Section 809 Panel Issues Report No. 2 - CAS Thresholds

We reported yesterday that the Section 809 Panel (the Advisory Panel on Streamlining and Codifying Acquisition Regulations) had just issued is second of three reports with recommendations on streamlining the acquisition process. Yesterday, we began our coverage of the report with the Panel's recommendations to significantly enhance the functionality of the Cost Accounting Standards Board (CASB). If you missed that post, you can go back and read it by clicking here.

The Panel made a second recommendation concerning Cost Accounting Standards. They have recommended that certain monetary thresholds be raised. Recently, as a result of the 2018 NDAA (National Defense Authorization Act), the CAS-covered contract threshold was significantly increased from $750 thousand to $2 million. The CAS-covered contract threshold is tied into the requirement for certified cost or pricing data so that is why the threshold increased. The increase became effective just a few days ago; July 1, 2018. The Panel recommended that the CAS be de-coupled from the TINA threshold and set at $35 million.The Panel also made increased threshold recommendations to the "trigger contract", the full-coverage, and the disclosure statement events.

Trigger Contract. The trigger contract threshold is now $7.5 million. CAS does not apply until a contractor receives a CAS-covered award of $7.5 million or more. Once that threshold is reached, all CAS-covered contracts subsequently awarded to that contractor are subject to CAS. The Panel recommends eliminating this threshold entirely since it would no longer be necessary with the CAS covered contract monetary threshold were raised to $25 million.

Full CAS Coverage. The current full CAS-coverage threshold is a CAS-covered contract of $50 million or more. Contracts below this threshold are subject to modified CAS-coverage (Standards 401, 402, 405, and 406). The Panel recommends increasing this threshold to $ 100 million.

Disclosure Statement. Presently, the threshold for requiring a disclosure statement is $50 million in total CAS-covered contracts. A disclosure statement is not required, however, for individual business segments of a contractor that have CAS-covered contracts that are valued at less than $10 million and represent less than 30 percent of sales. The Panel is proposing to increase this threshold to $100 million and also eliminate the $10 million / 30% exemption.

The Panel estimates that these increased threshold would remove about 10 percent of DoD procurement dollars from CAS coverage but would remove a significantly higher percentage of contractors out of CAS requirements.