Build Your Toolkit – System for Determining CAS Applicability

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In the current environment where “affordability” is paramount and companies must “do more without more,” it is critical that companies can quickly and efficiently identify their CAS-covered contracts. This is important for two key reasons:

  1. Company executives often make strategic decisions which impact the company’s cost accounting practices.  A consequence of these executive decisions is the requirement to determine the cost impact to CAS-covered contracts.  A system that quickly provides the universe of CAS-covered contracts saves significant time when performing the cost impacts.
  2. Companies who have modified CAS-covered contracts and who are not required to submit a CAS Disclosure Statement need to monitor the award values of their CAS-covered contracts.  This is necessary to determine if they will trip the threshold that would require their next contract award to be subject to full CAS coverage or to submit a CAS Disclosure Statement.

The original CAS Board, in its Working Group Guidance Paper – WG 77-17, recognized the necessity for companies to quickly and efficiently identify its CAS-covered contracts.  In WG 77-17, the CAS Board stated:

“In order to comply with the requirement of the Administration of CAS clause……contractors should be required to maintain a system for identifying accurately and completely all contracts and subcontracts which contain the Cost Accounting Standards clause…..The ACO should ensure that the contractor has such a system and that it is functioning effectively.” (emphasis added)

Determining applicability at the time of contract award is the best process to adopt.  This is important because one cannot determine applicability based solely on whether or not the CAS clauses (i.e. FAR 52.230-xx) are in the contract.  For example: (1) the legal principal called the “Christian doctrine” may “read the clause in” if the contracting officer should have included it but didn’t; and (2) one can argue the clause is “self-deleting” if the contracting officer included the clause, but shouldn’t have.  The most accurate method of determining CAS applicability involves understanding, at the time of contract award, if one of the nine exemptions identified at CFR 9903.201-1 “CAS applicability” exists.  This determination should be part of the contract brief process and then recorded in the accounting/contracts system.  Deltek currently has the ability to designate a contract as CAS-covered, so Deltek users are one step ahead!  Performing this exercise years after contract award can be difficult since the parties who negotiated the contract are either gone, or are not as familiar with the circumstances of the award.  In these circumstances, companies should have someone survey existing contracts using the same process discussed above to ensure they have all their CAS-covered contracts identified in the system.

Following the steps above will: (1) ensure your company uses its resources efficiently when calculating cost impacts; and (2) limit surprises when a company exceeds the threshold requiring full CAS coverage or to submit a CAS Disclosure Statement.

Aside from the CAS clauses, there are other important contract clauses companies should be tracking and including in their accounting/contracts system for easy identification.  Stay tuned for blog posts on these clauses and how your company can benefit by having a process to quickly and efficiently identify them.

Please contact Nicole Mitchell or Adam Eastridge at 240.364.2656  for questions or assistance with your federal government contracting issues.

About the Author: Adam D. Eastridge is a managing consultant in Aronson LLC’s Government Contract Services Group.  With more than 12 years of experience, he focuses on cost accounting standards (CAS), business systems, federal acquisition regulation (FAR), and audit support.

About Adam Eastridge


Adam D. Eastridge is a managing consultant in Aronson LLC’s Government Contract Services Group. With more than 12 years of experience, he focuses on cost accounting standards (CAS), business systems, federal acquisition regulation (FAR), and audit support.

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