May 30, 2012

Brian M. Bender

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UPDATE – Federal Acquisition Regulations Updated with Cost Accounting Standards Applicability Threshold Increase

On December 30, 2011, we communicated that the Cost Accounting Standards (CAS) Board increased the CAS threshold from $650,000 to $700,000. On May 10, 2012, the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) issued a final rule amending the Federal Acquisition Regulation (FAR). The rule was posted in the Federal Register on May 10, 2012. Note that this is a change from the final CAS rule.

“The FAR replaced “$650,000” with “$700,000” rather than the phrase “the Truth in Negotiations Act (TINA) threshold, as adjusted for inflation (41 U.S.C. 1908 and 41 U.S.C. 1502(b)(1)(B).” The FAR wanted to have clarity within its regulations with respect to the threshold. While the CAS Board no longer needs to take action, the FAR will be revised any time the TINA threshold is revised, which is every 5 years, if not sooner.

The FAR sections revised by this final rule are:

• 30.201-4 – Cost Accounting Standards Administration
• Part 52.230 – Solicitation Provisions and Contract Clauses
  • 52.230-1
  • 52.230-2
  • 52.230-3
  • 52.230-4
  • 52.230-5

The CAS threshold should be monitored by contractors who expect to become CAS covered in the near future, or are already CAS covered. This rule should not have much of an effect on any CAS exempt companies, as is the case with most small businesses.

Please contact Brian Bender at 301.222.8273 or bmbender@aronsonllc.com for questions or assistance with your cost accounting standards and federal government compliance issues.