Friday, August 9, 2013

CAS Working Group Guidance Papers - Application of CAS to BOAs

Back in the early days of the Cost Accounting Standards (CAS) Board, the Department of Defense (DoD) established a CAS Steering Committee and Working Group. From 1976 through 1981, this Working Group published 25 guidance papers. Most of these guidance papers, commonly referred to as "Working Group Guidance" and published as "interim" guidance, are still applicable today (37 years is a long time for interim guidance). The Working Group (WG)guidance was issued to interpret CAS Board rules and regulations for implementing in DoD procurement practices. We recall some sort of controversy surrounding WG guidance - the CAS Board, which was a legislative body at that time with the Comptroller General as head, was not always in agreement with DoD's "interpretations". Presently, the CAS Board is tucked under the Office of Federal Procurement Policy, Office of Management and Budget.

According to the Defense Contract Audit Agency's Contract Audit Manual (DCAM), 20 of the 25 WG Guidance papers are still current. Also, according to DCAA, the substance of these interim WG Guidance papers have been incorporated into Chapter 8 of their audit manual. Chapter 8 is the Agency's guidance on Cost Accounting Standards. The full text of the WG guidance can be downloaded here. These aren't the best copies but the only ones we know of that don't require a subscription from West or CCH. You will not find these on the CAS Board's website.

Over the next few days, we will be briefly discussing the 20 WG Guidance Papers that are still deemed to be current. We'll start with WG 76-2 from February 24, 1976. Application of CAS to Contract Modifications.

WG 76-2 - Application of CAS to Contract Modifications and to Orders Placed Under Basic Agreements.

The guidance states that "With respect to contract modifications the general rule is that any modifications made to a contract pursuant to the terms and conditions of the contract will not affect the status of the contract with respect to CAS application. That is, if CAS was applicable to the original contract, it will be applicable to the modification, if CAS was not applicable to the original contract, it will not apply to the modification."

In the case of Basic Agreements, FAR 3-410 specifically states that they are not contracts. The individual contracts or orders are therefore to be individually considered when determining the applicability of CAS. If the CAS dollar threshold is reached and the negotiated contract or order is not otherwise exempt under the CAS rules and Regulations, the contract or order is subject to CAS. 

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