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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: February 7, 2000

FROM: Barry McVay, CPCM

SUBJECT: Cost Accounting Standards Board (CASB); Applicability, Thresholds, and Waiver of Cost Accounting Standards Coverage

SOURCE: Federal Register, February 7, 2000, Vol. 65, No. 25, page 5989

AGENCIES: CASB, Office of Federal Procurement Policy (OFPP), Office of Management and Budget (OMB)

ACTION: Interim Rule

SYNOPSIS: The CASB is revising applicability, thresholds and procedures for the application of the Cost Accounting Standards (CAS) to negotiated government contracts. The CASB is taking action to implement Section 802 of the National Defense Authorization Act for Fiscal Year 2000, Public Law 106-65.

EDITOR'S NOTE: The CASB's regulations and the CAS are in Chapter 99 of Title 48 of the Code of Federal Regulations (CFR). All the changes are in Part 9903, Contract Coverage, Subpart 9903.2, CAS Program Requirements.

DATES: The effective date of this interim rule is April 2, 2000. Comments must be submitted April 7, 2000. (EDITOR'S NOTE: April 2 is a Sunday. The effective date of the interim rule should be April 7, which is 60 days after the February 7 date of the interim rule.)

ADDRESSES: Send comments to Richard C. Loeb, Executive Secretary, Cost Accounting Standards Board, Office of Federal Procurement Policy, 725 17th Street, NW, Room 9013, Washington, DC 20503. Attn: CASB Docket 00-01. E-mail comments will not be accepted.

FOR FURTHER INFORMATION CONTACT: Richard C. Loeb, Executive Secretary, CASB, 202-395-3254.

SUPPLEMENTAL INFORMATION: On October 5, 1999, President Clinton signed the National Defense Authorization Act for Fiscal Year 2000. Section 802 of the act, titled "Streamlined Applicability of Cost Accounting Standards", makes changes in the applicability requirements for CAS coverage. This interim rule revises the CASB's rules to implement these changes.

The following is a summary of the changes being made:

• Trigger Contract: A new subparagraph (b)(7) is added to 48 CFR 9903.201-1, CAS Applicability, which exempts contracts and subcontracts from CAS coverage "provided that, at the time of award, the business unit of the contractor or subcontractor is not currently performing any CAS-covered contracts or subcontracts valued at $7.5 million or greater."



• Firm-Fixed-Price Contract Exemption: Subparagraph (b)(15) of 48 CFR 9903.201-1 is revised to exempt from CAS coverage "firm-fixed-price contracts or subcontracts awarded on the basis of adequate price competition without submission of cost or pricing data." (EDITOR'S NOTE: The CASB is using the term "cost or pricing data" rather than "certified cost or pricing data" in order to conform to the statutory requirements of 10 U.S.C. Section 2306(h)(1) and 41 U.S.C. Section 254(b), which define "cost or pricing data" as data that requires certification.)



• Types of CAS Coverage: Paragraph (a) of 48 CFR 9903.201-2, Types of CAS Coverage, is amended by revising the dollar threshold for "full CAS coverage" from $25 million to $50 million, and by deleting the requirement that a contractor or subcontractor have received at least one contract or subcontract in excess of $1 million to be subject to "full CAS coverage". In addition, paragraph (b) of 48 CFR 9903.201-2 is amended by revising the definition of "modified CAS coverage" to indicate that such coverage "may be applied to a covered contract of less than $50 million awarded to a business unit that received less than $50 million in net CAS-covered awards in the immediately preceding cost accounting period." Also, conforming amendments are made to the 48 CFR 9903.201-3, Solicitation Provisions, and 48 CFR 9903.201-4, Contract Clauses.



• Waiver: 48 CFR 9903.201-5, Waiver, is revised to authorize the head of the agency to waive CAS applicability (1) for a contract or subcontract with a value of less than $15 million if the business unit of the contractor or subcontractor that will perform the work is primarily engaged in the sale of commercial items and would not otherwise be subject to the CAS; or (2) under exceptional circumstances when necessary to meet the needs of the agency.



• Disclosure Requirements: Paragraph (b) of 48 CFR 9903.202-1, General Requirements, is amended by revising the dollar amount for disclosure from $25 million to $50 million, and by deleting the requirement that a contractor or subcontractor have received at least one contract in excess of $1 million.

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail at BarryMcVay@FedGovContracts.com.

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