Ask any small government contractor what "CAS-covered" means, and you'll usually get a wince before you get an answer. Cost Accounting Standards compliance has, for decades, been one of those thresholds companies quietly dreaded crossing — the moment a growing business stopped being "just" a small business and started needing a disclosure statement, a formal cost accounting system, and a much closer relationship with the Defense Contract Audit Agency (DCAA).
That threshold is about to move, dramatically. Starting with contracts awarded on or after June 30, 2026, the federal government is raising the dollar figures that trigger CAS and certified cost-or-pricing data requirements — in some cases by 4x. It's part of a broader rewrite of the Federal Acquisition Regulation (FAR) that the administration has called the most significant overhaul of federal procurement rules in more than 40 years. If your business holds, bids on, or subcontracts under federal awards, the compliance math you've been planning around is changing under your feet.
Here's what's actually happening, who benefits, and what you should do about it before the June 30 effective date.
What's Changing, in Plain Numbers
The changes come from Section 1806 of the FY2026 National Defense Authorization Act (NDAA), layered on top of the FAR overhaul that began with Executive Order 14275 in April 2025. Three thresholds move at once:
Certified cost or pricing data (the "TINA" threshold). The dollar figure above which a contractor must submit certified cost or pricing data — essentially proving your proposed price is accurate, complete, and current — doubles from $2 million to $10 million. Contracts under that new ceiling won't require the certification paperwork at all.
CAS applicability at the contract level. The threshold that triggers mandatory Cost Accounting Standards compliance on an individual contract jumps from $2.5 million to $35 million — a 14x increase. This single change is the big one: it eliminates the old "trigger contract" concept that has, for years, been the moment growing contractors got pulled into CAS whether they were ready or not.
Full CAS coverage. The threshold based on a contractor's collective annual CAS-covered awards rises from $50 million to $100 million, widening the "modified coverage" band (contracts between $35–100 million) where only a subset of the standards apply.
Regulators estimate this exempts close to half of the contractors currently subject to CAS, while the government still keeps coverage over more than 90% of total contract dollars — the compliance burden is being lifted off small and mid-sized companies while staying firmly on the largest primes.
Why This Is Happening Now
The FAR overhaul isn't just a CAS story. Executive Order 14275 directed agencies to rewrite the FAR to cut regulatory bulk and reduce the cost of doing business with the government, on the theory that compliance overhead was scaring off exactly the small, innovative companies the government most wants to attract. Clause numbers across the FAR are being renumbered as part of that effort, and DFARS class deviations already started rolling out in February 2026 ahead of the permanent rulemaking.
CAS in particular had become notorious as a growth penalty. A contractor could win one mid-sized award, cross the old $2.5 million per-contract line, and suddenly need a disclosure statement, formalized cost accounting policies, and the internal accounting infrastructure to defend them — often before the company had the back-office staff to support any of it. Raising the threshold to $35 million per contract removes that trip wire for the vast majority of small and emerging contractors.
Who Actually Benefits
A detail that surprises a lot of contractors: small businesses, as defined by SBA size standards, have generally always been exempt from CAS under FAR 9903.201-1(b)(3), regardless of contract size. So if you're squarely a small business today, these threshold changes aren't rescuing you from something you were already facing.
The real winners are:
- "Other than small" businesses — companies that have graduated out of small business status (through growth, an 8(a) exit, or a merger) and are now exposed to CAS on their own contracts.
- Growing companies approaching the old thresholds. If you were budgeting for a disclosure statement and a CAS compliance program because you expected to cross $2.5 million on your next award, that expectation just changed — you now have room to grow to $35 million on a single contract before CAS kicks in.
- Mid-market contractors sitting in the $50–100 million collective-award range, who now land in modified coverage instead of full coverage.
If your company is a small business today but planning to bid as a prime on larger awards, lose small-business status, or scale toward the mid-market, this is exactly the kind of regulatory shift worth building into your growth planning — not because it affects you this quarter, but because it changes the ceiling before the old rules would have forced a compliance buildout.
What Doesn't Change
A few things are easy to misread in the coverage of this overhaul:
Modified CAS coverage still exists. Contracts between $35 million and $100 million fall into "modified coverage," which still requires compliance with a subset of the standards — CAS 401 (consistency in estimating, accumulating, and reporting costs), 402 (consistency in allocating costs incurred for the same purpose), 405 (accounting for unallowable costs), and 406 (cost accounting period). A reprieve from full coverage is not a reprieve from all coverage.
