How the DCAA ICE Model Works
The ICE Model brings accounting information into standardized schedules used to develop an incurred cost proposal. Contractors configure the model for their organization, provide fiscal-year financial data, and populate the applicable cost pools, allocation bases, rates, and supporting schedules.
The model can accommodate different indirect cost structures, including G&A, overhead, fringe, material handling, intermediate pools, and facilities capital cost of money. Its setup options allow schedules to reflect the contractor's actual accounting structure rather than applying one identical rate configuration to every business.
For contractors evaluating ERP capabilities, the DCAA-Compliant ERP: 2026 Buyer's Guide + AI Audit Tips can provide additional context on ERP features, integration, and audit-readiness workflows.
Key Schedules and Financial Data
The ICE package organizes the information needed to support an incurred cost submission. The exact schedules applicable to a contractor depend on factors such as business type, size, and accounting system capabilities.
- Indirect cost pools and allocation bases used to calculate final indirect rates.
- Direct and indirect costs by contract or other required classification.
- General and administrative expenses and applicable overhead or fringe pools.
- Subcontract and other supporting cost information where applicable.
- Reconciliations between general ledger amounts and costs claimed in the proposal.
- Supplemental information requested to support the incurred cost audit.
Contractors can use the DCAA Timekeeping & Labor Cost Tracking Guide to understand timekeeping requirements, labor cost tracking practices, compliance considerations, and ways to maintain audit-ready labor records.
Indirect Rate Calculation in the ICE Model
The model supports calculations that convert actual indirect cost pools and allocation bases into final indirect rates. A basic rate calculation is:
Indirect Cost Rate = Indirect Cost Pool ÷ Allocation Base × 100
For example, assume a contractor has a $1.5M indirect cost pool and a $7.5M allocation base. The resulting rate is $1.5M ÷ $7.5M × 100 = 20%. The resulting rate can then be applied according to the contractor's established accounting practices and applicable contract requirements.
Accurate pool and base information is therefore important because the ICE schedules connect the underlying accounting data with the final indirect rate calculations.
ERP Data and ICE Model Preparation
Many contractors prepare ICE schedules from accounting and ERP data. A reliable process requires consistent mappings between the general ledger, contract records, labor information, indirect pools, and allocation bases. The ERP for Government Contractors: The Complete Guide (2026) provides additional guidance on ERP selection, DCAA compliance, integration, and implementation considerations.
When ERP structures contain different departments, entities, cost centers, or accounting dimensions, Hyperbots Data Model Designer for ERP/HRMS Mapping can automatically understand and map ERP and HRMS structures without middleware, manual setup, or custom coding. This type of data mapping can support the preparation of standardized financial information for downstream workflows.
Using the Model During the Submission Process
A practical ICE preparation process starts with the completed fiscal-year accounting records. Finance teams can establish the reporting period, configure the model, load the required financial information, reconcile source records, review indirect pools and allocation bases, and validate the resulting schedules before submission.
The model also supports documentation by keeping related schedules together in an electronic submission package. Contractors should retain the underlying records used to prepare the schedules so reported amounts can be traced back to their accounting systems and supporting documentation.
For broader government-contractor finance workflows, an Acquisition Model can describe how an organization structures acquisition activities and related business processes, while the ICE Model specifically addresses incurred cost proposal preparation.
ICE Model Versions and Best Practices
DCAA's current ICE Model page lists Version 1.08, released in July 2026, using Microsoft Power Query, alongside Version 2.0.1h, using Visual Basic. The Power Query version is designed for modern Excel compatibility and uses Power Query to compile data and generate incurred cost schedules.
Contractors should use the current version appropriate to their submission process and follow the accompanying user documentation. The ICE manual also describes setup procedures, required data files, schedule preparation, data linking, and sample schedules. Keeping the company name and fiscal period consistently identified across submitted schedules helps maintain an organized proposal package.
The broader concept of an M A Model concerns mergers and acquisitions and therefore differs from the ICE Model, which is specifically structured around incurred cost proposal preparation for federal contractors.
Summary
The DCAA ICE Model is an electronic framework for organizing and preparing incurred cost proposal schedules under FAR 52.216-7. It connects actual accounting data with indirect cost pools, allocation bases, rate calculations, and supporting schedules. Contractors can use its standardized structure to prepare a coherent submission while retaining responsibility for the accuracy, completeness, and compliance of the information provided.