On Sunday, December 7, 2025, Congress put out a compromise version of the 2026 National Defense Authorization Act (NDAA). There is a lot in this version, but I wanted to bring to your attention the exciting possible changes to the Cost Accounting Standards (CAS).
What Might We See?
Congress is directing the Department of Defense (the name change to the Department of War has not made it through Congress) in Section 1806, Matters Related to Cost Accounting Standards, to:
- Increase the threshold for CAS applicability from $2.5M to $35M;
- Increase the threshold for full CAS coverage from $50M to $100M;
- Remove the 7.5M trigger contract requirement;
- Add “or the portion of a contract or subcontract” exempt from CAS coverage;
- All Cost Accounting Practice changes in a single fiscal year (not made on the same date) will be considered together in determining any potential increased cost in the aggregate to the Government; and
- Changes to the structure of the CAS board:
- The Board shall consist of 5 voting members and 2 non-voting members:
- The Administrator of Federal Procurement Policy will be the Chairman;
- Only 2 additional representatives of the Federal Government – 1 from DoD and 1 from GSA;
- 2 individuals from the private sector, appointed by the Director of the Office of Management and Budget (OMB) – 1 from a Contractor and 1 from a CPA firm;
- An increase in the CAS Board staff to 4;
- Up to 2 non-voting members appointed by the Board from academia, a nonprofit organization, or a private entity with substantial experience in establishing financial accounting and reporting standards in compliance with Generally Accepted Accounting Principles; and
- Beginning on January 1, 2028, an individual who is a member of an audit entity of an executive agency is not eligible to serve as a member of the Board. Yep, DCAA is out.
- The Board shall consist of 5 voting members and 2 non-voting members:
Remember, this must be passed by Congress and signed by the President, and then it will take at least 180 days or so to get into the regulations.
What About Current Contracts?
Great question. We may see the CAS Board issue regulations allowing modifications to existing contracts to meet the new requirements, but we may not. During the regulatory promulgation process, we need to make this recommendation to the Board.
Preparing for Regulatory Changes Ahead
As these potential CAS updates move through the legislative and regulatory process, contractors will benefit from staying informed and prepared for changes that could affect current and future contracts. Redstone Government Consulting supports government contractors by interpreting evolving regulatory requirements, reviewing contract impacts, and guiding updates to accounting practices and systems. Our team assists with evaluating CAS applicability, assessing cost impacts, and strengthening internal controls so contractors remain aligned with expectations and ready for implementation once final rules are issued.
John is a Director with Redstone Government Consulting, Inc. providing government contract consulting services to our clients primarily related to the DFARS business systems, CAS Disclosure Statements, and DCAA/DCMA compliance preparation, advisory, and defense. Prior to joining Redstone Government Consulting, John served in a number of capacities with DCAA/DCMA for more than 30 years. Upon his retirement, he was based in Texas as an SES-level Corporate Audit Director for DCAA, managing a staff of 300 auditors at one of the largest DOD programs. Professional Experience John began his career in the late 80s working in the Clearwater, FL audit office and over the next three decades he progressed through a number of positions within both DCAA and DCMA with career highlights as DCAA Program Manager at Ft. Belvoir, Chief of Technical Programs Division, Deputy Assistant Director-Policy, Director of the DCMA Cost and Pricing Center, the SES-level Lockheed Martin Corporate Audit Director, and Director of Integrity and Quality Assurance. John’s three decades of experience in performing and leading DCAA auditors and DCMA reviewers provides a wealth of expertise to our clients. John’s role, not only in the performance of audits, but also in the development of audit policy affords him unique insights into the defense of audit findings and the linkage of audit program steps to the underlying regulatory framework. He is an expert in FAR, DFARS, and other agency acquisition regulation, as well as a subject matter expert in the Cost Accounting Standards having reviewed and provided audit feedback on many of the largest and most complex cost accounting practices during his tenure with the DCAA. John’s tenure with DCAA and DCMA came at a critical time during each agency’s history where a number of changes were occurring such as the response to the ICS backlog, development of audit approaches to the DFARS Business Systems and implementation of new audit initiatives as a result of Congressional oversight through the NDAA process. John’s leadership at the DCMA Cost & Pricing center saw oversight of all major DOD pricing actions, leadership of should cost review teams, the Commercial Pricing group and many other areas of strategic value to our clients. His involvement in these and other Agency initiatives is of great value to our clients due to his in depth understanding of DCAA and DCMA’s internal policy directives. Education John holds a Master of Business Administration and a B.A. in Accounting from the University of South Florida. Certifications Certified Information Systems Auditor State of Alabama Certified Public Accountant