NDAA 2026 Threshold Changes: CAS and Pricing Impact

The NDAA 2026 CAS threshold changes, part of the National Defense Authorization Act for fiscal year 2026, signed into law on December 18, 2025 (P.L. 119-60), set out to do three things: raise full Cost Accounting Standards (CAS) coverage from $50 million to $100 million, raise contract-level CAS applicability from $2.5 million to $35 million, and raise the defense certified cost or pricing data threshold from $2.5 million to $10 million. One is law and settled. One is written into the law but waiting on a rule that is overdue. One never changed a number at all.

Amerifusion Bookkeeping has identified these as the most significant government contractor accounting changes in over a decade. For mid-size contractors in the $5 million to $50 million revenue range, the relief is real on the parts that took effect, and knowing which parts those are is the whole job.

Most government contractors have heard the headlines. Fewer understand what the changes mean for their specific situation, and the headlines get one thing badly wrong. The move to full CAS coverage at $100 million has not happened. A contractor sitting under full coverage today is still under it.

What did happen is at the contract level: a $15 million contractor with a single $8 million cost-reimbursement contract now sits below the $35 million statutory applicability figure. The savings in compliance overhead, audit preparation time, and disclosure statement maintenance are real where they apply.

But the transition is not automatic. Existing contracts carry their original CAS clauses until modified. Accounting systems need reconfiguration. Disclosure statements require formal updates or withdrawal, and none of that should start before your contracting officer confirms your status in writing.

What the FY2026 NDAA Changed: Section 1804 and Section 1806

Sections 1804 and 1806 of the FY2026 NDAA rewrote the dollar thresholds governing two core compliance regimes for defense contractors: the Truthful Cost or Pricing Data Act (10 U.S.C. 3702) and the Cost Accounting Standards [48 CFR Part 9903]. Both changes reduce the number of contractors and contracts subject to these requirements, with the stated goal of expanding the defense industrial base by lowering barriers to entry.

Section 1804(c) raises the threshold for submitting certified cost or pricing data from $2.5 million to $10 million for defense contracts entered into after June 30, 2026. It does that by amending 10 U.S.C. 3702(a) itself, so the date sits inside the statute rather than in an implementation note, and the amendment is already law.

The scope is narrow: title 10 is the DoD authority. Civilian agencies run on 41 U.S.C. 3502, which Congress did not touch, and FAR 15.403-4 still states $2.5 million for everyone. Contracts executed before that date retain the $2.5 million standard. The practical result: thousands of contract actions annually will no longer require the cost-build-up, rate verification, and data certification process that adds weeks to proposal preparation.

Section 1806 restructures CAS applicability, and its two halves do not work the same way. This is the single most misreported part of the statute.

Section 1806(d)(1) amends the law itself. It strikes the words that used to define CAS contract-level applicability by cross-reference to the Truth in Negotiations Act (TINA) threshold and writes $35,000,000 into 41 U.S.C. 1502(b)(1)(B) in their place. There is no contract-date condition, so the June 30, 2026 date does not belong to it.

But read two lines further. Paragraph (3) of the same subsection gave the Administrator for Federal Procurement Policy 180 days to issue the regulations needed to implement that amendment, and that deadline passed in June 2026 with nothing issued. So the statute reads $35,000,000 while the regulation implementing it does not exist, and most practitioner commentary treats the increase as taking effect through that rulemaking.

Note what the amendment also means for the old figure: the pre-amendment threshold was the TINA threshold, which was $2.5 million, not the $2 million that circulates in much of the commentary.

Section 1806(a) does not amend anything. It instructs the Administrator for Federal Procurement Policy to revise the rules so that the thresholds in 48 CFR 9903.201-2 move from $50 million to $100 million, within 180 days. That deadline ran out in June 2026. The only document filed under RIN 0348-AB85 is the proposed rule of March 20, 2026, so the regulation still reads $50 million, and so does the Disclosure Statement trigger at 9903.202-1. Until a final rule issues, full CAS coverage has not moved.

Two more details that most summaries get wrong. Section 1806 did not create the exemptions for commercial products, competitively awarded firm-fixed-price work, and items priced by law or regulation; those already sat at 41 U.S.C. 1502(b)(1)(C)(i) to (iii). What it added was the words or the portion of a contract or subcontract, so an exemption now reaches part of a contract rather than all of it.

And the $7.5 million trigger-contract exemption is not merely unchanged, it is repealed: Section 1806(d)(1)(B)(iv) struck clause (iv) outright. 48 CFR 9903.201-1(b)(7) still prints it, but only because the implementing rule is overdue, and it makes no difference under a $35 million floor.

Worth saying plainly, because every article on this subject buries it: if you are a small business, none of these thresholds decide anything. 48 CFR 9903.201-1(b)(3) exempts contracts and subcontracts with small businesses from all CAS requirements, at any dollar value, and it always has. Run that test before any of the numbers above.

Full CAS vs. Modified CAS: What the CAS Coverage Threshold 2026 Change Means

The CAS coverage threshold 2026 increase from $50 million to $100 million would shift a large number of contractors from full CAS coverage to modified coverage, and it is the change drawing the most attention. It has not arrived, so what follows describes the distinction as it stands today at $50 million.

