Thousands of small and mid-size government contractors will no longer have to build Cost Accounting Standards compliance into their books once they land a federal award, thanks to a final rule published September 1, 2026 by the Office of Management and Budget's Cost Accounting Standards Board. The rule raises the dollar threshold at which CAS kicks in at all fourteenfold, from $2.5 million to $35 million, and it takes effect October 1, 2026.
The Board's action rewrites the on-ramp for federal contracting. Under the prior rules, any negotiated contract above $2.5 million was potentially subject to CAS, and a separate $7.5 million "trigger contract" concept determined when a company's very first CAS-covered award pulled its entire business into the system. The final rule scraps the trigger-contract concept outright and replaces both numbers with the single $35 million floor. A company can now win contracts worth tens of millions of dollars without ever opening a CAS Disclosure Statement.
The change does not stop at the entry point. The threshold for full CAS coverage — the point at which a contractor must file a Disclosure Statement and comply with all 19 individual cost accounting standards rather than the lighter "modified" coverage — doubles from $50 million to $100 million. Agency heads also gain more room to act on their own: they can now waive CAS applicability on individual contracts up to $100 million without seeking Board approval, up from a $15 million ceiling, though they still must notify the Board when they do.
Why the CAS Board Raised the Entry-Point Threshold So Sharply
The Board frames the increase as a deregulatory move aimed squarely at compliance cost and market access. "This final rule is deregulatory, reduces compliance costs, simplifies CAS administration for existing contractors, and reduces barriers to entry for nontraditional contractors," the Board wrote in the final rule text. That last phrase — nontraditional contractors — points to the rule's underlying policy goal: keeping companies that primarily sell commercial products and services, and have historically avoided government work because of CAS overhead, inside the range where they can take federal contracts without triggering a specialized accounting regime built for large defense primes.
The Board issued a notice of proposed rulemaking on March 20, 2026, opening a comment period that ran through April 20, 2026. Nine parties weighed in — five industry associations, two individual contractors, one consulting firm, and one private individual — and the Board says it incorporated that feedback into the final text before publication.
The two thresholds had not moved in step with contract values for years, and the gap between the dollar figures written into the CAS rules and the size of a typical modern federal award had widened — leaving compliance costs to fall on contractors the standards were arguably never meant to reach. A $2.5 million contract that once looked substantial now covers routine mid-tier work, and holding it could still force a company into full CAS compliance — Disclosure Statements, cost impact analyses, and standardized cost accounting practices originally designed for large defense primes — even if the company's total federal business was modest. By resetting the entry point at $35 million and the full-coverage line at $100 million, the Board is aligning CAS's scope with the scale of activity it appears intended to police, rather than sweeping in every mid-size vendor by default.
How the Rule Treats Indefinite Delivery Contracts
One of the more technical but consequential pieces of the rule settles a long-standing ambiguity over indefinite delivery contracts, the task- and delivery-order vehicles that make up a large share of federal spending. The final rule draws a clear line between multiple-award and single-award IDCs.
For multiple-award IDCs — where several companies hold the underlying contract and compete for individual orders — CAS exemptions are now determined order by order, using that specific task or delivery order's ceiling value rather than the value of the overall vehicle. A company holding a large multiple-award IDC could still see individual task or delivery orders fall below the new $35 million threshold and escape CAS coverage on those orders, even though the vehicle itself is worth far more.
Single-award IDCs work differently. Because one contractor holds the entire vehicle, the Board determined that CAS applicability has to be assessed at the point the IDC itself is awarded, using the contract's full ceiling value — not the value of any individual order placed under it later. The entire IDC is exempt only if it is for commercial products or services, or if it consists of firm-fixed-price orders awarded with adequate price competition. The Board explained its reasoning in the rule text: "Determining CAS applicability for single-award IDCs at the IDC level ensures CAS is not underapplied to higher-risk transactions." In other words, a single company sitting on one large, sole-source-style vehicle cannot use order-level splitting to dodge CAS coverage the way a multiple-award pool of competitors can.
What It Means for Contractors
For contracting officers and CFOs alike, the practical effect starts October 1. Contractors whose largest individual awards fall between $2.5 million and $35 million — a band that captures a large share of small and mid-tier federal vendors — move outside CAS applicability entirely unless they already have Disclosure Statements on file for other reasons. Companies operating between $35 million and $100 million now sit in the "modified coverage" zone rather than full coverage, meaning fewer of the 19 individual standards apply and no Disclosure Statement is required.
Contractors already fully CAS-covered near the old $50 million line should check whether their portfolio now falls under the new $100 million full-coverage threshold, since some may be able to petition for reduced coverage going forward. Companies that primarily hold or compete for task orders under multiple-award IDCs should reassess exemption status order by order rather than assuming vehicle-level treatment, while holders of single-award IDCs should confirm applicability was correctly assessed at the time of the base award. Contracting officers evaluating waiver requests up to $100 million no longer need Board approval, though the notification requirement means the paperwork trail moves from an approval gate to a reporting obligation. Any company relying on the old $15 million or $50 million figures in its compliance program should update those thresholds before October 1 to avoid over-complying at needless cost, or under-complying against a rule that has already changed underneath it.
