The future of Cost Accounting Standards for government contractors

The Cost Accounting Standards Board (CASB) has proposed significant changes to the Cost Accounting Standards (CAS) compliance framework, aiming to simplify compliance, reduce barriers to entry, and provide clarity for government contractors. Here’s what you need to know.

Key Takeaways 

• The basic CAS threshold would rise to $35 million, reducing CAS-covered business segments by 60% while maintaining over 90% of CAS-covered dollars.

• CAS applicability for multiple award IDCs will be determined at the task order level, while single award IDCs will use the contract ceiling value.

• The CAS waiver authority threshold would increase to $100 million, giving agencies more autonomy in waiving CAS requirements. 

The CASB recently published a Notice of Proposed Rulemaking (NPRM) that would fundamentally reshape the CAS compliance landscape for government contractors—one of the most significant proposed rules in the history of the program.

The proposed rule change and its potential impact 

For an industry that has long advocated for modernization, barrier-to-entry reduction, and clarity on CAS applicability, this proposed rule delivers on all three fronts. 

The basic CAS applicability threshold jumps to $35 Million

Section 1806 of the 2026 National Defense Authorization Act (NDAA) decouples the CAS applicability threshold from the Truthful Cost or Pricing Data (TINA) statute, raising the threshold to the standalone $35 million figure.

Under the current framework, a contractor with a single negotiated contract over $7.5 million will trigger CAS coverage for all its CAS-eligible contracts above the TINA threshold (currently $2.5 million). If finalized, this new, proposed rule would directly impact mid-size contractors by dramatically simplifying the entry point. If your new contract (after the effective date of the final rule) is under $35 million, CAS would not apply.

The CASB estimates this change alone would reduce the number of CAS-covered business segments by approximately 60%, while still maintaining over 90% of the dollars currently subject to CAS coverage. Full CAS threshold and disclosure statement thresholds increase to $100 million. 

If adopted, the proposed rule would increase the thresholds for full CAS coverage and disclosure statement requirements from $50 million to $100 million on new determinations of CAS applicability after the effective date of the final rule. The implications of these changes are huge, since these thresholds have not moved since 2000.

Agency head CAS waiver authority increases to $100 million

The executive agency head waiver threshold for CAS would rise from $15 million to $100 million, implementing a change authorized by Section 820 of the 2017 NDAA. This provides agencies with more flexibility to waive CAS requirements without seeking CASB approval.

Clarity on CAS applicability to Indefinite Delivery Contracts (IDCs)

Though the industry has been debating this provision for years, the CASB is proposing a divided approach:

• Multiple award IDCs: CAS applicability and exemptions will be determined at the individual task or delivery order level. This aligns with the 809-Panel’s recommendation and reflects the practical reality that the information needed to assess CAS coverage (whether an order is competed and whether certified cost or pricing data is required) is generally not available until the order is placed, and the ceiling value of a multiple award IDC is highly speculative. 
• Single award IDCs: CAS applicability will be determined at the contract level, using base and all-option ceiling value. The CASB concluded that:
  • Ceiling value bears a significant relationship to the value of orders placed under single award IDCs 
  • Unlike multiple award IDCs, the information is available at the time of award of the IDC to be able to determine CAS exemptions and consistently apply CAS to single award IDCs.

What this means for contractors

The raised thresholds significantly lower the barriers for compliance. Companies that have outgrown small business status will find the path to competing for larger contracts more accessible under modified CAS coverage. For those who hold or compete for IDCs, the proposed clarification on CAS applicability eliminates a significant source of ambiguity.

How Highspring can help

Highspring’s Government Contracting Advisory Services (GCAS) team collaborates with contractors across the federal landscape, from emerging mid-size companies navigating CAS for the first time to large defense primes managing complex compliance programs. Our team includes former DCAA auditors, industry professionals who’ve led GovCon compliance practices at major contractors, and experienced advisory professionals.

We’re actively helping clients assess the potential impact of this proposed rule across their contract portfolios, including CAS applicability analysis, Disclosure Statement review, indirect rate structure evaluation and IDC-specific compliance planning.

If you have questions about how these proposed changes affect your organization, register for our upcoming webinar and reach out to our GCAS team to learn more.