Full CAS requires compliance with every applicable cost accounting standard, a filed CAS Disclosure Statement (Form CASB DS-1), and Defense Contract Audit Agency (DCAA) oversight of any accounting practice changes. Only the number of standards has moved. A final rule published 8 July 2026 wholly rescinded CAS 408 and CAS 411 and rescinded most of CAS 404 and CAS 409, relocating what survived, and it took effect on 7 August 2026. All four now read [Reserved] in 48 CFR part 9904, leaving fifteen standards with content.

Modified CAS requires compliance with only four standards: CAS 401 (consistency in estimating, accumulating, and reporting costs), CAS 402 (consistency in allocating costs), CAS 405 (accounting for unallowable costs), and CAS 406 (consistency in cost accounting periods).

The compliance difference is not trivial. Full CAS demands detailed documentation for every cost allocation method, formal cost impact analyses when changing accounting practices, and ongoing DCAA monitoring. Modified CAS contractors still follow fundamental cost accounting discipline but avoid the eleven further standards that full coverage brings, on subjects such as G&A allocation (CAS 410), deferred compensation (CAS 415), insurance costs (CAS 416), and independent research and development and bid and proposal costs (CAS 420).

That figure was fifteen until 7 August 2026. It is eleven now, because four standards were rescinded that day. If you see fifteen quoted anywhere, including in older guidance, it predates that rule.

Take a contractor with $60 million in net CAS-covered awards. Under 48 CFR 9903.201-2 they are in full coverage, and they still are, because the $100 million figure needs a rule that has not issued. If and when it does, they would fall to modified coverage: the Disclosure Statement filing obligation drops, the annual cost impact assessment for any practice change drops, and the DCAA audit scope narrows.

None of that has happened yet, and planning as though it has is the expensive version of this mistake. What has changed sits one level down. Because contract-level applicability is now $35 million by statute, a mid-market contractor whose individual awards all fall below that figure is outside CAS on those contracts regardless of where the coverage threshold ends up.

What the TINA Change Means Alongside the CAS Change

Section 1804(c) raises the certified cost or pricing data threshold to $10 million for DoD prime contracts entered after June 30, 2026, and DoD has been administering it by class deviation since March 16, 2026. Below the threshold a contracting officer can still require data other than certified cost or pricing data, so the paperwork drops but the documentation duty does not disappear. The one piece of advice worth repeating here: keep your internal cost models even when certification is not required. Clean cost data still supports negotiation, protects margins, and is what you will need on the next award that does cross the line.

The full picture, including the civilian split, the NASA and Coast Guard position, the exceptions and the modification rules, is in the TINA compliance threshold guide. This article stays on CAS.

Who Benefits Most: The $5M to $50M Contractor

NDAA government contractor accounting relief hits hardest for firms in the $5 million to $50 million revenue range. These contractors operate on margins that make every compliance dollar visible. The recurring cost of CAS compliance infrastructure, meaning disclosure statement maintenance, cost impact analyses and CAS-specific audit preparation, is money that comes straight back when the requirement lifts. Price your own figure from your last two years of professional fees and internal hours rather than an industry average, because the range across firms this size is enormous.

The specific scenarios where these thresholds create the most impact:

• Contractors whose largest single contract falls between $2.5M and $35M, and who are not small businesses. This is where the relief is, subject to the overdue rulemaking. Small businesses were already exempt under 9903.201-1(b)(3), and contracts under $7.5 million were covered by the trigger-contract exemption the same NDAA section has now struck. That contract sits below the statutory applicability figure. The old structure keyed off the TINA threshold of $2.5 million, not the $2 million widely quoted, and 48 CFR 9903.201-1 still describes it that way, so confirm the determination with your contracting officer before acting on it.
• Contractors with $50M to $100M in net CAS-covered awards. These firms are the intended beneficiaries of the coverage change and they have received nothing yet. They remain under full coverage, with the Disclosure Statement obligation intact, until the Office of Federal Procurement Policy (OFPP) issues the rule. Firms below $50 million were already on modified coverage and are unaffected either way.
• Contractors bidding on $3M to $10M DoD awards entered after June 30, 2026. They no longer prepare certified cost or pricing data as a matter of statute. Proposal turnaround time shortens. The same award from a civilian agency still carries the requirement.

The stated aim of both sections is to widen the defense industrial base by lowering the cost of entry. Whether the full-coverage change delivers that depends entirely on a rule that has not issued, so treat any projection of how the population shifts as a forecast about rulemaking rather than a description of today.

What to Update in Your Accounting System Now

Two of these changes are operational already and one is waiting on a rule, so the work splits the same way. Act on the statutory changes with your contracting officer’s confirmation in hand, and prepare for the coverage change without assuming a date for it. Do not wait for the rule to begin the analysis.

