Wednesday, July 13, 2016

Only 1 Percent of Government Contractors are CAS-Covered

Prospective Government contractors often panic when they hear the term "CAS" (Cost Accounting Standards). CAS has a reputation of adding onerous layers of regulations to an already overloaded regulatory system for Government contractors. Yet, with many exemptions from CAS available - the small business exemption being the most significant - very few contractors will ever need to concern themselves with Cost Accounting Standards.

A year or so ago, a Congressman from Maryland asked the Congressional Budget Office (CBO) a the number of Government contractors. The CBO didn't know, stating that it was no aware of any comprehensive information about the number of Government contractors. There are plenty of listings of the top 10, the top 100 or the top 200 Government contractors but there doesn't seem to be a comprehensive listing of the number of contractors. Perhaps one could search the SAM (System for Award Management) databases for a number but those would include wannabes, companies that have registered but do not yet have Government contracts. The NCMA (National Contract Management Association) estimates that in fiscal year 2014, there were 97,000 contractors winning federal dollars. Of course, there were probably many more contractors that this figure if you consider contractors performing work on contracts awarded prior to fiscal year 2014. Undoubtedly, this figure would increase beyond 100,000 active Government contractors.

Now, how many of these 100,000 Government contractors are subject to full or modified CAS-covered (Cost Accounting Standards)? Not very many really - less than one percent according to the FAR (Federal Acquisition Regulations) Councils.

Based on information gleaned from DCAA (Defense Contract Audit Agency) databases, the FAR Councils estimate that there are about 650 contractors who are either subject to full or modified CAS coverage. Additionally, according to the Council's estimates, there are an additional 250 CAS covered contractors for civilian agencies that are not under the audit cognizance of DCAA. That brings the total number of CAS covered contractors, either full or modified coverage, to approximately 900 contractors, a figure that represents less than one percent of all Government contractors. The remaining 99 percent of Government contractors need not worry about Cost Accounting Standards except to the extent that many of the requirements that originated with CAS have wormed their way into the FAR cost principles (FAR Part 31) over the years.

If you're not a small business and happen to negotiate more than $50 million dollars in contracts in a year, you can start thinking about CAS implementation - CAS Standards, CAS Disclosure Statements, and Notification of Accounting Changes, and Cost Impact Studies. Until then, find other things to do.

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