from a handful of recurring, catchable errors — an unsigned Schedule N, missing contract ceilings, or unidentified unallowable costs.
• A clean submission depends on accurate cost tracking all year, not a scramble to reconstruct records in the months before the deadline.

FAQ

Do firm-fixed-price contractors need to file an incurred cost submission? Generally no — the obligation is tied to holding a cost-reimbursement or T&M contract with the Allowable Cost and Payment clause, not to company size or contract count.

What happens if I miss the six-month deadline with no extension? The DCAA auditor can issue unilateral rate recommendations, which gives you significantly less room to contest the result than a submission you controlled and filed on time.

What’s the single most common reason an incurred cost submission gets rejected as inadequate? Incomplete or incorrectly filled schedules — particularly an unsigned Schedule N, missing contract ceiling data on Schedule I, or unallowable costs not separately identified with supporting notes.