Here is the action list for contractors who expect their CAS or TINA status to change:

1. Calculate your net CAS-covered awards. Pull your total CAS-covered contract values for the most recent cost accounting period. At or above $50 million you are in full coverage and you stay there until OFPP issues the rule; the $50 million to $100 million band is the one that would move, and it has not. Separately, if every individual contract value falls below $35 million, you are outside CAS at the contract level under the amended statute.
2. Review your CAS Disclosure Statement status. Contractors moving from full to modified coverage should consult with their contracting officer and cognizant auditor about whether to formally withdraw or amend their Disclosure Statement. Do not unilaterally stop filing.
3. Audit existing contract clauses. Contracts awarded under the old thresholds carry their original CAS clauses. The CAS clause in an existing contract does not automatically change, and 48 CFR 9903.201-2(b)(3) puts it beyond argument for one direction at least: a contract awarded with modified coverage “shall remain subject to such coverage throughout its life regardless of changes in the business unit’s CAS status during subsequent cost accounting periods.” Discuss bilateral modification with your contracting officer if you believe a contract should be de-scoped from CAS coverage.
4. Reconfigure your indirect rate structure. Contractors exiting full CAS may have flexibility to simplify cost pool structures designed to meet specific CAS requirements (CAS 410 for G&A allocation, CAS 420 for independent research and development and bid-and-proposal cost allocation). Review whether your current rate structure still serves your business or only served compliance.
5. Update your proposal templates. For defense awards between $2.5 million and $10 million entered after June 30, 2026, replace certified cost or pricing data formats with “other than certified” data packages. Build pricing models based on market data, historical pricing, and commercial comparisons.
6. Document everything. Any change in cost accounting practice requires documentation, even under modified CAS. DCAA-adequate records remain the standard for every contract regardless of CAS status.

Do the New CAS Thresholds Apply to Existing Contracts?

The most common misconception about the NDAA 2026 CAS threshold changes is that existing contracts automatically inherit the new thresholds. They do not. A contract awarded under the old $2.5 million CAS threshold retains its CAS clause until the contract is modified or completed.

The second half of that belief needs care in the other direction, though. Section 1806(d)(1) amended the statute in December 2025, so the law has read $35 million since. Section 1806(d)(3) then ordered implementing regulations for that amendment inside 180 days, and none have issued. So both halves of Section 1806 are waiting on overdue rulemaking; the difference is that the contract-level figure already changed in the US Code and the full coverage figure never changed anywhere.

This creates a transition period where contractors carry two standards at once. A new award between $2.5 million and $35 million falls below the statutory applicability figure, while an existing award of the same size keeps the CAS clause it was written with. Managing both requires clear segregation in your accounting system between legacy CAS-covered contracts and new-threshold contracts. It also requires accepting that 48 CFR 9903.201-1 has not been revised, so the regulation your contracting officer reads still describes the old cross-reference. Put the determination in writing.

The TINA transition is cleaner. Section 1804(c) sets a bright-line date: defense contracts entered into after June 30, 2026, use the $10 million threshold. Contracts entered on or before that date use $2.5 million. No ambiguity. But a modification to an existing contract could trigger questions about whether the modification constitutes a “new” contract action. Work with your contracting officer to clarify on a case-by-case basis.

Contractors approaching the incurred cost submission process will find DCAA auditing incurred costs under the CAS requirements that applied at the time of contract performance, not the requirements in effect at audit time. Your FY2025 incurred cost submission follows the old thresholds. FY2026 submissions for new awards follow the new thresholds. Keep your records clean enough to support both.

Frequently Asked Questions

Key Takeaways

• Sort the three changes by mechanism, because two are law and one is not. The DoD TINA threshold is $10 million by statute for prime contracts entered after June 30, 2026, with no rulemaking attached to it. CAS contract-level applicability reads $35 million in the statute, but Section 1806(d)(3) ordered implementing rules for it and they are overdue. Full CAS coverage is still $50 million and never changed in the law at all. Existing contracts keep their original CAS clauses in every case.
• The CAS contract-level threshold jump from $2.5 million to $35 million removes CAS coverage from a large number of contract actions. The old $7.5 million trigger-contract exemption went with it, struck from the statute by Section 1806(d)(1)(B)(iv), though 48 CFR 9903.201-1(b)(7) still prints it while the rule is overdue. Losing it changes nothing under a $35 million floor. And if you are a small business, 9903.201-1(b)(3) already exempted you from all of it.
• Compliance relief is not a compliance vacation. FAR Part 31 cost principles, DFARS business system requirements, and DCAA audit authority remain fully intact regardless of CAS status. Weak accounting systems will still produce questioned costs and adverse audit findings.
• Prepare now. Review your CAS-covered contract portfolio, calculate your net awards, and plan Disclosure Statement updates against the $50 million trigger that is still in force, rather than against a rule that has not issued.

These threshold changes reward contractors who already run disciplined accounting operations. A CAS exemption is not a free pass on cost accounting fundamentals, and reading it as one is the expensive mistake here. If your accounting system is solid, the NDAA 2026 changes hand you a competitive advantage: lower compliance costs and faster proposal cycles. If your system has gaps, now is the time to fix them, because DCAA audit authority is unchanged by these thresholds and always has been.

Take the free Compliance Readiness Check to see where your firm stands, or book a discovery call to discuss how these threshold changes affect your specific contract portfolio.