Proposed Rule2026-05511
Increase of Monetary Thresholds and Other Matters Related to Cost Accounting Standards Program Requirements
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Published
March 20, 2026
Issuing agencies
Management and Budget OfficeFederal Procurement Policy Office
Abstract
The Office of Federal Procurement Policy (OFPP), Cost Accounting Standards Board (the Board), is publishing this notice of proposed rulemaking (NPRM) to elicit public comments on proposed increases to the Cost Accounting Standards (CAS) thresholds and other matters related to the CAS program requirements.
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<title>Federal Register, Volume 91 Issue 54 (Friday, March 20, 2026)</title>
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[Federal Register Volume 91, Number 54 (Friday, March 20, 2026)]
[Proposed Rules]
[Pages 13559-13562]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-05511]
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OFFICE OF MANAGEMENT AND BUDGET
Office of Federal Procurement Policy
48 CFR Part 9903
RIN 0348-AB85
Increase of Monetary Thresholds and Other Matters Related to Cost
Accounting Standards Program Requirements
AGENCY: Cost Accounting Standards Board, Office of Federal Procurement
Policy, Office of Management and Budget.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Office of Federal Procurement Policy (OFPP), Cost
Accounting Standards Board (the Board), is publishing this notice of
proposed rulemaking (NPRM) to elicit public comments on proposed
increases to the Cost Accounting Standards (CAS) thresholds and other
matters related to the CAS program requirements.
DATES: Comments must be in writing and must be received by April 20,
2026.
ADDRESSES: Submit comments to the Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. by searching for ``CASB 2021-01''. Select the link
``Comment Now'' that corresponds with ``CASB 2021-01''. Follow the
instructions provided on the ``Comment Now'' screen. Please include
your name, company name (if any), and ``CASB 2021-01'' on your attached
document. If your comment cannot be submitted using <a href="https://www.regulations.gov">https://www.regulations.gov</a>, call or email the points of contact in the FOR
FURTHER INFORMATION CONTACT section of this document for alternate
instructions. Comments received generally will be posted without change
to <a href="https://www.regulations.gov">https://www.regulations.gov</a>, including any personal and/or business
confidential information provided. Public comments may be submitted as
an individual, as an organization, or anonymously (see frequently asked
questions at <a href="https://www.regulations.gov/faq">https://www.regulations.gov/faq</a>). To confirm receipt of
your comment(s), please check <a href="https://www.regulations.gov">https://www.regulations.gov</a>,
approximately two or three days after submission to verify posting.
Privacy Act Statement: The Board proposes this rule to elicit
public views pursuant to 41 U.S.C. 1502. Submission of comments is
voluntary. The information will be used to inform sound decision-
making. Do not include any information you would not like to be made
publicly available. Additionally, the OMB System of Records Notice, OMB
Public Input System of Records, OMB/INPUT/01, 88 FR 20913 (available at
<a href="http://www.federalregister.gov/documents/2023/04/07/2023-07452/privacy-act-of-1974-system-of-records">www.federalregister.gov/documents/2023/04/07/2023-07452/privacy-act-of-1974-system-of-records</a>), includes a list of routine uses associated
with the collection of this information.
FOR FURTHER INFORMATION CONTACT: John L. McClung, Manager, Cost
Accounting Standards Board (telephone: 202-881-9758; email:
<a href="/cdn-cgi/l/email-protection#7d17121513531153101e1e1108131a4f3d12101f5318120d531a120b"><span class="__cf_email__" data-cfemail="acc6c3c4c282c082c1cfcfc0d9c2cb9eecc3c1ce82c9c3dc82cbc3da">[email protected]</span></a>).
