In June 2023, the Armed Services Board of Contract Appeals (ASBCA) denied Honeywell's motion to dismiss a $151 million claim alleging improper G&A allocation treatment under CAS 410. The Board affirmed that interdivisional cost transfers must be included in a total cost input base, contradicting Honeywell's position. Government contractors should review whether their G&A allocation bases are consistent with this ruling.
Topics: Accounting System Compliance, Proposal Cost Volume Development & Pricing, Contracts & Subcontracts Administration, DFARS Business Systems, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS)
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The Cost Accounting Standards (CAS) Board has been working to eliminate several cost accounting standards and replace them with reliance on GAAP. As of April 2026, five standards are under proposed elimination, including a new March 2026 NPRM for CAS 407. Contractors should be aware that removing these standards does not eliminate cost accounting or consistency obligations.
Topics: Accounting System Compliance, Contracts & Subcontracts Administration, DFARS Business Systems, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS)
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.
Topics: Accounting System Compliance, Contracts & Subcontracts Administration, DFARS Business Systems, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS)
Section 1826 of the FY 2026 National Defense Authorization Act shifts DoD treatment of nontraditional defense contractors from discretionary to mandatory exemptions from key cost and business system requirements. With no dollar threshold and rulemaking still pending, government contractors must evaluate timing, contract status, and downstream compliance implications.
Topics: Accounting System Compliance, Proposal Cost Volume Development & Pricing, Small Business Compliance, Contracts & Subcontracts Administration, DFARS Business Systems, DCAA Audit Support, Contractor Purchasing System Review (CPSR), Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR), Material Management & Accounting System (MMAS), Commercial Item Determination
In reference to the now outdated terminology “Multiple Personality Disorders” (now “DID” or Dissociative Identity Disorder), my focus is on two Government actions, the 2026 NDAA (National Defense Authorization Act) and the very recent EO (Executive Order), “Prioritizing the Warfighter in Defense Contracting.” Before getting into the substance of this blog, just to note that one can only hope that the proposed/legislated changes to improve the efficiencies and effectiveness of the procurement process (for the Department of War and more broadly the US Government) will actually succeed and not be just one more set of idealized and unfulfilled political promises.
Topics: Accounting System Compliance, Contracts & Subcontracts Administration, DFARS Business Systems, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS)
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Recent statutory changes under the FY 2026 National Defense Authorization Act revise the applicability thresholds for the Cost Accounting Standards and limit certain post-award contract price adjustments. These updates affect how contractors evaluate fixed-price awards, accounting practice changes, and clause timing, as regulatory implementation is expected within 180 days of enactment.
Topics: Accounting System Compliance, Contracts & Subcontracts Administration, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS)
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).
Topics: Accounting System Compliance, Contracts & Subcontracts Administration, Government Regulations, Export & Import, Cost Accounting Standards (CAS)
Revenue recognition is a very critical and highly scrutinized aspect of accounting for government contractors. Whether you're working on cost-plus contracts, time and materials, or firm fixed price agreements, how and when you recognize revenue can significantly impact your financial reporting and compliance with government regulations.
Topics: Accounting System Compliance, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)
How much do you know about DCAA and its oversight of your incurred cost proposals (ICP) and indirect cost rates? Would it help to understand what is done and why? Knowing what initiates a DCAA audit of an incurred cost proposal and maintaining a good system of internal controls can potentially keep you from audit.
Topics: Incurred Cost Proposal Submission (ICP/ICE), DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)
The now infamous NIH Guidance (NOT-OD-25-068) and Executive Order 14222 started us thinking. Is the Department of Defense (DoD) possibly the next domino to fall? After all, the DoD has a very large contract spend of $431.4 billion based on the Defense Spending by State, FY 2023 — Executive Summary. We looked to see if we could find data on how much of that spend is going to indirect costs (i.e., overhead). Surprisingly, the only data we could find is very dated. The data comes from the DoD Indirect-Cost Management Guide from October 2001 posted on the Defense Acquisition University (DAU) website. The guide states, “estimates made by the Defense Contract Management Command (DCMA), in conjunction with discussions with defense contractor top management on their DCMA Overhead Initiative, indicate[s] that indirect costs constitute approximately $90 billion of the $170 billion total DoD work in process at all defense contractor[s].” While not clear, our assumption is that this represents the 2000 or 2001 timeframe. Based on this, DoD is spending 53% of its appropriated funding on indirect costs. This means the average defense contractor has an approximate 100% indirect cost rate, covering overhead and general & administrative (G&A) costs. Based on recent experiences with our clients, we believe this is still a reasonable estimate of indirect cost on DoD contracts, if not a little higher.
Topics: Accounting System Compliance, Proposal Cost Volume Development & Pricing, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)