The CAS Board has finalized significant changes to CAS thresholds and coverage requirements effective October 1, 2026. The rule raises the basic and full coverage thresholds while introducing new considerations for IDIQ contracts, existing awards, and Disclosure Statement requirements.
On September 1, 2026, the Cost Accounting Standards (CAS) Board issued a final rule implementing the 2026 National Defense Authorization Act (NDAA) – Section 1806, Matters related to cost accounting standards, increase in the CAS thresholds effective October 1, 2026.
What Changed?
CAS Exemption Threshold Increases to $35 Million
9903.201-1(b), addressing exemptions to CAS, has been changed to provide that contracts, subcontracts, and interdivisional transfers that do not exceed $35M will be exempt from CAS coverage. This eliminates the trigger contract of 7.5M and decouples the CAS threshold from the Truthful Cost or Pricing Data Act (TINA) threshold. The remaining exemptions remain unchanged, other than making it clear that parts of a contract (i.e., hybrid contracts) can be exempt while other parts of the same contract can be CAS covered.
CAS Coverage Changes for IDIQ Contracts
9903.201-1(c) has been added to implement the CAS Board’s position relating to Indefinite Delivery Indefinite Quantity (IDIQ) contracts. CAS coverage on Single award IDIQ contracts will be based on the ceiling value (i.e., maximum value). The CAS board was adamant that these are high-risk contracts to the Government and took no heed to the numerous comments. Multiple award IDIQ contracts CAS coverage will be determined at the order level. Which is at least one small step in the right direction.
Full and Modified CAS Coverage Changes
9903.201-2, addressing types of CAS coverage, has been changed to increase the threshold for full CAS coverage from $50M to $100M. This now provides that all individual contracts, subcontracts, and interdivisional transfers, not otherwise exempt from CAS, that are valued at $100M or more, will be full CAS covered. Additionally, should the contractor receive CAS covered contracts, subcontracts, and interdivisional transfers totaling $100M or more in the prior cost accounting period all contracts, subcontracts, and interdivisional transfers, not otherwise exempt from CAS, will be full CAS covered.
9903.201-2(b)(4) has been added to implement what we must say is a surprise. The CAS Board is providing for the transition contracts, subcontracts, and interdivisional transfers that were full CAS covered under the prior threshold to modified CAS coverage provided their award value was below the new threshold. The provision states:
“Contractors or subcontractors subject to full CAS coverage based on the $50 million threshold in effect prior to October 1, 2026 may transition the affected contracts or subcontracts to modified coverage at the start of the business unit’s next full cost accounting period beginning on or after October 1, 2026, provided the business unit: (i) Has no unresolved CAS noncompliances; and (ii) Does not meet the criteria for full CAS coverage using the $100 million threshold in effect as of October 1, 2026.”
While we are happy to see this, the wording used is a little concerning. It has always been that contracts are CAS covered not contractors. But what do they say about a gift horse?
9903.201-2(b)(5) was also added to allow contractors and subcontractors now eligible for modified coverage based on the new threshold, to certify the eligibility for modified coverage on new solicitations and awards on or after October 1, 2026.
Related Threshold and Disclosure Statement Changes
Additionally, the following sections have been changed to increase the threshold for full CAS coverage from $50M to $100M:
- 9903.201-3, addressing requirements for solicitations;
- 9903.201-4, addressing requirements for contract clauses;
- 9903.201-5, addressing requirements related to waivers; and
- 9903.202-1, addressing requirements for a disclosure statement.
9903.202-1(b)(2) has also changed. The text “Any company which, together with its segments,” has been removed and the text “Any business unit or segment,” has been added. This means that the requirement to submit a disclosure statement is now limited to the business unit or segment alone.
What Do Government Contractors Need to Do?
Review pending solicitations and upcoming proposals to determine if you are eligible for Modified CAS instead of Full CAS. Contractors are going to need to update their policies and procedures for accounting estimating and purchasing. Provide training to accounting, estimating, and purchasing personnel on the updates and the impacts they will have.
Preparing for the New CAS Thresholds
Redstone GCI assists government contractors with understanding CAS requirements and evaluating how changes in coverage thresholds may affect existing contracts, upcoming awards, and Disclosure Statement requirements. Our subject matter experts can also assist with reviewing and updating accounting and estimating policies and procedures, evaluating cost accounting practices, and providing training to accounting, estimating, contracts, and other personnel affected by the new requirements.