What is the new CAS threshold under the 2026 NDAA?

For contracts awarded after June 30, 2026, the Cost Accounting Standards (CAS) applicability threshold increases from $2.5 million to $35 million.

As a result, many negotiated government contracts valued below $35 million will no longer be subject to CAS based solely on contract value. Government contractors should still review the terms, type, and circumstances of each contract before determining that an exemption applies.

When do the 2026 NDAA CAS threshold changes take effect?

The new CAS thresholds apply to contracts awarded after June 30, 2026.

Contractors should review both their current contract portfolio and proposal pipeline to determine which awards will be governed by the previous thresholds and which will fall under the new rules.

What are Cost Accounting Standards for government contractors?

Cost Accounting Standards, commonly called CAS, are federal rules governing how covered government contractors measure, assign, and allocate costs to government contracts.

CAS requirements are intended to promote consistency in cost accounting practices. Compliance may require contractors to maintain detailed accounting policies, cost allocation practices, internal controls, and supporting documentation.

Did the 2026 NDAA eliminate the CAS trigger contract?

Yes. The 2026 NDAA eliminates the historical CAS “trigger contract” mechanism.

Under the previous framework, receiving a contract of $7.5 million or more could cause a contractor’s other eligible contracts to become CAS-covered. Eliminating the trigger contract means CAS applicability will no longer cascade across smaller contracts in the same way.

What is the full CAS coverage threshold for 2026?

The threshold for full CAS coverage increases from $50 million to $100 million for contracts awarded after June 30, 2026.

This means qualifying contractors receiving awards between $35 million and $100 million may be subject to modified CAS coverage rather than full CAS coverage.

What is modified CAS coverage?

Modified CAS coverage is a more limited CAS compliance regime that applies fewer Cost Accounting Standards than full CAS coverage.

Under the new thresholds, contractors with qualifying awards between $35 million and $100 million may operate under modified coverage. This can reduce the accounting, documentation, and administrative burden associated with federal contract compliance.

What is the difference between modified and full CAS coverage?

Modified CAS coverage requires compliance with a narrower set of Cost Accounting Standards. Full CAS coverage requires compliance with the complete set of applicable standards and generally involves more extensive accounting policies, disclosures, documentation, and administrative oversight.

Because the full CAS coverage threshold has increased to $100 million, some contractors that would previously have faced full coverage may now remain under modified coverage.

What is the certified cost or pricing data threshold for 2026?

The threshold for submitting certified cost or pricing data increases from $2.5 million to $10 million for applicable contracts awarded after June 30, 2026.

This change may reduce the amount of detailed cost justification and certification required during negotiations for contracts valued between $2.5 million and $10 million.

Do contracts between $2.5 million and $10 million still require certified cost or pricing data?

Under the new threshold, many negotiated contracts between $2.5 million and $10 million will no longer require certified cost or pricing data solely because of their value.

However, contractors should not assume that all cost-support requirements disappear. Contracting officers may still request information necessary to evaluate pricing, and other procurement rules or exceptions may apply.

Are government contracts below $35 million exempt from CAS?

Many contracts below the new $35 million CAS applicability threshold may be exempt from CAS, but contract value is not the only consideration.

CAS applicability may also depend on the contract type, procurement method, applicable exemptions, contractor status, and agency guidance. Contractors should evaluate each award individually before changing their compliance procedures.

How do the new CAS thresholds affect small and mid-sized government contractors?

The higher thresholds may significantly reduce compliance costs for small and mid-sized government contractors.

Potential benefits include:

Fewer contracts subject to CAS
Reduced cost accounting documentation
Less exposure to full CAS coverage
Fewer certified cost or pricing data submissions
Lower barriers to entering the federal contracting marketplace
Greater flexibility when pursuing larger negotiated contracts

These changes may make federal contracting more accessible to businesses that previously lacked the accounting infrastructure required to manage CAS compliance.

How do the new thresholds affect established government contractors?

Established government contractors may be able to reduce compliance obligations and pursue opportunities that previously created disproportionate accounting or documentation requirements.

Contractors should review upcoming bids, option exercises, contract modifications, and new awards to determine whether the revised thresholds change their CAS coverage or certified cost or pricing data requirements.

Does the 2026 NDAA include exemptions for nontraditional defense contractors?

Yes. The 2026 NDAA includes additional exemptions for certain nontraditional defense contractors.

These provisions may provide relief to entities that have not performed under a full CAS-covered Department of Defense contract during the preceding year. The nontraditional contractor exemptions are separate from the general CAS threshold increases and should be evaluated independently.

Do the new CAS thresholds eliminate DCAA compliance requirements?

No. The higher CAS thresholds do not automatically eliminate other government contracting accounting or DCAA compliance requirements.

A contractor may still need an accounting system capable of segregating direct and indirect costs, tracking costs by contract, excluding unallowable costs, supporting labor charges, and complying with applicable Federal Acquisition Regulation or Defense Federal Acquisition Regulation Supplement requirements.

CAS coverage and DCAA accounting system compliance are related, but they are not interchangeable.

Does my government contract require CAS compliance in 2026?

A contract awarded after June 30, 2026, may require CAS compliance when it exceeds the new $35 million applicability threshold and no exemption applies.

A complete determination should consider:

The contract award date
Total contract value
Contract and procurement type
Applicable statutory or regulatory exemptions
Whether modified or full CAS coverage applies
The contractor’s prior awards and business structure
Current Department of Defense implementation guidance

Contractors should document their analysis before concluding that a contract is exempt.

What should government contractors do before the new CAS thresholds take effect?

Government contractors should review their contract portfolio and proposal pipeline against the new thresholds.

Recommended steps include:

Identify contracts expected to be awarded before and after June 30, 2026.
Compare each anticipated award with the $35 million CAS threshold.
Identify awards approaching the $100 million full-coverage threshold.
Review negotiations between $2.5 million and $10 million for changes to certified cost or pricing data requirements.
Evaluate whether a nontraditional defense contractor exemption may apply.
Update internal proposal, accounting, and compliance procedures.
Continue monitoring Department of Defense implementation guidance.

Can KatzAbosch help determine whether the new CAS thresholds apply?

Yes. KatzAbosch helps government contractors evaluate CAS coverage, DCAA compliance, accounting systems, indirect cost structures, and federal contracting requirements.

Our government contracting professionals can review your existing contracts and proposal pipeline, evaluate potential CAS exemptions, and help determine how the 2026 NDAA threshold changes may affect your accounting and compliance obligations.

2026 NDAA CAS Thresholds Frequently Asked Questions for Government Contractors