The NDAA 2026 CAS threshold changes signed into law on December 18, 2025 (P.L. 119-60) raise the full CAS coverage threshold from $50 million to $100 million, increase the contract-level CAS applicability threshold from $2.5 million to $35 million, and quadruple the certified cost or pricing data requirement from $2.5 million to $10 million. 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 compliance relief is real, but only if you act before the June 2026 effective dates.
Most government contractors have heard the headlines. Fewer understand what the changes mean for their specific situation. A $30 million contractor currently under full CAS coverage will shift to modified coverage, dropping 15 of 19 cost accounting standards from mandatory compliance. A $15 million contractor with a single $8 million cost-reimbursement contract was previously CAS-covered. That same contract under the new thresholds is exempt. The savings in compliance overhead, audit preparation time, and disclosure statement maintenance are significant. 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.
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 (formerly TINA) 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 raises the threshold for submitting certified cost or pricing data from $2.5 million to $10 million. This applies to defense contracts entered into after June 30, 2026. 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 at three levels. First, the contract-level threshold rises from $2.5 million to $35 million [Section 1806(d)]. Second, the full CAS coverage threshold doubles from $50 million to $100 million in net CAS-covered awards [Section 1806(a)]. Third, new exemptions exclude portions of contracts for commercial products, firm-fixed-price awards, and items with prices set by law or regulation. Implementing regulations are due within 180 days of enactment, placing the deadline at approximately June 16, 2026. DFARS updates are due within 120 days, or approximately April 17, 2026.
| Threshold | Previous | FY2026 NDAA | Section |
|---|---|---|---|
| Certified Cost or Pricing Data (TINA) | $2.5 million | $10 million | Section 1804 |
| CAS Contract-Level Applicability | $2.5 million | $35 million | Section 1806(d) |
| Full CAS Coverage (Net Awards) | $50 million | $100 million | Section 1806(a) |
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 shifts a large number of contractors from full CAS coverage to modified coverage. Full CAS requires compliance with all 19 cost accounting standards, a filed CAS Disclosure Statement (Form CASB DS-1), and DCAA oversight of any accounting practice changes. 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 administrative burden of 15 additional standards covering topics like depreciation (CAS 409), deferred compensation (CAS 415), and insurance costs (CAS 416).
For a contractor with $60 million in net CAS-covered awards, the old threshold placed them firmly in full coverage. Under the new $100 million threshold, they fall to modified coverage. The Disclosure Statement filing obligation drops. The annual cost impact assessment for any practice change drops. The DCAA audit scope narrows. Cherry Bekaert estimated that many mid-market contractors who previously triggered full CAS will now be fully exempt from CAS altogether, given the simultaneous increase in the contract-level threshold to $35 million.
The NDAA 2026 TINA Threshold: Pricing Freedom and Risk
The NDAA 2026 TINA threshold increase from $2.5 million to $10 million eliminates the certified cost or pricing data requirement for the majority of mid-size contract awards. Under the Truthful Cost or Pricing Data Act [10 U.S.C. 3702], contractors bidding on negotiated contracts above the threshold must submit current, accurate, and complete cost or pricing data and certify its accuracy. Defective pricing, where the data submitted was not current or complete, triggers price reductions and potential False Claims Act liability.
Below the new $10 million threshold, contracting officers will rely on “data other than certified cost or pricing data” to determine price reasonableness. This includes commercial pricing data, market comparisons, historical pricing on similar work, and catalog prices. The proposal preparation burden drops significantly. No more Schedule I/II formats with labor rates, material costs, and indirect rates broken out to the penny. No more cost audits by DCAA before award.
The risk side is real. Without certified data requirements, some contracting officers may have less visibility into actual costs. Contractors who have relied on cost-based pricing models need to develop commercial pricing strategies. If your proposals have always been built on a cost-plus-fee or cost-reimbursement basis, the shift to market-based pricing requires different estimating skills. Amerifusion Bookkeeping recommends maintaining internal cost models even when certification is not required. Clean cost data supports negotiations, protects margins, and positions you for contracts above the $10 million threshold where certification still applies.
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. A firm spending $50,000 to $100,000 annually on CAS compliance infrastructure (disclosure statement maintenance, cost impact analyses, CAS-specific audit preparation) recovers that investment directly when the requirements lift.
The specific scenarios where these thresholds create the most impact:
- Contractors with $35M to $50M in net CAS-covered awards move from full CAS coverage to modified coverage (or full exemption, depending on individual contract values). Disclosure Statement obligations drop. Audit scope narrows.
- Contractors whose largest single contract falls between $2.5M and $35M lose CAS coverage entirely on that contract. The old “trigger contract” mechanism, where a single contract above $7.5 million triggered CAS for all contracts above $2.5 million, is eliminated.
- Contractors bidding on $3M to $10M awards no longer prepare certified cost or pricing data. Proposal turnaround time shortens. Audit risk at the pre-award stage disappears.
