CAS Board Doubles Full-Coverage Threshold to $100M
The rule relieves 200-plus contractors of full CAS, but single-award IDC holders may find themselves pulled in rather than let out.
TL;DR
The CAS Board published two final rules September 1, effective October 1, that double the full-coverage threshold from $50M to $100M, raise the basic coverage threshold from $2.5M to $35M, and eliminate the trigger-contract framework. The Board also rescinded CAS 407, which governed standard-cost accounting for direct material and direct labor. More than 200 entities stand to shed full CAS obligations. But the rules cut both ways: single-award IDCs will now be assessed for CAS applicability at the ceiling value, not the task-order level, meaning some contractors will face full CAS on vehicles they'd structured to stay under the old threshold.
The two rules implement Sections 1806(a) and (d) of the FY 2026 NDAA, the same legislative vehicle that raised the Truthful Cost or Pricing Data Statute threshold from $2.5M to $10M. The statutory direction was straightforward: raise the numbers. But the CAS Board used the rulemaking to make a consequential structural choice on indefinite delivery contracts.
The IDC split
The final rule amends 48 C.F.R. § 9903.202-1 to bifurcate IDC treatment. Multiple-award IDCs get CAS applicability determined at the task-order level, business as usual. Single-award IDCs, however, are assessed at the ceiling value at time of award. For a contractor who bid a single-award vehicle with a $120M ceiling and a $6M first task order, the old framework might have kept them in modified coverage. Under the new rule, the ceiling pulls the entire vehicle into full CAS territory from day one.
CAS 407 goes, mostly
The second final rule rescinds CAS 407, which set criteria for using standard costs to estimate, accumulate, and report direct material and direct labor costs. The Board concluded that GAAP and existing CAS standards already protect the government's interests on these points. Not everything disappeared: requirements tied to standard cost and related variances at the production-unit level were moved into CAS 418, "Allocation of direct and indirect costs."
The rescission continues a GAAP-conformance project Congress directed in the 2017 NDAA. In 2019, the Board identified seven standards as candidates for conformance. On July 8 of this year, the Board published a final rule rescinding CAS 404, 408, 409, and 411. With CAS 407 now gone, only CAS 415 and 416 remain from the original seven. The pace has picked up sharply.
What's missing from the rule
Neither final rule addresses transition mechanics for contractors exiting full CAS coverage. The rule text doesn't specify whether existing CAS-covered contracts retain their clauses or whether contractors can begin treating new awards under the higher thresholds immediately on October 1. For CAS 407, the rule doesn't identify how contractors with standard-cost practices rooted in the old standard should migrate those practices, or whether they must notify the cognizant federal agency official of the change. The Board's July quartet of rescissions suggests the agency isn't looking for drawn-out phase-ins, but contractors will want explicit guidance before assuming anything.
Published ·Deep Fathom