Many contractors hear the words “Cost Accounting Standards (CAS)” and immediately think expensive compliance requirements, complicated accounting rules, and additional administrative work. The good news is that recent federal changes have made CAS compliance much easier for many businesses.
If you’re a small business pursuing government contracts, you’re generally still exempt from CAS as long as you meet the SBA size standards. If your company has grown beyond small business status, recent legislation and regulatory updates have significantly reduced the number of contractors subject to CAS while simplifying compliance for those that are. Here’s what you need to know.
The FY 2026 National Defense Authorization Act (NDAA) and recent Federal Acquisition Regulation (FAR) updates dramatically increased the dollar thresholds that determine when CAS applies.
The Basic CAS Applicability Threshold increased from $2.5 million to $35 million per negotiated contract.
The threshold for Full CAS Coverage increased from $50 million to $100 million.
Even better, the government eliminated the long standing $7.5 million trigger contract rule, making it much easier for contractors to determine when CAS requirements apply. For many growing businesses, these changes mean fewer compliance requirements and greater flexibility when competing for federal contracts.
The government also took steps to reduce unnecessary administrative costs. Effective August 7, 2026, the CAS Board finalized a rule aligning several Cost Accounting Standards with Generally Accepted Accounting Principles (GAAP). The rule removes or significantly reduces 68 overlapping requirements across CAS 404, CAS 408, CAS 409, and CAS 411. The result is a simpler accounting process that reduces duplicate recordkeeping and minimizes the need to maintain separate accounting systems for commercial and government work.
These changes are a welcome relief for federal contractors. If your company still qualifies as a small business under SBA size standards, you will generally remain exempt from CAS. If your business has outgrown its small business designation, now is the perfect time to review your contracts and accounting practices. The higher thresholds and streamlined standards may reduce your compliance obligations and lower your administrative costs.
Understanding these updates before submitting proposals can help you stay compliant while positioning your company for future growth. Government contracting requirements continue to evolve, and staying ahead of those changes can save your business both time and money.
GSA Proposal Maven Inc. is a government contract firm that has helped thousands of businesses increase their bottom line with the GSA MAS contract program, 8(a) Certification Program, VOSB Certification, SDVOSB Certification, and other federal agency contracts. Contact us at (877) 302-3773 or click here to schedule your FREE fifteen-minute consultation by clicking here.
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