The Forvis Mazars analysis noted these changes will “significantly decrease the amount of contractors with contracts subject to full compliance with all CAS and Disclosure Statement requirements.” The Congressional intent is explicit: reduce compliance barriers to attract commercial companies and small businesses into defense contracting.
What to Update in Your Accounting System Before June 2026
The NDAA 2026 CAS threshold changes do not become operational until implementing regulations are published. DFARS updates are due by approximately April 17, 2026. FAR and 48 CFR 9903 updates are due by June 16, 2026. Contractors should prepare now and execute changes as regulations go final. Waiting until July creates unnecessary risk.
Here is the action list for contractors who expect their CAS or TINA status to change:
- Calculate your net CAS-covered awards. Pull your total CAS-covered contract values for the most recent cost accounting period. If the total falls between $50 million and $100 million, you shift from full to modified CAS coverage. Below $35 million in individual contract values, and you may exit CAS entirely.
- 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.
- Audit existing contract clauses. Contracts awarded before the new thresholds take effect will carry their original CAS clauses. The CAS clause in an existing contract does not automatically change. Discuss bilateral modification with your contracting officer if you believe a contract should be de-scoped from CAS coverage.
- 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 418 for IR&D/B&P allocation). Review whether your current rate structure still serves your business or only served compliance.
- Update your proposal templates. For awards between $2.5 million and $10 million, 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.
- 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.
Existing Contracts vs. New Awards: The Transition Gap
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 new thresholds apply to contracts entered into after the implementing regulations take effect, anticipated after June 30, 2026.
This creates a transition period where contractors may carry two compliance standards simultaneously. New awards above $35 million but below the old $2.5 million trigger would be CAS-exempt. Existing awards in the same range remain CAS-covered. Managing dual compliance regimes requires clear segregation in your accounting system between legacy CAS-covered contracts and new-threshold contracts.
The TINA transition is cleaner. Section 1804(c) sets a bright-line date: 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 should note that DCAA will audit 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
What are the NDAA 2026 CAS threshold changes?
The FY2026 NDAA (P.L. 119-60) raises the full CAS coverage threshold from $50 million to $100 million in net CAS-covered awards, increases the contract-level CAS applicability threshold from $2.5 million to $35 million, and exempts portions of contracts for commercial products and firm-fixed-price work. These changes take effect once implementing regulations are published, expected by June 2026.
When does the new $10 million TINA threshold take effect?
Section 1804(c) of the FY2026 NDAA applies the $10 million certified cost or pricing data threshold to defense contracts entered into after June 30, 2026. Contracts executed on or before that date retain the previous $2.5 million threshold. The change applies to both prime contracts and subcontracts under defense awards.
Do existing contracts automatically get the new CAS thresholds?
No. Contracts awarded under the previous thresholds retain their original CAS clauses until modified or completed. New thresholds apply only to contracts entered after implementing regulations take effect. Contractors should discuss bilateral modifications with their contracting officer to update CAS clauses on existing awards where appropriate.
What is the difference between full CAS and modified CAS coverage?
Full CAS coverage requires compliance with all 19 cost accounting standards and a filed Disclosure Statement (Form CASB DS-1). Modified CAS coverage requires compliance with only four standards: CAS 401, 402, 405, and 406. The FY2026 NDAA raises the full coverage threshold from $50 million to $100 million in net CAS-covered awards.
Should my company still maintain DCAA-compliant accounting if we fall below the new thresholds?
Yes. CAS exemption does not exempt you from FAR cost principles (FAR Part 31), DCAA audit authority, or adequate accounting system requirements under DFARS 252.242-7006. Contractors below the new thresholds still need documented cost allocation policies, audit-ready records, and clean indirect rate calculations to win and perform government contracts.
How does the CAS Board governance change affect contractors?
Section 1806 moves the CAS Board reporting line from the Office of Federal Procurement Policy to the Office of Management and Budget. It also bars members of executive agency audit entities (such as DCAA) from serving on the CAS Board, effective January 1, 2028. The practical impact on day-to-day contractor compliance remains to be seen as the new board composition takes shape.
Key Takeaways
- The FY2026 NDAA quadruples the TINA threshold to $10 million and raises the full CAS coverage threshold to $100 million. For contractors in the $5 million to $50 million range, this is the largest compliance relief event in a decade. But the changes only apply to new contracts after June 30, 2026. Existing contracts keep their original CAS clauses.
- The CAS contract-level threshold jump from $2.5 million to $35 million eliminates CAS coverage for thousands of contract actions annually. The old “trigger contract” mechanism is dead. A single $8 million contract no longer pulls your entire portfolio into CAS.
- 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 before the June 2026 implementation deadline hits.
These threshold changes reward contractors who already run disciplined accounting operations. The firms at risk are those who mistake CAS exemption for a free pass on cost accounting fundamentals. 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, before the new thresholds take effect and DCAA shifts its audit focus to the contractors who remain above the line.
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.
