CAS Board Raises Contract Thresholds to $35 Million and Eliminates CAS 407: What Federal Contractors Need to Know as DoW Demands Cost and Pricing Transparency

Federal contractors are heading into October with significantly different cost accounting rules, while defense contractors are also facing renewed pressure to provide the government with greater visibility into their costs and pricing. On September 1, the Cost Accounting Standards (CAS) Board issued two final rules, both effective October 1, that substantially reduce the reach of CAS. Most notably, the Board increased the basic CAS applicability threshold from $2.5 million to $35 million and doubled the thresholds for full CAS coverage and Disclosure Statements from $50 million to $100 million. In a separate rule, the Board eliminated CAS 407, which governs the use of standard costs for direct material and direct labor, after concluding that Generally Accepted Accounting Principles (GAAP) and other CAS requirements adequately address most of the same issues.