New exemptions target specific contract types, not everyone. Section 1806(d) also expands exemptions for commercial products or services, prices set by law or regulation, and firm-fixed-price line items — typically evaluated at the contract line item level, not the whole contract.
Existing CAS-covered contracts don't retroactively become exempt. These thresholds apply to contracts awarded on or after June 30, 2026. If you're already CAS-covered under an existing award, that coverage generally continues under the terms in place when the contract was signed.
DCAA audits aren't going away. Fewer companies will be CAS-covered, but incurred cost audits, timekeeping reviews, and accounting system adequacy reviews remain very real for contractors doing cost-reimbursement or T&M work, CAS-covered or not.
A Quick Example
Picture a 45-person engineering firm that lost its small-business size status last year after a merger. Under the old rules, the firm's $4 million task order would have crossed the $2.5 million CAS trigger the moment it was awarded — forcing a disclosure statement, a formal cost accounting policy manual, and likely an outside consultant to get audit-ready within months. Under the new $35 million threshold, that same $4 million award doesn't touch CAS at all. The firm still needs solid cost allocation and consistent estimating practices to defend its pricing, but it can build that discipline on its own timeline instead of under a compliance deadline dictated by DCAA. That's the real shift here: less "comply or lose the contract," more "build good habits because they're good habits."
Common Mistakes to Avoid
Assuming the June 30 date applies to contracts you already hold. The new thresholds apply to contracts awarded on or after June 30, 2026. An existing CAS-covered contract signed in 2025 doesn't suddenly become exempt because the rules changed — it keeps the coverage determination made at the time of award.
Confusing "small business" with "under threshold." These are two separate exemptions. Small businesses have long been categorically exempt from CAS. The new dollar thresholds matter to other-than-small businesses and to small businesses that expect to graduate out of that status. Don't assume the headlines about CAS relief apply to you if you're already exempt for a different reason — and don't assume they don't apply just because you're currently small, if growth is on your roadmap.
Treating "not CAS-covered" as "no cost documentation needed." Contracting officers, prime contractors doing subcontract due diligence, and DCAA can still ask for cost detail on non-CAS-covered work, particularly cost-reimbursement and time-and-materials contracts. Losing CAS applicability doesn't mean losing the need for defensible numbers.
Ignoring the clause renumbering because it seems cosmetic. It isn't. A compliance matrix or proposal template that still cites a superseded clause number can create a mismatch between what you certified and what's actually in the solicitation — a fixable problem if you catch it early, an awkward one if a contracting officer catches it first.
What Small and Growing Contractors Should Do Before June 30
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Map your current and pipeline contracts against the new thresholds. CAS applies at the contract level and is evaluated against the rules in effect on the award date — pull your active and anticipated awards and check which side of $35 million (and $10 million for certified cost data) they land on.
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Don't tear down your cost accounting discipline — right-size it. If you built cost accounting practices in anticipation of CAS coverage that's no longer imminent, that's not wasted work; consistent cost estimating and allocation practices are good business hygiene and directly support accurate proposal pricing, whether or not CAS technically applies. Just don't over-invest in disclosure-statement-grade formality you don't yet need.
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Watch for clause renumbering in your templates. If your proposal boilerplate, compliance matrices, or subcontract flow-down language cite specific FAR or DFARS clause numbers, verify they still match as the overhaul rolls out — renumbering without updating references is a quiet way to submit a proposal that cites the wrong rule.
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Reassess your growth strategy. If avoiding CAS exposure has been shaping how you structure teaming arrangements, subcontracts, or award pursuit, the new headroom (up to $35 million per contract, $100 million collectively) may change what's worth bidding on directly versus through a partner.
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Keep tracking every award independently. Because CAS is evaluated contract-by-contract against the rules in effect at award, a disciplined contract tracking process — not a one-time threshold check — is what actually keeps you audit-ready.
Why This Comes Back to Your Books
None of this changes the fundamentals of good financial recordkeeping for a government contractor. Whether or not a given contract is CAS-covered, you still need to allocate direct and indirect costs consistently, track costs by contract, and be able to reconstruct exactly how a number in a proposal or invoice was derived — because a DCAA auditor, a contracting officer, or your own controller may ask months later. The threshold changes reduce which contracts require formal CAS compliance; they don't reduce the value of clean, auditable books.
That's where plain-text accounting has a real advantage for growing contractors. Beancount.io lets you track costs by contract or cost center with full transparency, version-controlled history, and no black-box calculations — every allocation and adjustment is visible and reproducible, which is exactly what you want to be able to hand an auditor. Get started for free and see why developers and finance-minded contractors are switching to plain-text accounting.