Defense contractors have six weeks to prepare for two significant threshold increases signed into law in the National Defense Authorization Act for Fiscal Year 2026 (P.L. 119-60, signed December 18, 2025). Section 1806 raises the threshold for full Cost Accounting Standards (CAS) coverage from $50 million to $100 million in negotiated contracts within a cost accounting period, subject to adjustment for inflation. Section 1806(a) raises the threshold for required disclosure of certified cost or pricing data under the Truth in Negotiations Act (TINA) from $2.5 million to $10 million, applying to defense contracts entered into after June 30, 2026. For many mid-tier defense firms, the combination eliminates two of the most administratively burdensome compliance requirements in the Federal Acquisition Regulation system — and, for the first time in years, makes DoD contracting meaningfully more accessible to nontraditional contractors.

What Changes on June 30, 2026

Certified Cost or Pricing Data (TINA): Under current rules, contractors must submit certified cost or pricing data — a comprehensive package of actual cost data certified as accurate and complete as of the date of agreement on price — for contract awards, modifications, and subcontracts above $2.5 million. A defective pricing claim by the government, if sustained, can require the contractor to repay any amount by which the negotiated price exceeded what it would have been had accurate data been submitted, plus interest. After June 30, the mandatory trigger threshold rises to $10 million. Contracts between $2.5 million and $10 million will no longer automatically require certified data submission, though contracting officers retain discretion to request certified data when they determine it is necessary to ensure a fair and reasonable price.

Full CAS Coverage: The Cost Accounting Standards Board's full coverage rules impose standardized cost accounting practices across 19 CAS standards and require contractors to disclose those practices in a Disclosure Statement (Form CASB DS-1) filed with the Defense Contract Audit Agency. Full coverage currently applies when a contractor receives $50 million or more in negotiated CAS-covered contracts in the preceding cost accounting period. That threshold doubles to $100 million. Contractors above $2 million but below the new $100 million full-coverage threshold remain subject to modified CAS coverage under CAS 401 and 402 — which require only that cost accounting practices be consistently applied and that like costs be treated consistently — but are relieved of the more burdensome full-coverage disclosure, forward pricing rate agreement, and disclosure change requirements.

Context: Largest Threshold Change in Decades

The $2.5 million TINA threshold was last adjusted in 2018, when it was raised from $750,000 to $2.5 million. Before that, the $750,000 threshold had been in place since 1990. The jump from $2.5 million to $10 million is the largest single increase in the statute's 54-year history, and reflects congressional consensus that the threshold had fallen far behind price inflation and contractor compliance costs. The NDAA conference report cited studies showing that TINA compliance costs for contracts in the $2.5 million to $10 million range frequently represent 5 to 8 percent of contract value — a disproportionate administrative burden that discourages commercial and nontraditional firms from pursuing DoD work.

The CAS full-coverage threshold change carries similar legislative history. The $50 million threshold has been in place since 1996, and inflation alone would justify an adjustment; the doubling to $100 million reflects both catch-up inflation adjustment and a policy judgment that full CAS overhead imposes costs that are no longer proportionate for mid-tier contractors. The practical effect is that several hundred contractors who currently maintain full CAS coverage will be permitted to transition to modified coverage in FY2027, reducing their audit exposure and accounting system compliance costs.

The NDAA's 180-day implementation window requires DoD to amend the DFARS to reflect the new thresholds before June 30, 2026. The Defense Acquisition Regulations System is expected to publish an interim rule in late May or early June, with a public comment period running concurrently with the rule's immediate effectiveness — standard practice for threshold adjustments with a legislatively mandated effective date.

Nontraditional Contractor Protections

Section 1826 of the same NDAA strengthens protections for nontraditional defense contractors — companies that have not, in the preceding one-year period, entered into or performed on any DoD contract or subcontract that was subject to full CAS coverage or that required submission of certified cost or pricing data. Under Section 1826, nontraditionals are exempt from CAS, FAR Part 31 cost principles, and certain business systems requirements. DoD's authority to waive these protections for an individual nontraditional contractor is now limited to head-of-contracting-activity determinations plus concurrent congressional notification — a higher procedural bar than the previous standard, intended to prevent program offices from routinely waiving the protections to ease their own acquisition workload.

What It Means for Contractors

  • Contracts entered into after June 30, 2026, at values between $2.5 million and $10 million will not trigger mandatory certified cost or pricing data requirements — reducing pre-award proposal preparation burden for mid-sized awards and eliminating defective pricing exposure for that tier of work.
  • Contractors currently subject to full CAS coverage should verify whether their FY2026 contract portfolio falls below the new $100 million threshold; if so, they must update their cost accounting Disclosure Statement and notify the cognizant DCAA auditor of the change in coverage status before the next contract affected by the new threshold is negotiated.
  • Contracting officers retain discretion to request certified data below the $10 million threshold when they determine it is necessary for price reasonableness — contractors should not assume the threshold change eliminates all data requests, particularly on sole-source awards or contracts with limited price competition.
  • Nontraditional defense contractors receive additional protections under Section 1826: they are exempt from CAS, FAR Part 31 cost principles, and certain business systems requirements, with DoD waiver authority limited to head-of-contracting-activity determinations plus congressional notification — a meaningful structural improvement for commercial tech firms entering the defense market.
  • Legal and pricing counsel should review all existing forward pricing rate agreements with DCAA that were negotiated under the prior thresholds; the changed coverage status for some contractors may affect the terms of those agreements and warrant renegotiation.

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