CAS Board Notices of Proposed Rulemaking
4th June 2026
CAS Applicability Thresholds
On March 20, 2026, the CAS Board released a notice of proposed rulemaking (NPRM) to raise certain CAS thresholds in alignment with Section 1806 of the FY 2026 NDAA. The CAS Board is proposing to raise the thresholds for full CAS coverage and Disclosure Statement requirements to $100 million, while eliminating the CAS 9903-202-1(c)(ii) exemption for a Disclosure Statement if a segment’s CAS-covered awards are less than 30% of total segment sales for the period and less than $10 million. The NPRM also proposes raising the CAS waiver authority threshold for executive agency heads from $15 million to $100 million.
In addition to the CAS threshold changes, the NPRM provides clarification on applying CAS to IDCs. For multiple award IDCs, the CAS Board is proposing to apply CAS (and its exemptions) at the task or order level (i.e., CAS would apply only to individual task or delivery orders exceeding the CAS coverage monetary threshold). For single award IDCs, the CAS Board is proposing to evaluate CAS applicability at the ceiling level. The CAS Board is also proposing to add a new paragraph (c) to CAS 9903.201-1 to address how exemptions related to IDCs will be determined.
Conformance of CAS 407, Use of Standard Costs for Direct Material and Direct Labor to GAAP
On March 20, 2026, the CAS Board released a second NPRM to address the conformance of CAS 407, Use of Standard Costs for Direct Material and Direct Labor, to GAAP. The CAS Board is proposing to eliminate most of CAS 407, while retaining certain requirements addressing standard costs and related variances at the production unit level (i.e., not addressed in GAAP). According to the NPRM, these sections (i.e., CAS 407-30(a)(7), 407-40(b), 407-50(a)(4)(i) and (ii), 407-50(d)(1) and (2), 407-50(e), and 407-60(b)) will be moved to CAS 418. The CAS Board stated that the elimination of CAS 407 would not result in a change to a contractor’s disclosed accounting practices, and therefore, any changes made by a contractor related to standard costing of direct material or labor and the treatment of variances would be considered a unilateral cost accounting practice change.
The NPRMs can be found here and here.
To discuss this topic further or to explore its implications for your organization, please contact Tom Reynolds, Partner, tomreynolds@hka.com.
HKA’s Government Contracting Group
HKA Government Contracting experts understand the complex business and regulatory environments in which government contractors operate and have a history of finding practical, cost-effective solutions to challenges faced by government contractors and their counsel.
