A note on the links: the eCFR has not yet applied these amendments. Until it does, each section linked below still shows the text in effect before October 1, 2026, under a notice that Federal Register changes are pending.
148 CFR 9903.201-1CAS starts above $35 million, and the trigger contract is gone
48 CFR 9903.201-1 now exempts "Negotiated contracts and subcontracts not in excess of $35 million". The old line was tied to the Truthful Cost or Pricing Data statute, at $2.5 million. The rule cuts that tie and drops the $7.5 million trigger contract, so one large award no longer pulls a business unit's smaller awards under CAS.
Indefinite delivery contracts get their own test. A multiple-award contract is tested order by order, on each order's ceiling. A single-award contract is tested once, at award, on the ceiling of the whole contract.
Why it matters: the Board estimated the change would cut the number of CAS-covered business segments by about 60 percent. It names mid-size firms that have outgrown the small business exemption among those it expects to benefit. One caution: a single-award contract with a large ceiling can still bring CAS in, even if the orders placed under it never reach that ceiling.
What to watch: the CAS clauses and certifications in solicitations from October 1, 2026. Check each negotiated proposal against the new line before you certify, and read the ceiling of any single-award vehicle you bid.
248 CFR 9903.201-2Full coverage moves to $100 million, with a way down
48 CFR 9903.201-2 replaces $50 million with $100 million for full coverage. Below that line, a CAS-covered business unit is eligible for modified coverage. The rule also gives a business unit already under full coverage a way down:
"may transition the affected contracts or subcontracts to modified coverage at the start of the business unit's next full cost accounting period"
Why it matters: the step down is not automatic. The rule sets two conditions. The first reads "Has no unresolved CAS noncompliances". The second is that the business unit does not meet the $100 million test for full coverage. A unit that meets both can also use that status to certify modified coverage on new solicitations and awards from October 1, 2026.
The Board adds a caution. Any accounting practice change that comes from the move is unilateral. That is a change the contractor elects to make, for which the Government pays no increased costs in the aggregate. It falls under the contract price adjustment rules.
What to watch: the start of your next full cost accounting period, when existing contracts can move. Before it begins, find out whether any CAS noncompliance is still open with your auditor or contracting officer, and decide whether to resolve it so the business unit can qualify.
348 CFR 9903.202-1The Disclosure Statement is tested business unit by business unit
48 CFR 9903.202-1 now applies its $100 million Disclosure Statement requirement to "Any business unit or segment", tested on its own. The old text counted the company together with its segments. The separate segment test in paragraph (c) is removed and reserved.
Why it matters: a company whose segments together cross $100 million, but none of which does alone, owes no Disclosure Statement. A segment that crosses the line on its own owes one, whatever the rest of the company does.
What to watch: your segment map. Count net CAS-covered awards for each business unit separately, and confirm with your contracting officer which units still owe a statement.
448 CFR 9903.201-5An agency head can now waive CAS up to $100 million
48 CFR 9903.201-5 lets the head of an executive agency waive CAS without the Board's approval. The waiver is for a business unit that mainly sells commercial items and is not otherwise subject to CAS. That authority stopped at $15 million. The rule raises it to $100 million, the same line as full coverage, to match a change Congress made in the 2017 NDAA.
Why it matters: the waiver is narrow, but it now reaches much larger contracts. A mostly commercial business unit can be relieved of CAS on a contract of up to $100 million.
What to watch: whether an agency you work with uses it. If CAS is what keeps a commercial teammate out of a bid, raise a waiver with the contracting officer early.
5CAS 407 and CAS 418CAS 407 is rescinded, and what it kept moves to CAS 418
The second rule rescinds CAS 407, the standard on using standard costs for direct material and direct labor, and eliminates 12 of its 16 requirements. The few the Board kept, on standard costs and variances at the production unit level, move into CAS 418, starting with a definition at 48 CFR 9904.418-30.
Why it matters: the Board found no case where the rescission would change a contractor's disclosed practices. It says any current or future change to standard costing of direct material or labor, or to the treatment of variances, would be considered unilateral.
What to watch: your Disclosure Statement and your policies. Update references to CAS 407 so they point to CAS 418, and leave your standard cost practices alone unless you are ready to treat a change as unilateral.
What DCAA has told its auditors
DCAA issued audit guidance on each rule before it took effect. MRD 26-CCLD-009(R), dated September 29, 2026, covers the thresholds rule and replaces the guidance DCAA issued on August 19, 2026 under MRD 26-CCLD-004(R). MRD 26-CCLD-008(R), dated September 24, 2026, covers CAS 407.
On the thresholds, auditors are told to confirm that a business unit or segment holds CAS-covered contracts that require a Disclosure Statement before they accept a Disclosure Statement engagement or open a comprehensive CAS compliance audit. On audits already under way, they are to coordinate with the cognizant federal agency official on whether a CAS audit is still needed, keeping in mind that "the CAS coverage (full/modified) of prior awards could change". The memo also confirms that the home office rule is unchanged: a home office that allocates costs to any segment that must file a Disclosure Statement still submits Part VIII, whatever the size of the allocation. Where one contract mixes contract types or commercial elements, each portion is tested for exemption on its own.
On CAS 407, DCAA is deactivating activity code 19407 and will plan no new comprehensive CAS 407 compliance audits. An audit in progress with no known risk or evidence of noncompliance is to be canceled. The standard still reaches back, though: "any noncompliance that occurred prior to the effective date must still be resolved". Forward pricing auditors will watch proposals and rate calculations for noticeable variances from prior submissions, and incurred cost audits test each year against the CAS in effect for that year. DCAA calls a change to standard costing or to the treatment of variances voluntary; the rule calls it unilateral.
What to watch: the coverage of awards you already hold, which DCAA expects could change, and any open CAS 407 issue from before October 1, 2026, which still has to be resolved. Keep your rate builds consistent with prior submissions unless you have disclosed the change behind the difference.
Disclaimer. This piece is commentary on published final rules. It is not legal advice, and it is not a determination about any contractor, business unit or contract. Confirm how the rules apply to you with your contracting officer, counsel or a government contracts professional.
Keep reading
CAS Is on the Way Out. Your Outside Auditor Is on the Way In.Why the Cost Accounting Standards are giving ground to generally accepted accounting principles, and what that hands to a contractor's outside auditor.