RGCI - How the March 2026 CAS Threshold and Related Changes Affect Government Contractors

On March 20, 2026, the CAS Board issued a Notice of Proposed Rulemaking proposing significant increases to the CAS thresholds and changes to exemption determinations for indefinite-delivery contracts. Most changes reflect requirements in Section 1806 of the 2026 NDAA and are broadly favorable to contractors, though key concerns remain about the treatment of single-award indefinite-delivery contracts.

Highlights

  • Proposed CAS threshold increases. The March 2026 NPRM proposes to raise the full CAS and disclosure statement threshold to $100 million. It also proposes raising the basic CAS threshold to $35 million. These thresholds would be decoupled from the Truthful Cost or Pricing Data statute. The $7.5 million trigger contract requirement would also be eliminated.
  • Changes to indefinite-delivery contract exemptions. CAS applicability for multiple-award indefinite-delivery contracts would be determined at the order level. For single-award contracts, the ceiling value would determine CAS applicability. This raises administrative burden concerns for contractors with smaller individual orders.
  • Incomplete implementation of the 2026 NDAA. The NPRM does not yet address two statutory changes from Section 1806. These include CAS applicability for portions of hybrid contracts and the removal of firm-fixed-price contracts from cost impact calculations. It also omits the ability to net cost accounting practice changes within a fiscal year.
  • Government implementation deadlines are approaching. The 2026 NDAA directed DFARS updates by April 17, 2026. CAS rule revisions are due by June 16, 2026. Public comments on the NPRM are due April 20, 2026.

On March 20, 2026, the Cost Accounting Standards (CAS) Board, Office of Federal Procurement Policy (OFPP), and Office of Management and Budget (OMB) issued a Notice of Proposed Rulemaking (NPRM) “to elicit public comments on proposed increases to the Cost Accounting Standards (CAS) thresholds and other matters related to the CAS program requirements.”

What is Changing with CAS?

The CAS Board is proposing to make the following changes:

  • Increasing the threshold for full CAS and disclosure statement requirement to $100 million.
  • Decoupling the basic CAS threshold from the Truthful Cost or Pricing Data statute and raising the initial CAS threshold to $35 million, as well as eliminating the $7.5 million trigger contract requirement.
  • Increasing the CAS waiver authority threshold for executive agency heads to $100 million.
  • Adding to CAS 9903.201-1(c)(1), the exemption requirements for multiple award indefinite delivery contracts will be determined at the task or order level.
  • Adding to CAS 9903.201-1(c)(2) exemption requirements for single award indefinite delivery contracts will be determined at the contract level using the base and all option values of the indefinite delivery contract (i.e., maximum value – ceiling value).

Overall, these are all positive changes, most of which are driven by the requirements set forth in Section 1806 of the 2026 National Defense Authorization Act (NDAA).

However, we are concerned about the treatment of single-award indefinite-delivery contracts. The Board found that, based on contract data from FY 2020, the value of orders placed over the life of most single-award indefinite delivery contracts approached their ceiling value (base and all options). While that may certainly be the case, we do not believe the CAS Board has considered the impact of the additional resources required to track and manage CAS-covered orders, which are substantially below the new $35 million minimum CAS threshold.

For example, a contractor is awarded an indefinite-delivery, single-award contract with a maximum value of $36 million. Over a five-year period, the Government awarded 40 orders, all valued at less than $1 million. Does it make sense that the contractor should be burdened with significant administrative costs for tracking and managing those now CAS-covered orders that, had they been awarded as individual contracts, would not have been CAS-covered?

Additionally, should a non-traditional defense contractor receiving three long-term single award indefinite delivery contracts with maximum values of $36 million in one year lose its non-traditional status? Can you say barrier to entry?

By the way, The 2026 NDAA was signed on December 18, 2025, and directed:

  • The Administrator for Federal Procurement Policy to implement the revised rules and procedures in the CAS within 180 days of the act being enacted (i.e., June 16, 2026); and
  • The Secretary of Defense is to implement the revised rules and procedures in Defense Federal Acquisition Regulations (DFARS) within 120 days of the act being enacted (i.e., April 17, 2026).

Let us hope the Government knows it is on the clock.

Parts of Section 1806 of 2026 NDAA NOT Addressed in the NPRM

The CAS Board did not address the following:

  • Subsection 1806(d) revised 41 USC 1502, Cost Accounting Standards, by inserting in subparagraph (b)(C)(ii) “(or the portion of a contract or subcontract)” after “a contract or subcontract” and inserting in subparagraph (b)(C)(iii) “(or the portion of such contract or subcontract)” after “a firm, fixed-price contract or subcontract.” As amended, this would address the CAS applicability of portions of Hybrid contracts at the Contract Line Item (CLIN) or lower levels that meet the CAS exemption for commercial and fixed price with adequate price competition contracts.
  • Subsection 1806(f) revised 41 USC 1503, Contract Price Adjustments, by inserting in subparagraph (b)(2) “For such changes in cost accounting practices—

(A) costs recovered by the Federal Government shall exclude any contract or subcontract (or any portion of such contract or subcontract) that is firm, fixed-price, or that is not price-redeterminable based on costs; and

(B) for a fiscal year, for any contract or subcontract (or any portion of such contract or subcontract) that is not a firm, fixed-price contract or subcontract, the costs recovered by the Federal Government shall not exceed the net increased costs, if any, paid to the contractor or subcontractor for all changes in cost accounting practices implemented within the same fiscal year.”

