Overview
This section prescribes the policies and procedures for applying Cost Accounting Standards (CAS) to negotiated government contracts and subcontracts. It defines the criteria for CAS applicability, specifies the mandatory solicitation provisions and contract clauses based on the type of coverage, and establishes the authority and conditions for granting CAS waivers.
Key Rules
- Applicability Threshold: The threshold for CAS applicability is tied to the amount set forth in 10 U.S.C. 3702(a)(1)(A), which is the same threshold used for the submission of certified cost or pricing data (currently $2 million, adjusted for inflation).
- Types of Coverage:
- Full Coverage: Requires compliance with all relevant CAS standards in 48 CFR 9904.
- Modified Coverage: Available for contracts between $2.5 million and $50 million; requires compliance only with CAS 401, 402, 405, and 406.
- Mandatory Administration Clause: The Contracting Officer must insert FAR 52.230-6 (Administration of Cost Accounting Standards) whenever any other CAS contract clause is included in a contract.
- Specific Clause Use:
- 52.230-2: For full CAS coverage.
- 52.230-3: For modified CAS coverage.
- 52.230-4: For foreign concerns (limited to standards 401 and 402).
- 52.230-5: For educational institutions.
- Waiver Authority: The Head of the Agency may waive CAS for contracts under $15 million if the business segment is primarily commercial and has no other CAS-covered contracts, or in "exceptional circumstances" where benefits outweigh risks. This authority cannot be delegated below the senior contract policymaking level.
Practical Implications
- Compliance Burden: Contractors must carefully track their total CAS-covered contract values, as crossing the $50 million threshold triggers a shift from modified to full CAS coverage, significantly increasing accounting and disclosure requirements.
- Administrative Oversight: Because the "Administration of CAS" clause (52.230-6) is mandatory for all CAS-covered contracts, contractors must be prepared for rigorous government oversight regarding any changes to cost accounting practices or potential non-compliances.
- Strategic Awarding: Contracting Officers must verify an offeror's eligibility for modified coverage or foreign concern status during the solicitation phase to ensure the correct legal protections and accounting obligations are incorporated into the final award.