SUPPLEMENTARY INFORMATION:
I. Overview
Currently, there are four monetary thresholds that establish the
nature and extent of CAS coverage: (i) the basic applicability
threshold for CAS coverage, currently tied to the Truthful Cost or
Pricing Data statute, which is currently $2.5 million as of October 1,
2025; (ii) the $7.5 million trigger contract threshold, which exempts
contracts under this amount until a contractor receives at least one
contract in excess of $7.5 million; (iii) the $50 million threshold for
full CAS coverage (contracts below this threshold are subject to
modified CAS coverage requiring compliance with just four of the
current 19 standards); and (iv) the $50 million threshold for requiring
a disclosure statement. The first two thresholds are statutory and
require legislative action to change, while the latter two are
regulatory and were established based on the Board's authority at 41
U.S.C. 1502(b)(2). The Board is proposing to raise the regulatory
thresholds (see Section II), and proposing changes to the basic
threshold as a result of Section 1806 of the 2026 National Defense
Authorization Act (NDAA) (see Section III). The NPRM would also raise
the CAS waiver authority threshold for executive agency heads from $15
to $100 million. This increase would implement changes made to 41
U.S.C. 1502 (b)(3) by Section 820 of the 2017 National Defense
Authorization Act (see Section IV).
Lastly, the NPRM provides clarifications on applying CAS to
indefinite delivery contracts (see Section V) after considering
responses to a Staff Discussion Paper (SDP) issued on June 18, 2024 (89
FR 51491) to elicit public views on whether and how to amend its rules
to address the application of CAS to indefinite delivery vehicles
(IDVs). The SDP included discussion of six possible approaches for
addressing CAS coverage to IDVs, and five principles to guide the
evaluation of alternatives.
This proposed rule is issued by the Board in accordance with the
requirements of 41 U.S.C. 1502.
II. Regulatory Thresholds
In 1977, the Board established two levels of CAS compliance (full
and modified) to partially address concerns that CAS creates a barrier
to entry and the challenges of applying CAS to smaller government
contractors, and to those contractors whose government business
represents a small share of their total sales volume. The Board
established a $10 million threshold for full CAS coverage based on a
single award or cumulative CAS covered awards during the last period.
Contractors subject to the newly created modified coverage were also
largely exempted from filing disclosure statements.
In 1993, the Board raised the threshold to $25 million to adjust
for inflation, and again in 2000 at the direction of Congress to the
current thresholds of $50 million for full coverage and for filing
disclosure statements. In addition, since 1992, a disclosure statement
has not been required from a segment that has CAS covered contracts
totaling less than $10 million and representing less than 30 percent of
segment sales (CAS 9903-202-1(c)(ii)).
The Advisory Panel on Streamlining Acquisition Regulations
established by Section 809 of the 2016 National Defense Authorization
Act (809-Panel), recommended raising the thresholds for full CAS
coverage and disclosure statement requirements to $100 million. They
also recommended eliminating the condition for not requiring a
disclosure statement from a segment that has CAS-covered contracts
totaling less than $10 million and representing less than 30 percent of
segment sales as it would no longer be necessary.
The Board conducted an analysis to assess the likely impact of
raising these thresholds in terms of the number of entities and dollar
amounts that would be covered at various threshold increases. The Board
analyzed Federal Procurement Data System (FPDS) data for the five-year
period covering Fiscal Years (FYs) 2020 through 2024. The data included
all new definitive awards, and single award indefinite delivery
contracts that included the CAS clause and excluded any contract
awarded to a
[[Page 13560]]
small business (as they already are exempt from CAS), or awarded using
commercial procedures (as these generally would also be exempt). The
Board has reasoned that the Unique Entity Identifier (UEI) represents a
covered segment.
Based on analysis of the FPDS data, the Board estimates that
raising the threshold for full coverage to $100 million would maintain
nearly 99 percent of the dollars currently subject to full coverage
today but remove nearly 30 percent of the entities. This would result
in a substantial reduction of burden and lower the barrier to entry
with a minimal loss in the total dollars currently subject to full
coverage and disclosure statement requirements. Adjusting the $50
million thresholds based solely on inflation since 2000 would raise the
threshold to $92 million today.
