The Cost Accounting Standards Board (CASB) has proposed a significant overhaul to CAS applicability thresholds — one that is clearly aimed at reducing compliance burdens, simplifying CAS administration, and expanding competition in the federal marketplace. If implemented, these changes would represent one of the most meaningful deregulatory CAS reforms in decades, particularly for growing mid-size contractors and nontraditional entrants.
Link to Raising the Basic CAS Threshold to Million Raising the Basic CAS Threshold to $35 Million
At the center of the proposal is an increase to the basic CAS applicability threshold. The proposed rule would raise the trigger point for CAS coverage to $35 million, reflecting codification of an OMB legislative proposal.
Just as importantly, the proposal would decouple CAS applicability from a contractor’s Taxpayer Identification Number (TIN) and eliminate the longstanding “trigger contract” concept. In practice, these changes would substantially simplify the CAS determination process and reduce the uncertainty and administrative friction that often accompanies CAS compliance assessments.
By raising the entry point for CAS applicability, the rule would also lower barriers for contractors competing for higher-value awards — particularly companies that may have avoided federal contracting due to the cost and complexity of implementing CAS-compliant accounting systems. CAS reform at this scale could attract additional private investment into the government contracting space, increasing competition by making higher-value procurements more accessible.
Link to Increasing Full CAS Coverage and Disclosure Statement Thresholds to 0 Million Increasing Full CAS Coverage and Disclosure Statement Thresholds to $100 Million
The proposal also includes a major adjustment to full CAS coverage and CAS disclosure statement thresholds. Specifically, CASB proposes raising the threshold from $50 million to $100 million.
This change could materially reduce compliance burdens because full CAS coverage brings all 19 CAS standards into play and typically requires significantly more sophisticated accounting infrastructure and oversight. Raising the threshold would allow many contractors to remain under modified CAS coverage, which is less demanding and more commercially aligned.
CASB’s analysis of FPDS data from FY 2020 through FY 2024 underscores the impact:
- Under current rules, CASB estimates 773 entities were subject to full coverage and disclosure statement requirements during the period.
- Those entities accounted for approximately $1.22 trillion in contract value.
- Applying the proposed $100 million threshold would reduce the number of fully covered entities to 564, while still capturing $1.21 trillion in contract dollars.
In other words, the change would result in a nearly 30% reduction in the number of contractors subject to full CAS coverage, while preserving virtually all of the dollar-value coverage — less than a 1% reduction in covered contract dollars.
This is a targeted compliance reduction: Fewer contractors will be burdened by full CAS, but the government will still maintain oversight of nearly the entire value of federal contract spending.
Link to A Win for Mid-Size and “Graduated” Contractors A Win for Mid-Size and “Graduated” Contractors
One of the most consequential aspects of the proposal is its effect on contractors that have outgrown small business status. Many mid-size firms lose the benefit of CAS exemptions once they no longer qualify as small businesses, which can abruptly increase compliance costs and discourage pursuit of larger federal awards.
By increasing the threshold for full CAS coverage, CASB is directly reducing that “compliance cliff.” These contractors may now be more willing to compete for larger awards without immediately facing the extensive administrative burden associated with full CAS compliance and disclosure statement requirements.
Link to Clarifying CAS Treatment for IDIQ Contracts Clarifying CAS Treatment for IDIQ Contracts
The proposed rule also includes clarifications regarding when CAS applies to indefinite-delivery contracts (IDCs), including IDIQ-type vehicles. CAS applicability in the IDIQ context has long been a source of uncertainty and disputes, especially when CAS status depends on how task orders are structured, priced, or awarded.
Clarifying these rules should reduce ambiguity, avoid unnecessary contract friction, and prevent disputes over whether CAS applies — and whether coverage is modified or full. Increased predictability is itself a barrier-reducer: Contractors can price and structure bids more confidently when CAS exposure is clearer.
Link to CASB Requests Feedback on Quantified Cost Savings CASB Requests Feedback on Quantified Cost Savings
Notably, CASB is specifically seeking comments on the expected cost impact of the proposal, including quantified estimates of compliance savings. Contractors, industry groups, and trade associations should take that request seriously — because robust cost data could shape both the final rule and future CAS reform initiatives.
Link to Bottom Line Bottom Line
If adopted, the proposed CAS threshold changes would be a major deregulatory development. By raising the basic CAS applicability threshold to $35 million, increasing full coverage and disclosure thresholds to $100 million, clarifying CAS treatment for IDIQ contracts, and continuing broader CAS-GAAP alignment efforts, CASB is signaling a deliberate policy shift by reducing compliance cost, expanding competition, and attracting new market entrants — without materially reducing oversight of federal contract dollars.
For mid-size and nontraditional contractors, the message is clear: CAS may soon be less of a barrier, and federal contracting may become a more realistic — and less administratively punishing — growth strategy.
If you have any questions about this noteworthy development, please do not hesitate to contact Aron Beezley or Gabby Sprio.