The Federal government may soon adopt new rules for when indefinite delivery contracts and orders are subject to the Cost Accounting Standards. According to a June 18, 2024 notice, the CAS Board is considering multiple different approaches to this issue, and it has invited comments from the public.

In determining whether a contract is subject to CAS, a key factor is the dollar value of the agreement. In general, negotiated awards are exempt from CAS when not in excess of the TINA threshold. CAS 9903.201-1(b)(2). So are awards of less than $7.5 million, provided that the business unit is not currently performing any CAS-covered awards valued at $7.5 million or greater at the time of award. CAS 9903.201-1(b)(7). Moreover, a contractor’s business unit must apply “full” CAS coverage after receiving a single CAS-covered award of at least $50 million, or after receiving $50 million or more in net CAS-covered awards in its preceding cost accounting period. CAS 9903.201-2(a). 

However, indefinite delivery vehicles (IDVs), which include basic ordering agreements and indefinite delivery / indefinite quantity contracts (IDIQs), often do not provide a stated dollar value for CAS purposes. Determining the value of these “IDVs” or their “orders” for CAS purposes can at times be a fact-specific exercise. Federal contractors and procurement officials have taken various approaches to this issue under the circumstances.

The CAS Board is now looking to write new rules about CAS coverage for IDVs. The Board is considering at least six different approaches, and it has invited public comment on each, which we have quoted in part here:

1. Order-by-order. Each task order and delivery order would be treated as an individual contract and CAS would apply only to those orders whose values met the coverage thresholds.
2. Maximum award value. CAS would apply to all orders under an IDV, no matter the value of the individual order, if the ceiling amount of the IDV met the coverage thresholds.
3. Minimum award value. CAS would not apply to any orders under an IDV unless its minimum guarantee amount met the CAS coverage thresholds, in which case CAS would apply to all orders.
4. Cumulative threshold. CAS would apply at the point where the cumulative value of the orders awarded crosses the dollar threshold for CAS coverage. At that point, the current order and all subsequent orders awarded would be covered by CAS.
5. Order-by-order for multiple award IDVs and maximum award value for single award IDVs. For multiple award IDVs each order would be regarded as if it were an individual contract for CAS coverage (see alternative no. 1). For single-award IDVs, coverage would be based on the maximum award value (see alternative no. 2).
6. Order-by-order for multiple award IDVs and cumulative threshold for single award IDVs. For multiple award IDVs each order would be regarded as if it were an individual contract for CAS coverage (see alternative no. 1). For single-award IDVs, CAS would apply at the point where the cumulative value of the orders awarded crosses the dollar threshold for CAS coverage. At that point, the current order and all subsequent orders awarded would be covered by CAS (see alternative no. 4).

Contractors that currently perform CAS-covered contracts, as well as companies looking to pursue CAS-covered work, should take note and consider submitting responses to the CAS Board. The CAS Board has set a deadline of August 19, 2024 for comments.