For these reasons, the Board is proposing to raise the thresholds
for full CAS coverage and disclosure statement requirements to $100
million, and also proposing to eliminate the exemption at CAS 9903-202-
1(c)(ii) which currently exempts a disclosure statement from a segment
if during the most recently completed cost accounting period the
segment's CAS-covered awards are less than 30 percent of total segment
sales for the period and less than $10 million. As a result of the
higher thresholds this exemption is no longer necessary. The Board
seeks public comment on this proposal in this NPRM, and is interested
in comments related to its assumption that each business segment has
its own UEI. Specifically, the Board welcomes feedback on whether there
any entities currently subject to disclosure statement requirements
that are reporting as a segment without its own UEI, and if so, the
specific circumstances that led to this determination and what UEI they
use to bid on contracts.
III. Statutory Thresholds
The Board used the same data set discussed in Section II above, and
conducted an analysis to assess the likely impact of raising the
statutory CAS applicability thresholds in terms of the number of
entities and dollar amounts that would be covered at various
thresholds. The current threshold for CAS applicability is $2.5 million
but with the caveat that the entity has at least one CAS covered
contract valued at $7.5 million. The Board's analysis estimates that
increasing the threshold to $35 million would reduce the number of CAS-
covered business segments by approximately 60 percent, while still
maintaining over 90 percent of the current dollars subject to CAS
coverage.
OMB used the Board's analysis to develop a legislative proposal to
decouple the basic CAS monetary threshold from the Truthful Cost or
Pricing Data statute, and raise it to a stated dollar amount of $35
million. The proposal also eliminates the $7.5 million trigger contract
threshold as it would no longer be necessary with a higher
applicability threshold. The proposal was transmitted to Congress at
the end of June for consideration in the 2026 NDAA. Section 1806 of the
2026 NDAA fully codified the OMB legislative proposal, and this rule
proposes the changes to 9903.201-1 CAS applicability to implement these
changes.
IV. Agency Head Waiver Authority
CAS 9903.201-5 provides that agency heads may waive CAS on their
own for contracts valued up to $15 million without seeking approval
from the Board but must notify the Board of the waiver. This proposed
rule raises the CAS waiver authority threshold for executive agency
heads to $100 million. This increase implements changes made to 41
U.S.C. 1502(b)(3) by Section 820 of the 2017 National Defense
Authorization Act.
V. Application of CAS to Indefinite Delivery Contracts
A. Overview and Conclusion
Indefinite delivery contracts (IDCs) are contracts where work is
awarded through the placement of individual task and delivery orders as
requirements arise, with a minimum guaranteed order value and a ceiling
amount reflecting the maximum total value of orders that can be placed
under the contract. They include the Federal Supply Schedules Program
and government-wide acquisition contracts (GWACs), though obligations
under the Schedules and GWACs are tracked separately from other task
and delivery order contracts in FPDS.
Analysis of FPDS data shows the use of IDCs has continued to
increase in both size and as a percentage of overall contract
obligations. There have also been increases in the use of other
indefinite delivery vehicles (IDVs), including blanket purchase
agreements and basic ordering agreements. In FY 2024 obligations for
orders against IDCs and other IDVs reached $467 billion which
represented 60 percent of the total contract obligations. IDCs are the
predominant form of IDVs used for ordering and represented 75 percent
($352 billion) of the $467 billion in obligations for orders against
IDVs in FY 2024. Although there is a statutory preference to award IDCs
to multiple contractors, they may also be awarded to a single
contractor. The prevalence of obligations on orders against IDCs
awarded to a single contractor has also increased reaching $262 billion
in FY 2024, which represented over one-third of all contract
obligations.
In formulating their recommendation, the 809-Panel appeared to
focus exclusively on multiple award IDCs and noted some of the inherent
challenges in determining CAS applicably at the IDC contract level. As
the 809-Panel noted, for multiple award IDCs, the information needed to
determine whether CAS applies--such as whether the order is competed
and whether certified cost or pricing data is needed--is generally not
available until the time a task or order is placed. In addition, the
ceiling value for any individual holder of a multiple award IDC is
highly speculative. The 809-Panel postulated that
``The FPDS data for IDVs have limited value; although data are
collected at the IDV level, the important events occur at the order
level. Examining IDVs by dollars is meaningless because the amounts
bear no relationship to the value of orders actually placed under
IDVs''.
The Board agrees with the 809-Panel assessment and recommendation
in regards to multiple award IDCs, and is proposing to amend its rules
to make clear that application of CAS applicability including all
exemptions should be determined at the task or order level. CAS would
apply only to those individual task or delivery orders whose values met
the monetary threshold for CAS coverage and did not qualify for another
CAS exemption.
However, the Board believes that the ceiling value is a more
appropriate indicator of CAS applicability for single award IDCs than
order value because it bears a significant relationship to the value of
orders actually placed under the IDC.
The Board analyzed single award IDCs awarded in FY 2020 to compare
the value of orders placed over the life or a substantial portion of
the life of those IDCs against their ceiling value (base and all
options). There were 369 new awards of IDCs to a single entity that
included the CAS clause. Of these contracts, over 90 percent received
orders above the statutory threshold for CAS of $2 million during the
period, and over 75 percent received orders above the current $7.5
million trigger contracts. In addition, most of these IDCs received
orders approaching their ceiling with nearly 65 percent reaching
[[Page 13561]]
at least 90 percent of the original ceiling value. Because the
government has an ongoing relationship with a single vendor for work
performed within the scope of the IDC, the ceiling amount is an easy
and clear way to determine if the threshold amount has been met. The
Board noted that for IDCs valued at $35 million or more (the amount
proposed by OMB for increase to the statutory threshold) 75 percent
received orders of greater than $35 million.
The Board has also concluded that, unlike multiple award IDCs, the
information required to determine CAS exemptions and consistently apply
CAS to single award IDCs are available at the time of award of the IDC.
For these reasons, the Board is proposing to add coverage on the
application of CAS exemptions to IDCs to 9903.201-1 CAS applicability
by adding the new paragraph 9903.201(c). The proposed rule is
consistent with the criteria the Board identified for evaluating
alternatives: it helps each contract party manage risk; it is expected
to reduce regulatory burden and promote competition by minimizing
complexity and providing guidance that is clear and straightforward.
Having a clear and predictable rule will promote consistency in the
application of CAS.
B. Summary of Public Comments to SDP
The Board received ten sets of comments from the public in response
to the SDP. These comments came from companies, industry and
professional associations, and individuals.
All commentors agreed with the need for the Board to provide
clarity on applying CAS exemptions to IDCs. Nine of the comments
supported the 809-Panel recommendation to determine applicability of
CAS for all IDCs order by order, while one supported use of the minimum
guaranteed amount for the IDC. None of the comments expressed concern
about the criteria set by the Board for evaluating alternatives.
Comment: Commentors largely favored determining applicability based
on the size of the order because they generally agreed with the 809-
Panel conclusion that the maximum contract value bears little to no
relationship to the cumulative value of orders.
Response: The Board's analysis of FPDS data shows that the ceiling
value does bear a significant relationship to the value of orders
actually placed under single award IDCs. The Board believes the
proposed changes to raise the regulatory thresholds mitigates the
minimal risk of a single award IDC being subject to full CAS coverage
based on the maximum contract value and not receiving orders of a
comparable value. The Board also noted that despite the statutory
preference for multiple award IDCs, reliance on singe award IDCs has
continued to grow. Single award IDCs increase the potential for vendor
lock, reducing competition and creating cost risk to the government.
Comment: One commentor believes that the Board should make clear
that any new rule on applying CAS exemptions to IDVs should be
considered a required change in the implementation of the new
regulations for CAS Administration purposes.
Response: The Board does not concur. The proposed rule does not
change any standards. It only provides needed clarity on applying the
CAS exemptions in 9903.201-1 to IDVs. This clarification does not
require a contractor to change their cost accounting practices
(9903.302) as the comment would suggest.
VI. Expected Impact of the Proposed Rule
The proposed rule is expected to be deregulatory, reduce compliance
cost and simplify CAS administration for existing contractors, and to
reduce barriers to entry for nontraditional contractors, including new
mid-size entities who no longer qualify for a full exemption from CAS
as small businesses.
The proposed rule increases the basic CAS applicability threshold
to $35 million to implement codification of OMB's legislative proposal
discussed in Section III above. The decoupling of CAS from TIN,
elimination of the trigger contract concept and establishment of a $35
million basic CAS applicability threshold simplifies the application of
CAS while dramatically lowering barrier to entry for higher contract
values. Higher contract values will attract additional private
investment into the federal contracting marketplace and increase
competition as a result of the increase point of entry without the need
to establish more sophisticated compliance regimes required to comply
with CAS requirements.
The proposed rule also would increase the thresholds for full CAS
coverage and disclosure statement requirements from $50 million to $100
million. This action would significantly reduce compliance burden and
lower barriers to entry into the federal marketplace. The Board
analyzed FPDS data for the five-year period covering FYs 2020 through
2024 and estimates there have been 773 entities subject to full
coverage and disclosure statement requirements with aggregate total
contract values during the period of $1.22 trillion. Applying the
proposed threshold increase of $100 million to the data set would
reduce the number of entities to 564 while maintaining $1.21 trillion
of the dollars. This represents a nearly 30 percent reduction in
entities that would subject to all 19 of the current standards with a
less than one percent loss of dollar coverage. The higher threshold for
full coverage will also reduce barriers to entry for non-traditional
contractors including contractors that have outgrown their small
business size status and no longer qualify for a full exemption from
CAS as small businesses as they may be more willing to compete for
larger contracts only subject to modified coverage.
The proposed clarifications on when CAS applies to IDCs will avoid
unnecessary ambiguity, friction and contract disputes. These changes
will also lower barriers to entry into the federal marketplace as
potential offerors will have clarity on whether or not they will be
subject to CAS and, if covered, whether full or modified.
The changes addressed by this NPRM, both individually and in
conjunction with the Board's ongoing broader CAS-GAAP conformance
efforts are expected to simplify CAS administration and reduce barriers
to entry for non-traditional contractors including new mid-size
entities who no longer qualify as small businesses. These actions
should increase competition in federal contracting, as envisioned by
the Senate Armed Services Committee in promoting CAS-GAAP conformance
(S. Rept. 114-25 Section 811), ``The committee is concerned that the
current cost accounting standards favor incumbent defense contractors
and limit competition by serving as a barrier to participation by non-
traditional, small business, and commercial contractors. To level the
competitive playing field to access new sources of innovation it is in
the government's interest to adopt more commercial ways of contracting,
accounting, and oversight.''
The Board is interested in comments on the expected impact of this
rule, including any quantified estimates on the cost reductions and
savings expected to be achieved by the proposed changes.
VII. Regulatory Flexibility Act
CAS Board rules do not impact small entities within the meaning of
the Regulatory Flexibility Act 5 U.S.C. 601-612. Contracts and
subcontracts with small business concerns are exempted from all CAS
requirements.
[[Page 13562]]
VIII. Executive Orders 12866, 13563 and 14192
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This rule is not a significant regulatory action under E.O. 12866,
Regulatory Planning and Review, dated September 30, 1993. This rule is
anticipated to be deregulatory action under E.O. 14192 based on the
discussion in the ``Expected Impact of the Rule'' section.
