Highlights

• Threshold Increase. The FY 2026 National Defense Authorization Act increases the Truthful Cost or Pricing Data threshold to $10 million for qualifying prime contracts and subcontracts entered into after June 30, 2026, marking a significant statutory change for negotiated procurements.
• Inflation Adjustment. An earlier update raised the threshold to $2.5 million, effective October 1, 2025, creating multiple thresholds that government contractors must track.
• Clause Timing. Contract award dates and clause language determine which threshold applies, particularly for contracts awarded prior to June 2020.
• Effective Dates. Statutory changes may apply before the FAR text is updated, requiring government contractors to understand when new thresholds become operative.
• Compliance Impact. The updates increase the importance of reviewing government contracts and subcontracts to ensure thresholds are applied consistently.

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The Truthful Cost or Pricing Data Act (previously the Truth in Negotiations Act) and still referred to as TINA, was established to ensure the government was placed on a level playing field with contractors when negotiating non-competitive or sole-source contracts. TINA applies to both prime and subcontract negotiations. While the TINA threshold hasn’t changed since 2018, there have been two updates to the threshold in less than a 12-month period. This is a welcome surprise. However, government contractors need to understand the thresholds and which ones apply to their contracts and subcontracts.

Topics: Proposal Cost Volume Development & Pricing, Contracts & Subcontracts Administration, DFARS Business Systems, DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR), Estimating System Compliance

In reference to the now outdated terminology “Multiple Personality Disorders” (now “DID” or Dissociative Identity Disorder), my focus is on two Government actions, the 2026 NDAA (National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)

Highlights

• NDAA Update. The Fiscal Year 2026 National Defense Authorization Act was signed into law on December 18, 2025, and includes statutory changes affecting the applicability of the Cost Accounting Standards for certain government contracts and subcontracts.
• Section 1806 Amendments. Revisions to CAS applicability thresholds and contract price adjustment requirements have created confusion about how fixed-price contracts and subcontracts are treated.
• Applicability Clarification. This article explains when Cost Accounting Standards apply at award and how post-award contract price adjustments are limited following cost accounting practice changes.

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

For the last few years, our friends at the Defense Contract Audit Agency (DCAA) have been very helpful by publishing the Contractor Compensation Cap in the December timeframe. This year, I am guessing that the Government shutdown has diverted their attention. To help our clients, we have calculated the 2026 amount of the cap.

Topics: Accounting System Compliance, Proposal Cost Volume Development & Pricing, Employee & Contractor Compensation, Incurred Cost Proposal Submission (ICP/ICE), DCAA Audit Support, Human Resources, Government Regulations, Federal Acquisition Regulation (FAR)

On November 24, 2025, President Trump signed EO 14363, Launching the Genesis Mission to accelerate America’s race for global dominance in the application of AI to scientific discovery and scientific challenges.

Topics: Accounting System Compliance, Incurred Cost Proposal Submission (ICP/ICE), DFARS Business Systems, DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR), Grants & Cooperative Agreements (2 CFR 200)

On December 5, 2025, the Department of Justice (DOJ) reported another settlement under the False Claims Act (FCA) related to cybersecurity. Swiss Automation agreed to pay $421,234 to the Government as a result of failing to provide adequate cybersecurity controls for drawings of parts supplied to Department of Defense (DoD) prime contractors. The qui tam suit under the False Claims Act (FCA) was brought forward by a whistleblower, not an Information Technology (IT) employee, but a Quality Control Manager of the company. The whistleblower received $65,291.

Topics: Contracts & Subcontracts Administration, DFARS Business Systems, Contractor Purchasing System Review (CPSR), Government Regulations, Federal Acquisition Regulation (FAR), Material Management & Accounting System (MMAS), Cybersecurity, Commercial Item Determination

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)

EO 14173 revoked EO 11246 Equal Employment Opportunity, which required covered federal contractors to practice affirmative action, develop written Affirmative Action Plans (AAPs) and implement compliant programs directed towards equal opportunities for women and minorities. This major change left contractors with a choice: set aside all efforts previously made toward compliance with EO 11246, or continue with employment analytics under a framework acceptable under EO 14173. In this article, we explain why we encourage you to consider the continuation of these efforts.

Topics: Contracts & Subcontracts Administration, Human Resources, Government Regulations, Office of Federal Contract Compliance Programs, Service Contract Act

Well, our friendly DCAA auditors are back after the Government shutdown. On December 2, 2025, Defense Contract Audit Agency (DCAA) issued a memorandum to their auditors titled, “Actions Required for Assignment Due Dates Following Furloughs.”

Topics: Proposal Cost Volume Development & Pricing, Incurred Cost Proposal Submission (ICP/ICE), Small Business Compliance, Contracts & Subcontracts Administration, DCAA Audit Support, Government Regulations

On November 26, 2025, the Office of Management and Budget (OMB) issued the 2025 Compliance Supplement. The Supplement outlines the compliance requirements to assist auditors in understanding the Federal program’s objectives, procedures and requirements when performing a Single audit for fiscal years beginning after June 30, 2024. The Compliance Supplement is normally issued in the spring of each year; however, OMB delayed its issuance to incorporate significant updates to 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, in October 2024. In order to assist auditors with the different requirements, Part 3 Compliance Requirements of the Supplement was divided into two Parts for audit testing as follows:

• Part 3.1 for awards subject to 2 CFR 200 prior to October 2024 and
• Part 3.2 for awards after October 1, 2024

Topics: Accounting System Compliance, DFARS Business Systems, DCAA Audit Support, Contractor Purchasing System Review (CPSR), Government Regulations, Grants & Cooperative Agreements (2 CFR 200)