Tuesday, July 12, 2011

CAS Threshold Raised

Not all contracts are covered by CAS (Cost Accounting Standards). There are a number of exemptions available that exclude certain contracts from CAS coverage. For example, contracts that are awarded based on sealed bidding are exempt. So are contracts awarded to small businesses. Another exemption is for contracts (and subcontracts) of $650,000 or less. There are ten different exemptions in all.

Today, the OFPP (Officer of Federal Procurement Policy) Cost Accounting Standards Board (CASB) issued an interim rule that revises the threshold for the application of CAS from $650 thousand to the Truth in Negotiations Act (TINA) threshold, as adjusted for inflation. The TINA threshold for obtaining cost or pricing data was recently adjusted for inflation to $700 thousand in the Federal Acquisition Regulation (FAR). Until now, the CAS threshold was a stated dollar amount in the Code of Federal Regulations. The wording of the interim rule, "... in excess of the Truth in Negotiations Act (TINA) threshold, as adjusted for inflation..." will cause future changes to the CAS applicability threshold to self-execute upon any changes to the TINA threshold as they are implemented by FAR.

This change will preclude repeated rulemakings that only update the stated dollar amounts to maintain consistency with TINA. In the future, changes to the TINA threshold will automatically change the CAS applicability threshold.

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