Friday, September 15, 2017

Section 809 Panel - Team 9 - Cost Accounting Standards

The Section 809 Panel, created by section 809 of the 2016 NDAA (National Defense Authorization Act) was tasked with finding ways to streamline and improve the defense acquisition process. The Panel has two years to do it.

In order to cover every aspect needed to improve the defense acquisition process, the Section 809 Panel is broken up into 10 teams that analyze specific topics. Today we want to discuss Team 9 that was set up to review the Cost Accounting Standards Board (CASB) administrative and accounting requirements in the context of significant changes in what is being acquired, contracting methods, acquisition methods, and contractor operations.

Most Government contractors are not CAS covered or even subject to modified CAS coverage. However, most of the CAS standards, which were first promulgated back in the 70s, have now been incorporated into FAR cost principles in one form or another. Therefore, any recommendations coming out of the Section 809 Panel could easily impact all DoD contractors.

Team 9 has sent out a request to interested parties on recommended issues to address and potential solutions to those issues, with a particular emphasis on concerns that are significant and widespread enough that addressing them will noticeably improve the effectiveness and efficiency of DoD procurement.

So far, CAS matters under review by Team 9 include the following 10 areas:

  1. CAS applicability, exemptions, and thresholds focusing on expanding existing exemptions
  2. Conformance of GAAP and CAS where GAAP offers a suitable basis for fulfilling CASB objectives
  3. Cost impact measurement and administration (contractors especially will benefit from changes here)
  4. Materiality - more objective criteria for determining materiality
  5. Improved definition of terms such as "cost accounting practice" and "change to a cost accounting practice
  6. Allocation standards 403, 410, 418, and 420 (including accounting for allocated direct costs)
  7. Disclosure statement structure and requirements
  8. Accounting for unallowable costs - especially definitions and illustrations concerning expressly unallowable cost and directly associated costs
  9. Pension costs
  10. Insurance costs - self insurance and postretirement benefits

If you have any ideas, comments, complaints, or recommendations or are just curious about the process, find a way to become involved in the Section 809 Panel.

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