Wednesday, July 18, 2018

CAS Board Published Final Rule on Exemption from CAS

The Cost Accounting Standards Board (CASB) published a final rule yesterday revising the exemption for contracts and subcontracts for the acquisition of commercial items. This final rule clarifies the types of contracts that are exempt from the application of CAS when acquiring commercial items. It becomes effective on August 16, 2018.

The new rule is designed to remove inconsistencies between the list of contract types recognized for use in acquiring commercial items in the CAS administration rules (48 CFR 9903.201-1(b)(6)) with the contract types reflected in FAR (48 CFR 12.207).

For example, FAR 12.207 allows the use of firm fixed price contracts in conjunction with award fee incentives or performance or delivery incentives known as FPI contracts when the award fee or incentive is based solely on factors other than costs. However, the CAS exemption does not expressly recognize FPI contracts on the enumerated list of exempt contracts.

Under the new rule, the CAS Board simply replaced the existing exemption language with a reference to the FAR reference covering contracts available for commercial items.
Old provision: Firm fixed-priced, fixed-price with economic price adjustments (provided that price adjustment is not based on actual costs incurred), time-and-materials, and labor hour contracts and subcontracts for the acquisition of commercial items.
New provision: Contracts and subcontracts authorized in 48 CFR 12.207 for the acquisition of commercial items.
Read more about the new rule including public comments and the Board's responses thereto here.

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