TL;DR. Congress and the CAS Board raised the bar, so fewer of you have to do the full cost accounting dance (your accountants may finally take a lunch break).
- Small or mid-size contractor? Basic CAS applicability rose from $2.5M to $35M, and the $7.5M "trigger contract" concept is gone. Re-check whether your contracts are still covered.
- Currently under full coverage? The full coverage and Disclosure Statement threshold rose from $50M to $100M. You may be able to move to modified coverage, but only under specific conditions.
- Awarded something between December 2025 and September 2026? The effective date is contested. Confirm which threshold applied to those awards.
What actually changed
The FY2026 NDAA, signed 18 December 2025, did the heavy lifting in Section 1806. It raised the full coverage threshold from $50M to $100M and the basic CAS threshold from $2.5M to $35M. It also told the CAS Board to write implementing rules within 180 days.
The Board proposed its rule in March 2026 and missed the June deadline. On 1 September 2026 it published a final rule on the thresholds (91 FR 56056), effective 1 October 2026. It also published a separate rule conforming CAS 407 to GAAP (91 FR 56061).
DoD moved in parallel. Class Deviation 2026-O0006 Rev1 replaces the $50M figure in the DFARS CAS provisions with $100M. One law firm reports it took effect immediately, weeks before the Board's rule did. So what? If you sell to DoD, the deviation matters as much as the Federal Register. Read both.
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Where you land now
| Threshold | Before | Now |
|---|---|---|
| Basic CAS applicability | $2.5M | $35M |
| Trigger contract | $7.5M | Eliminated |
| Full coverage and Disclosure Statement | $50M | $100M |
| Certified cost or pricing data (related, NDAA §1804) | $2M | $10M |
The takeaway is simple. A contract that once dragged you into CAS at $3M now has to be a lot bigger to do it. So what? Pull your contract list and re-test each award against the new numbers instead of assuming your old status still holds.
What CAS forces you to change (and what you can stop)
CAS is less about how much you charge and more about how consistently you account for costs. Here is the mechanical difference between the coverage levels:
- Not covered: You still follow general cost principles, but CAS rules on how you allocate and measure costs do not apply.
- Modified coverage: A short list of core standards applies. These deal with things like consistency in estimating, accumulating and reporting costs.
- Full coverage: The full set of applicable standards applies, and you must file a Disclosure Statement describing your accounting practices in writing. Then you have to actually follow what you wrote.
The hidden cost of coverage is change management. Once you disclose a practice, changing it is no longer just an accounting decision. You have to notify the government and may face a cost impact analysis. Every noncompliance finding is a potential price adjustment.
Key insight: Dropping a coverage level does not wipe your slate clean. The transition summary I found says you can move affected contracts to modified coverage at the start of your next full cost accounting period beginning on or after 1 October 2026, but only if you have no unresolved CAS noncompliances and your business unit does not meet the $100M criteria. That summary comes from a secondary source, so confirm it against the rule text before you plan around it.
For a calendar-year company, "next period" would mean 1 January 2027. So what? Clean up open noncompliance issues now. They may be the one thing between you and a lighter regime.
The fuzzy parts to verify before you act
Not everything is settled, and I would rather tell you that than guess.
- Effective date. The Board's rule took effect 1 October 2026. But one law firm argues the statutory dollar changes may have applied from enactment, since the Board missed its deadline. Some secondary sources cite 30 June, and I could not reconcile that with a primary source. For awards made between December 2025 and 30 September 2026, get a written position from counsel.
- Agency waiver authority. Reportedly raised by the rule. I did not confirm the new dollar level.
- Indefinite-delivery contracts. The proposed rule would decide coverage per order for multiple-award vehicles and by ceiling value for single-award ones. I only saw this in a description of the proposal, so check the final text.
- Hybrid contracts. One source says the rule permits exemptions for portions of them. Details matter here.
- Claims of "five standards rescinded." One consultancy says so, but the official notice I found covers only the CAS 407 GAAP change. Treat the bigger claim as unverified.
The 14 September 2026 Deputy Secretary memo on the industrial base also references the threshold changes. I did not read its full text, so check it for any CAS-specific direction.
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- Inventory contracts with their award dates and values, then test each against the old and new thresholds.
- Check your Disclosure Statement status. If you are under $100M, ask whether you can move to modified coverage and when your next cost accounting period starts.
- Close open noncompliance items. They could block the transition.
- Read the primary sources: 91 FR 56056 and 91 FR 56061 in the Federal Register, plus DoD Class Deviation 2026-O0006 Rev1.
- Ask your contracting officer how they are applying the deviation, especially for IDCs and hybrid contracts.
The bar moved, which is good news for many mid-size firms. But the win goes to the contractor who confirms where they stand, not the one who assumes.
CAS Coverage Reference
| Coverage Level | Roughly When | What You Must File | Practical Cost |
|---|---|---|---|
| Exempt | Small business, or only commercial or fixed-price competitive work | Nothing | None |
| Modified coverage | One covered award above the trigger, below the full threshold | 4 standards only | Moderate, mostly consistency |
| Full coverage | Larger covered awards in the same year | All 19 standards plus a Disclosure Statement | High, changes need cost impact analysis |
| Changed practice | Any accounting change once covered | Cost impact proposal | The government can claw back the difference |