Costs

On September 14, 2026, Deputy Secretary of War Stephen Feinberg issued a memorandum and an accompanying appendix focused on strengthening the defense industrial base by reforming acquisition requirements related to a wide range of issues, including accounting standards, efficiency, government oversight, procedural requirements, audits, pricing, and more.  Building on prior policymaking, including Executive Order 14402 (April 30, 2026), this memorandum directs agency actions aimed at making defense acquisition more commercially oriented and less dependent on government-unique accounting and oversight regimes. 

Among other things, the memorandum directs the Department of War (“DoW”) to shift away from the Cost Accounting Standards (“CAS”) and increase its reliance on the Generally Accepted Accounting Principles (“GAAP”), including by advancing CAS coverage reform at the CAS Board.  The memorandum further directs a number of other reforms related to accelerating acquisition transformation, scaling advance market commitments, improving efficiency, reducing administrative burden, limiting audits, streamlining business system reviews, and increasing the use of commercial contracting and other transaction authority (“OTA”) agreements. 

Continue Reading Department of War Issues Memorandum Aimed at Strengthening the Industrial Base Through Acquisition Reform

On September 1, 2026, the Cost Accounting Standards (“CAS”) Board published two final rules implementing seismic changes to cost accounting requirements for federal government contractors.  The most significant change implements a requirement in last year’s National Defense Authorization Act (“NDAA”), doubling the dollar value threshold for full coverage under CAS. …

Continue Reading CAS Board Rolls Out Two Changes with Significant Impact on Federal Contractors

The Armed Services Board of Contract Appeals’ (ASBCA) decision in Lockheed Martin Aeronautics Co., ASBCA No. 63621, reinforces a critical principle for government contractors:  contract performance requirements operate independently of cost accounting classifications. Contractors cannot avoid substantive FAR and DFARS obligations—here, U.S.-flag transportation requirements—by treating costs as…

Continue Reading Indirect Doesn’t Mean Exempt: ASBCA Rejects Cross‑Motions Over U.S.-Flag Transportation Costs

On February 20, 2026, the Supreme Court struck down an extensive series of tariffs imposed last year by President Trump, holding that they were not authorized under the International Emergency Economic Powers Act (“IEEPA”).  And on March 4, 2026, the United States Court of International Trade began the process of refunding certain of “the millions of entries that were subject to IEEPA,” through a process known in the international trade context as liquidating. 

These recent decisions by the Supreme Court and Court of International Trade may prompt federal contractors to consider seeking refunds of tariffs paid to import goods required to perform under their government contracts.  As we covered in a previous post, government contracts may contain clauses allowing for price increases following the imposition of a new federal tax.  These clauses can also work the other way and require a price decrease (or a credit to the Government under a cost-reimbursement contract) in the event of an after-relieved tax.  

Continue Reading Tariff Takedown:  Implications of Tariff Refunds for Government Contractors

A recent decision from the Armed Services Board of Contract Appeals (ASBCA) is a timely reminder that, when it comes to stop‑work orders, the clause the government actually invokes—not the one it later wishes it had—can be outcome‑determinative. In Wolverine Tube, Inc., ASBCA No. 63877 (Jan. 22, 2026), the Board rejected the Air Force’s attempt to retroactively recharacterize a stop‑work order and held that the order expired by its own terms after 90 days. Although the contractor did not obtain summary judgment on most of its claimed costs, the decision breaks new ground on how protest-related stop-work orders operate, what happens when they lapse, and how far the government can go in arguing that “stop work” really meant “stop incurring costs forever.”

Continue Reading Stop-Work Means Stop Work (…Until It Doesn’t): Lessons from Wolverine Tube

The Government Accountability Office (“GAO”) released a report on the Defense Contract Audit Agency’s (“DCAA”) past and future use of private-sector, independent public accountants to augment its auditor workforce. The initiative—approved under Section 803 of the Fiscal Year (“FY”) 2018 National Defense Authorization Act (“NDAA”)—began in fiscal year 2020 and was originally envisioned by Congress as a tool to reduce DCAA’s backlog of incurred cost audits. But, as GAO noted, DCAA had largely eliminated its audit backlog by the end of FY 2018, primarily through its reliance on risk-based sampling methodology, which reduced the number of audits DCAA was required to complete.

Continue Reading GAO: DCAA Built a Valuable Bench of Independent Public Accountants, Now What?

As reported and analyzed in recent posts, the Trump administration has begun implementing a number of new tariffs, including three sets of country-based tariffs (China, Canada, and Mexico) and Section 232 tariffs on steel and aluminum. We expect further announcements of reciprocal tariffs on imports from China, Canada, and Mexico, and other tariffs on specific items including lumber, semiconductors, and agricultural products. These tariffs raise significant concerns for government contractors.  We have outlined below five points government contractors should keep in mind when assessing the impact of these tariffs on their contracts.

Continue Reading The Trump Tariffs and Federal Contractors: In These Taxing Times, Contractors Have a Duty To Know These Five Things

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.

Continue Reading Wondering Whether Your IDIQ Award Will Be Subject to CAS?  New Rules May Be Coming Soon from the CAS Board.

The Armed Services Board of Contract Appeals has issued its annual report for FY 2023, shedding light on how often contractor appeals reach a successful result, and what agencies are most frequently involved in contract litigation.

Continue Reading ASBCA Issues Annual Report, Providing Data on How Often Contractors Prevail

In Honeywell International, Inc., the ASBCA declined to dismiss a roughly $151 million claim by DCMA alleging a violation of CAS 410, holding that the government’s allegations were sufficient to state a claim for improper treatment of G&A expenses.  The Board’s decision provides guidance on how to interpret CAS 410 — a topic that is often addressed by auditors, but has rarely been the subject of written opinions by the courts or boards of contract appeals.

Continue Reading ASBCA: Government Can Pursue $151 Million Claim Under CAS 410