FAR Subpart 30.6 and the provision at 52.230-6 include pertinent rules and regulations related to the Cost Accounting Standards (CAS) along with necessary administrative policies and procedures. These administrative policies require contractors with CAS covered contracts to submit cost impact estimates and descriptions in cost accounting practices and also to provide information on CAS-covered subcontractors.
Specifically, FAR 52.230-6 requires contractors to submit to the cognizant Contracting Officer
- a description of any cost accounting practice change,
- the total potential impact of the change on contracts containing a CAS provision,
- a general dollar magnitude or detailed cost-impact proposal of the change which identifies the potential shift of costs between CAS-covered contracts by contract type (i.e. firm fixed-price, incentive cost-plus-fixed-fee, etc.) and other contractor business activity.
Recently the Government attempted to estimate the cost of complying with this provision. Based on consultation with a Government subject matter expert (SME) they estimated that it would take the average contractor 175 hours to prepare and submit these accounting practice changes and the related cost impact and that the average contractor would be expected to submit 2.27 responses per year. That works out to about 400 hours per year per contractor.
Besides these hours for describing accounting changes and preparing cost impact proposals, CAS-covered contractors must also be prepared to
- Prepare and submit initial CAS Disclosure Statements
- Maintain and update CAS Disclosure Statements
- Entertain auditors as they review Disclosure Statements for adequacy and compliance
- Entertain auditors as they test for compliance with the 19 CAS Standards
- Negotiate cost impact proposals
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