This statutory change specifically requires that the Government not include firm fixed-priced contracts in its cost impact calculation of increased cost in the aggregate. It allows contractors to net all cost accounting practice changes made in the same fiscal year.

Submitting Public Comments

The CAS Board is looking for input on these changes. We plan on submitting the following concerns:

  • Single-award, indefinite-delivery contracts should have CAS applicability determined at the order level to ensure that only significant purchases (i.e., those over $35 million) are CAS-covered.
  • The statutory requirement to address Hybrid contracts is addressed.
  • The statutory requirement to remove fixed price contracts from the cost impact process and the netting of cost accounting practice changes in the same fiscal year are addressed.

We suggest you consider submitting comments as well. To comment, click on this link on Regulations.gov and then click on the “Comment” button at the top of the page. Comments are due by April 20, 2026. Only a 30-day comment period was provided. Just an FYI, the instructions in the NPRM for submitting comments by searching on “CASB 2021-01” do not work.

Preparing for CAS Compliance Changes Before Proposed Rules Take Effect

Redstone GCI assists government contractors in understanding how proposed and final CAS rule changes may affect their compliance responsibilities, contract portfolios, and cost accounting practices. This includes helping clients assess CAS applicability, interpret changing thresholds and related requirements, evaluate how contract types and structures may be affected, and review disclosure statements or accounting practices that may require updates. For contractors affected by proposed changes to single-award indefinite-delivery contracts, our team can help assess compliance and administrative considerations related to potential CAS coverage. As final rules are issued and implementation deadlines approach, understanding your CAS obligations early can help reduce the risk of noncompliance and support more accurate, consistent cost accounting practices over time.

Learn More About Our Cost Accounting Standards (CAS) Services

Frequently Asked Questions (FAQs)

  • What is the CAS threshold, and why does it matter? The Cost Accounting Standards threshold determines which contracts require compliance with federal cost accounting rules. Contractors above the threshold must follow specific standards for recording and allocating costs, which affects accounting practices and contract pricing.
  • What changes are proposed to the CAS thresholds? The proposed rule would raise the basic CAS threshold from $2 million to $35 million and the full CAS and disclosure statement threshold from $50 million to $100 million. These increases would reduce the number of contractors subject to CAS requirements.
  • How does this affect contractors with indefinite-delivery contracts? Under the proposal, the applicability of the CAS to the multiple-award indefinite-delivery contract is determined at the order level. Single-award contracts would be evaluated using the contract ceiling value, meaning a contractor with a $36 million ceiling contract could be subject to CAS even if individual orders are well below $1 million.
  • What parts of the 2026 NDAA are not addressed in the NPRM? The NPRM does not yet address how CAS applies to portions of hybrid contracts, nor does it address the statutory requirement to exclude firm-fixed-price contracts from cost-impact calculations or to allow netting of cost accounting practice changes within the same fiscal year.
  • How can contractors submit public comments? Comments can be submitted through Regulations.gov by searching for the rulemaking and clicking the "Comment" button. Comments are due April 20, 2026, at 11:59 PM EDT. Note that searching by "CASB 2021-01" per the NPRM instructions does not work.
  • Does this rule change apply to my company? This rule primarily affects contractors performing cost-reimbursable or other non-fixed-price federal contracts. If your company holds single-award indefinite-delivery contracts with ceiling values approaching the new proposed $35 million threshold, reviewing your CAS compliance posture now is advisable.

Written by John C. Shire, CPA

John C. Shire, CPA 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

About Redstone GCI

Redstone GCI is a consulting firm focused on fulfilling the needs of government contractors in all areas of compliance. With a singular mission to help contractors through the multiple layers of “red tape,” we allow contractors to focus on what they do best – support their mission with the U.S. Government. We are home to a group of consultants made up of GovCon industry professionals, CPAs, attorneys, and retired government audit and acquisition professionals.

Our focus and knowledge of audit and compliance functions administered by DCAA and DCMA will always be at the heart of what we do. However, for the past decade, we’ve strategically grown to support other areas of the government contractor back-office with that same level of focus and expertise. We’ve added expertise in contracts management, subcontract administration, proposal pricing, various software systems, HR and employment law, property administration, manufacturing, data analytics/reporting, Grant specialists, M&A, and many other areas. When we see a trend in the needs of contractors, we act to ensure we can provide the best expertise in the market to fulfill those needs.

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Topics: Accounting System Compliance, Contracts & Subcontracts Administration, DFARS Business Systems, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS)