Does CAS (Cost Accounting Standards) Coverage Matter?

For purposes of CAS (Cost Accounting Standards), Government contractors fall into one of three categories, exempt, modified coverage, and full coverage (see CAS Coverage, Full, Modified, or Exempt). Only one percent of contractors fall under modified or full CAS coverage (see Only 1 Percent of Contractors are CAS Covered). The remaining 99 percent are exempt. But that statistic is a bit misleading to the 99 percent. Since the last last CAS Standard was promulgated 37 years ago, most of the CAS standards have been incorporated into the FAR (Federal Acquisition Regulations) either directly or conceptually.

To illustrate, consider CAS 402, Consistency in Allocating Costs Incurred for the Same Purpose. The fundamental requirement of this Standard includes the following:

No final cost objective shall have allocated to it as an indirect cost any cost, if other costs incurred for the same purpose, in like circumstances, have been included as a direct cost or that or any other final cost objective. 

Compare this to the language of FAR 31.203 Indirect Costs:

No final cost objective shall have allocated to it as an indirect cost any cost, if other costs incurred for the same purpose, in like circumstances, have been included as a direct cost of that or any other final cost objective.

Note that the wording of CAS and FAR are identical.

Now look at the CAS 420 language as it pertains to direct costs:

Further, no final cost objective shall have allocated to it as a direct cost any cost, if other costs incurred for the same purpose, in like circumstances, have been included in any indirect cost pool to be allocated to that or any other final cost objective.

Compare that with the language in FAR 31.202, Direct Costs:

No final cost objective shall have allocated to it as a direct cost any cost, if other costs incurred for the same purpose in like circumstances have been included in any indirect cost pool to be allocated to that or any other final cost objective. 

Again, CAS and FAR have exactly the same language and requirements.

So if you are complying with FAR Part 31 (and all contractors are required to comply), you are, for all intents and purposes, already in compliance with the CAS standards. And, if you are fortunate to grow out of your CAS exemption, do not despair over the prospect of having to comply with CAS -  you are most likely already in compliance with existing CAS Standards.