IX. Paperwork Reduction Act
The Paperwork Reduction Act, Public Law 96-511, does not apply to
this proposed rule, because this rule imposes no paperwork burden on
offerors, affected contractors and subcontractors, or members of the
public which requires the approval of OMB under 44 U.S U.S.C. 3501, et
seq.
List of Subjects in 48 CFR Part 9903
Cost accounting standards, Government procurement.
Kevin R. Rhodes,
Administrator, Office of Federal Procurement Policy, and Chair Cost
Accounting Standards Board.
For the reasons set forth in the preamble, the Office of Federal
Procurement Policy proposes to amend chapter 99 of title 48 of the Code
of Federal Regulations as set forth below:
PART 9903--CONTRACT COVERAGE
0
1. The authority citation for part 9903 continues to read as follows:
Authority: Pub. L. 111-350, 124 Stat. 3677, 41 U.S.C. 1502.
Sec. 9903.201 [Amended]
0
2. Section 9903.201-1 is amended to add a new paragraph (c) and a
revised paragraph (b) to read as follows:
9903.201-1 CAS applicability
* * * * *
(b) The following categories of contracts and subcontracts are
exempt from all CAS requirements:
(1) Sealed bid contracts.
(2) Negotiated contracts and subcontracts not in excess of $35
million. For purposes of this paragraph (b)(2), an order issued by one
segment to another segment shall be treated as a subcontract.
(3) Contracts and subcontracts with small businesses.
(4) Contracts and subcontracts with foreign governments or their
agents or instrumentalities or, insofar as the requirements of CAS
other than 9904.401 and 9904.402 are concerned, any contract or
subcontract awarded to a foreign concern.
(5) Contracts and subcontracts in which the price is set by law or
regulation.
(6) Contracts and subcontracts authorized in 48 CFR 12.207 for the
acquisition of commercial items.
(7) Subcontractors under the NATO PHM Ship program to be performed
outside the United States by a foreign concern.
(8) Firm-fixed-price contracts or subcontracts awarded on the basis
of adequate price competition without submission of certified cost or
pricing data.
(c) Application of paragraph (b) exemptions to indefinite delivery
contracts shall be determined as follows:
(1) Multiple award indefinite delivery contracts. The exemptions
listed in paragraph (b) shall be determined at the time of award of any
individual task or delivery order, and shall use the base and all
option value of the individual task or deliver order to determine if
the monetary threshold in (b)(2) has been met.
(2) Single award indefinite delivery contracts. The exemptions
listed in paragraph (b) shall be determined at the time of award of the
indefinite delivery contract, and shall use the base and all option
value of the indefinite delivery contract to determine if the monetary
threshold in (b)(2) has been met.
Sec. 9903.201 [Amended]
0
3. Section 9903.201-2 is amended by removing ``$50 million'', wherever
it appears, and add, in its place, the text ``$100 million''.
0
4. Section 9903.201-3 is amended by removing ``$50 million'', wherever
it appears, and add, in its place, the text ``$100 million''.
0
5. Section 9903.201-4 is amended by removing ``$50 million'', wherever
it appears, and add, in its place, the text ``$100 million''.
Sec. 9903.201 [Amended]
0
6. Section 9903.201-5 is amended in paragraph (a) is by removing ``$15
million'', and add, in its place, the text ``$100 million''.
Sec. 9903.202 [Amended]
0
7. Section 9903.202-1 is amended by removing ``$50 million'', wherever
it appears, and add, in its place, the text ``$100 million''.
0
8. Section 9903.202-1 is amended by removing (c)(i) and (c)(ii) and
editing paragraph (c) to read as follows.
Sec. 9903.202-1 General requirement.
* * * * *
(c) When a Disclosure Statement is required, a separate Disclosure
Statement must be submitted for each segment that has costs included in
the total price of any CAS-covered contract or subcontract unless it
meets one of the exemptions in 9903.201-1(b).
* * * * *
[FR Doc. 2026-05511 Filed 3-19-26; 8:45 am]
BILLING CODE 3110-01-P
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