The FY 2026 National Defense Authorization Act, signed into law in January 2026, includes two significant threshold adjustments that reduce cost accounting and pricing transparency requirements for defense contractors. Section 1804 raises the Truth in Negotiations Act — TINA — certified cost or pricing data threshold from $2 million to $10 million, meaning that contractors are not required to submit certified cost or pricing data or provide TINA representations for contract actions under $10 million. Section 1806 raises the Cost Accounting Standards coverage threshold from the current $2 million single-award threshold and $50 million aggregate threshold to $35 million and $100 million respectively, exempting a substantial category of mid-tier defense contractor from the full CAS disclosure statement and compliance requirements. Both changes take effect for solicitations issued on or after July 1, 2026, following the FAR and DFARS implementing rule currently in interim rule status. The threshold increases follow decades of advocacy from small and mid-tier defense industry groups that have argued the existing thresholds — last substantially updated in the 1990s — have been effectively lowered in real terms by inflation, capturing far more contractors in complex compliance regimes than Congress originally intended.
TINA Threshold Change: Impact on Negotiated Acquisitions
The Truth in Negotiations Act requires contractors to submit certified cost or pricing data for negotiated contracts above the threshold and certifies that the data submitted is accurate, complete, and current as of the date of price agreement. If the data proves to have been defective — meaning that the contractor had cost data available at negotiation that it did not disclose and that data would have resulted in a lower negotiated price — the government is entitled to a price adjustment equal to the amount by which the price was increased due to the defective data, with interest. TINA creates significant compliance obligations: contractors must maintain cost accounting systems capable of collecting and organizing cost data in the format the government requires, must have internal controls that identify potentially relevant data before certification, and must have legal and financial staff experienced in preparing and reviewing TINA submissions. Raising the threshold to $10 million removes these obligations for the largest single category of negotiated contracts by volume — individual task orders and contract modifications in the $2 million to $10 million range — and substantially simplifies the pricing process for mid-tier contractors that execute many contracts in this size range.
CAS Threshold Changes and Disclosure Statement Relief
Cost Accounting Standards apply to negotiated contracts awarded to large business contractors above the CAS coverage thresholds and require covered contractors to maintain consistent cost accounting practices disclosed in a formal disclosure statement, follow those practices consistently, and adjust contract prices if the practices change in a way that affects contract costs. Full CAS coverage — triggered for contractors with aggregate covered contract awards over the old $50 million threshold — requires the most extensive compliance, including both the disclosure statement and compliance with all 19 cost accounting standards. Modified CAS coverage — triggered for individual contracts between the single-contract threshold and the aggregate threshold — requires a more limited compliance showing. The increase to $35 million single-contract and $100 million aggregate substantially narrows the population of contractors subject to full CAS coverage and eliminates modified CAS coverage for many contracts in the $2 million to $35 million range. Mid-tier contractors that have been subject to CAS requirements but whose government contract portfolios are concentrated in the newly exempt range will need to assess whether their aggregate covered awards still trigger full CAS coverage even after the threshold changes take effect.
What It Means for Contractors
The TINA and CAS threshold increases represent the most significant reduction in cost accounting compliance obligations for mid-tier defense contractors in over two decades and take effect July 1, 2026 for new solicitations.
- Contractors with substantial contract volumes in the $2 million to $10 million range should assess their TINA compliance costs — including the personnel time, system costs, and legal fees associated with preparing and certifying cost or pricing data submissions — as these costs will be eliminated for contracts below the new $10 million threshold after July 1, 2026.
- Companies currently subject to CAS coverage should recalculate their projected covered contract award totals under the new $35 million and $100 million thresholds to determine whether they remain covered; companies that fall below the new thresholds on existing contracts should determine whether there is a mechanism to apply the new thresholds to existing contract modifications or whether the old thresholds continue to apply to pre-July 1 awards.
- The threshold increases do not affect commercial item acquisitions, which have been exempt from TINA and CAS requirements under separate statutory provisions; the relief primarily benefits contractors that perform substantial amounts of negotiated, non-commercial defense work in the newly exempt contract value range.
- Government contracting officers should be aware that the new thresholds apply to solicitations issued after July 1, not to options exercised or modifications to contracts awarded before that date under the old thresholds; managing the transition on active multi-year contracts requires careful coordination between program offices and procurement legal counsel.
Transition Planning for Currently Covered Contractors
Contractors currently subject to full or modified CAS coverage face a transition planning challenge that is more nuanced than the headline threshold numbers suggest. The new thresholds — $35 million single-contract, $100 million aggregate — apply to contracts and contract modifications signed after July 1, 2026. But existing contracts that were awarded when the old thresholds applied continue to be governed by the old coverage requirements; the disclosure statements, cost accounting practice consistency requirements, and equitable adjustment clauses that applied at award remain in force for the life of those contracts. A contractor with a mixed portfolio may simultaneously face full CAS coverage on legacy contracts and exemption on new awards, requiring two parallel frameworks during the transition. The most operationally significant implication is for contractors that have modified their cost accounting practices and need to assess whether those changes create equitable adjustment obligations under legacy CAS contract clauses even as new awards are exempt. Engaging cost accounting counsel to map the legacy contract portfolio against the July 1 transition date and identify any pending cost accounting practice changes that should be timed relative to the new threshold environment is a prudent near-term step for companies with significant CAS-covered contract bases.