OMB cuts 68 Cost Accounting Standards requirements, lifts threshold to $35M

OMB’s Cost Accounting Standards modernization is one of the deregulatory items that changes a contractor’s ledger, not just the preamble tone. Federal News Network reports that OMB and the Cost Accounting Standards Board eliminated 68 of 72 individual requirements, rescinded two sections, stripped most provisions from two others and removed more than 10,000 words from the rule. The effective date is August 7, 2026. The basic coverage threshold jumps from $2.5 million to $35 million in annual federal contract value.

For contractors below the new line, the change is material. OMB says the final rule will cut the number of contractors using CAS by half. Those vendors can rely on Generally Accepted Accounting Principles for measuring and assigning costs tied to compensated personal leave, capital assets, depreciation and acquisition costs of material. Prime and subcontractor finance teams lose overlapping books; external and government auditors get fewer duplicative compliance obligations to test.

The walkback matters. Erin Rankin of Crowell & Moring told Federal News Network that the fundamentals of CAS still exist for cost and pricing, even after the burden drops. Contractors above $35 million remain inside a reduced but real cost-allocation regime. The article also cuts off as the discussion turns to remaining concerns, so the safe read is narrower: OMB has again chosen GAAP as the destination while leaving a smaller CAS regime in place. As the third major CAS modernization push in 18 months, this is the headline item in the lower-barrier contracting agenda, and the part contractors can actually model.