Revision of Cost Accounting Standards Threshold (FAR Case 2012-003)

Summary:

FAC 2005-59 includes a final rule amending the Federal Acquisition Regulation (FAR) to revise the threshold for applicability of cost accounting standards in order to implement a recent rule of the Cost Accounting Standards Board and statutory requirements.

Supplementary Information:

I.  Background

The Cost Accounting Standards (CAS) Board published a final rule in the Federal Register at 76 FR 79545, on December 22, 2011, which revised the threshold for the application of CAS from "$650,000" to "the Truth in Negotiations Act (TINA) threshold, as adjusted for inflation (41 U.S.C. 1908 and 41 U.S.C. 1502(b)(1)(B))" in the CAS provisions and clauses at 48 CFR parts 9901 and 9903. The TINA threshold is adjusted every 5 years for inflation, as required by 41 U.S.C. 1908. Title 41 U.S.C. 1502(b)(1)(B) ties the CAS applicability threshold to the dollar value of the TINA threshold (currently $700,000). The FAR cites the TINA threshold at FAR 15.403-4(a)(1).

II. Discussion and Analysis

This final rule revises the CAS applicability threshold from $650,000 to $700,000 at FAR 30.201-4 and the CAS clauses in the FAR at 52.230-1 through 50.230-5. The FAR replaced "$650,000" with "$700,000" rather than the phrase "the Truth in Negotiations Act (TINA) threshold, as adjusted for inflation (41 U.S.C. 1908 and 41 U.S.C. 1502(b)(1)(B))" (the phrase used by the CAS Board in its rule) as applicable. The FAR made this change from the CAS Board's rule for improved clarity of FAR 30.201-4 and the CAS clauses in the FAR--stating the specific dollar value of the TINA threshold, rather than a reference to the TINA threshold as was done in the CAS Board's final rule. In so doing, no further action will be required by the CAS Board to implement further adjustments for inflation in the future as permitted by the CAS Board's rule; the CAS applicability thresholds in the FAR will be revised every 5 years in the future, whenever the TINA threshold is revised in the FAR as part of the statutory revision of the acquisition thresholds.

Dates:

The Effective Date for this final rule is 10 May 2012.

Click here to read the entire Federal Register notice for this rule.

__________________________________________________________________________________________________________