The most common name for the annual indirect rate proposal submitted to DCAA. Collects all cost accounting data from a contractor's general ledger to compute actual indirect rates for the fiscal year.
An alternate name used interchangeably with ICP. DCAA and many contracting officers use “submission” to refer to the same package of schedules and supporting documentation.
A third name for the same deliverable, emphasizing its core purpose: establishing the actual indirect cost rates that replace provisional billing rates used during contract performance.
During the year, contractors bill using provisional indirect rates — estimates approved at contract start. After the fiscal year closes, the ICP computes actual rates from the general ledger. The difference between what was billed (provisional) and what should have been billed (actual) produces an overbilling or underbilling on each flexibly priced contract. Overbillings are credited to the government; underbillings may be invoiced.
Fixed-price contracts described at FAR 16.203-1(a)(2), 16.204, 16.205, and 16.206 — including economic price adjustment, redetermination, and fixed-ceiling-price contracts.
Cost-reimbursement contracts and subcontracts (FAR subpart 16.3), including CPFF, CPIF, CPAF, and cost-sharing arrangements.
Incentive contracts and subcontracts where the price may be adjusted based on actual costs incurred (FAR subpart 16.4).
Orders issued under indefinite-delivery contracts and subcontracts where final payment is based on actual costs incurred (FAR subpart 16.5).
The materials portion of time-and-materials contracts and subcontracts (FAR subpart 16.6).
Fixed-price contracts generally do not trigger the ICP requirement unless they contain flexibly priced line items. If you are unsure whether FAR 52.216-7 applies, check Section I of your contract — that is where the clause will appear if incorporated.
Contractor closes the books on the fiscal year
ICP must be submitted within 6 months of FY end
Proposal delivered to the auditor and contracting officer
DCAA screens against 47-question checklist
DCAA examines rates, costs, and compliance
ACO issues final rate agreement letter
A contractor with a calendar fiscal year (Jan 1 – Dec 31) must submit its ICP by June 30 of the following year. A contractor with a September 30 fiscal year end must submit by March 31. Extensions may be requested but approval is at DCAA's discretion.
| Schedule | Title | Description |
|---|---|---|
| A | Rate Summary | Master summary of all indirect rates (Pool ÷ Base = Rate) |
| B | G&A Expense Pool | General & Administrative indirect cost pool detail |
| C | Overhead Pool(s) | Overhead indirect cost pool detail |
| D | Intermediate Pools | Intermediate cost pools (e.g., Occupancy) allocated to final pools |
| E | Allocation Bases | OH and G&A allocation base detail (labor, fringe, direct costs) |
| F | Cost of Money | CAS 414 facilities capital cost of money computation |
| G | Reconciliation | Reconciliation of total costs to books of record |
| H | Direct Costs | Direct costs by contract with applied indirect rates |
| I | Cumulative Costs | Cumulative allowable costs and billings by contract |
| J | Subcontracts | Subcontract and intercompany cost detail |
| K | T&M Contracts | Time and materials contract detail |
| L | Payroll Reconciliation | Labor distribution vs. IRS Form 941 reconciliation |
| M | Decisions & Changes | Disclosure of CAS changes and accounting practice changes |
| N | Certificate | FAR 52.242-4 Certificate of Final Indirect Costs |
| O | Contract Closing | Contract completion and closing information |
Schedule A summarizes all computed indirect rates. Schedule H lists direct costs by individual contract. Schedule I tracks cumulative costs claimed and billed — revealing overbillings and underbillings. Schedule N is the signed certification that all claimed costs are allowable — submitting without it renders the entire proposal inadequate.
Expenses that can be specifically identified with a single contract. These costs vary based on the contract's scope and requirements.
Expenses that benefit multiple contracts or the organization as a whole. These costs are pooled and distributed via indirect rates.
Charging an indirect cost as direct inflates the contract price and understates indirect rates. Charging a direct cost as indirect distributes it to contracts that received no benefit. Either error can result in DCAA questioned costs, rate adjustments, and compliance findings.
A prudent businessperson would incur the same cost under similar circumstances. The cost must be ordinary and necessary for the conduct of the contractor's business.
The cost must provide a measurable benefit to the contract or cost objective being charged. A cost is allocable if it is incurred specifically for the contract or benefits it in proportion to the allocation.
The cost must comply with standards promulgated by the CAS Board, if applicable; otherwise, generally accepted accounting principles and practices appropriate to the circumstances.
The cost must conform to any limitations set forth in the specific contract terms. Contracts may include clauses that restrict or cap certain cost categories beyond what FAR requires.
The cost must comply with any limitations set forth in FAR subpart 31.2, including the 46 cost principle categories under FAR 31.205 that define which expenses are allowable, unallowable, or conditionally allowable.
Costs that are expressly unallowable under FAR 31.205 (entertainment, lobbying, alcoholic beverages, etc.) must be identified and removed from indirect pools before submission. Including expressly unallowable costs can trigger penalties under FAR 42.709 — up to the amount of the unallowable cost plus interest.
Charging indirect costs as direct (or vice versa) distorts rates across every contract and is one of the most common DCAA findings.
Failing to remove FAR 31.205 expressly unallowable costs from indirect pools — entertainment, lobbying, interest, alcohol — before submission.
Including or excluding costs from the G&A base that contradict the contractor's elected CAS 410 method, producing cascading rate errors.
Schedule L (payroll) does not reconcile to the general ledger, creating a gap that DCAA will question during audit fieldwork.
Submitting without a signed Certificate of Final Indirect Costs renders the entire proposal inadequate and restarts the review clock.
Missing invoices, timesheets, or subcontract agreements to support claimed costs. DCAA requires full transparency during audit.
The contracting officer may reduce provisional billing rates on flexibly priced contracts when a timely and adequate incurred cost proposal has not been submitted.
The contracting officer may establish final indirect cost rates unilaterally when the contractor fails to submit a completion invoice after rates are settled, per FAR 52.216-7(d)(6).
Inadequate proposals invite deeper scrutiny. DCAA may question entire cost categories if supporting documentation is missing or if unallowable costs are found in indirect pools.
Including expressly unallowable costs in the ICP can trigger penalties equal to the disallowed amount plus interest. Repeat offenses can result in penalties up to twice the unallowable amount.
A late or inadequate ICP does not just delay contract closeout — it can directly reduce cash flow, trigger penalties, and damage your standing with contracting officers and DCAA. Timely, accurate submission is one of the highest-value compliance activities a government contractor can perform.
The ICP Dashboard automates schedule generation, runs the full DCAA adequacy checklist, and validates FAR 31.205 compliance — all from your browser.
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