On September 14, 2026, the DoW published a memo outlining efforts to strengthen the Defense Industrial Base. According to the memo, the DoW wants to break down barriers to entry and expand the industrial base, largely by streamlining its acquisition processes. A few highlights from the memo are listed below:

• Opportunities to move from CAS to GAAP will be leveraged when possible. The DoW will submit proposals to the CASB within 60 days to make CAS exemption the default; confine remaining CAS coverage to sole-source, cost-based development or incentive-fee procurement; and ensure CAS applies only to relevant contracts, not companies as a whole.
• No solicitations can be issued that would bring a business unit not previously subject to CAS under full CAS coverage without written approval.
• In alignment with Executive Order 14402, Promoting Efficiency, Accountability, and Performance in Federal Contracting,fixed-price contracts will be the default procurement method.
• Profit policy will be modernized using commercial benchmarks so negotiated margins reflect value delivered, risk carried, and private capital invested, not merely cost incurred. Commercial benchmarks will inform negotiation objectives but will not constitute caps. The memo emphasizes that healthy and reasonable margins drive innovation, and the DoW intends to reward efficiency, speed, and performance.
• The DoW will default to asking suppliers for cost and pricing information they already keep, with no new accounting system or special data format requirements.
• The DoW desires greater visibility and access throughout the supply chain.
• A modernized Disclosure Statement (short certification that cost accounting follows audited annual GAAP financial statements) will be created.
• Contractor business systems will be consolidated. This includes combining estimating and material management requirements into simplified, commercial-aligned accounting system criteria; limiting earned value management to major development programs and certain major long-duration production programs; relying on government-wide property stewardship duties rather than separate reviews; and increasing the purchasing system review threshold and reserve reviews for demonstrated risk.
• Clear, specific, commercially aligned, and publicly available business systems criteria will be published within 60 days, and class deviation accepting an independent public accounting firm’s certification against the new criteria will be issued.
• Audits should be risk-based and consider the contractor’s financial statements and internal control attestations before additional work commences.
• Options for streamlining contract oversight responsibilities within DCAA and Defense Contract Management Agency (DCMA) should be considered to eliminate duplication and address workforce limitations.

Read the September 14 DoW memo.

---

---

---

---

HKA’s Government Contracting Group