Are you making the correct selections for Cost Accounting Standards coverage when responding to U.S. government contract or subcontract requests for proposals (RFPs)? It is not uncommon to inadvertently make the wrong selections. The language in the Federal Acquisition Regulation (FAR) solicitation clause at FAR 52.230-1, Cost Accounting Standards Notices and Certification, does not, in itself, provide sufficient guidance for making the proper determination whether or not your resultant award will be CAS-covered.

It is also common for responders to fail to make the proper selection recognizing their requirements to prepare and submit a Cost Accounting Standards Board Disclosure Statement (CASB-DS).

Identifying a CAS exemption:

FAR 52.230-1, Cost Accounting Standards Notices and Certification, states that “Any contract in excess of $700,000 resulting from this solicitation will be subject to the requirements of the Cost Accounting Standards Board (48 CFR Chapter 99), except for those contracts which are exempt as specified in 48 CFR 9903.201-1.”

Since these exemptions are not listed in the solicitation clause, this requires the responder to either know these exemptions or to access theCode of Federal Regulations (CFR). Many suppliers that are primarily commercial sellers or smaller businesses are not savvy government contractors. They tend to focus on the technical and pricing aspects of their proposal response and either gloss over the paragraph or do not research the CFR to find their exemption.

The most common opportunities for exemption election are:

  • Contracts and subcontracts with small businesses;
  • Contracts and subcontracts of less than $7.5 million, provided that, at the time of award, the business unit of the contractor or subcontractor is not currently performing any CAS-covered contracts or subcontracts valued at $7.5 million or greater; and
  • Firm fixed-priced, fixed-priced with economic price adjustment (provided that price adjustment is not based on actual costs incurred), time-and-materials, and labor-hour contracts and subcontracts for the acquisition of commercial items.

As the responder, you have the knowledge regarding your small business status and your prior awards. If you are claiming that your goods or services are commercial items as defined in FAR Part 2, Definitions, there are additional contractual benefits, but you will need to be ready to provide data to support this contention sufficient for the buyer to make a commercial item determination.

If you are prime contractor, it is in your best interests to assist your suppliers in making the proper selection, as the government will assess you for recovery of the cost impact of supplier noncompliance.

Are you making the proper selection to recognize your requirements to prepare and submit a Cost Accounting Standards Board Disclosure Statement (CASB-DS)? It is easy for a first timer to make a wrong choice.

The criteria for submission of a CASB-DS are as follows.

Criterion 1: Any business unit that is selected to receive a CAS-covered contract or subcontract of $50 million or more, including option amounts, or

Criterion 2: Any company that, together with its segments, received net CAS-covered awards totaling more than $50 million in its most recent cost accounting period is required to submit a Disclosure Statement.

When a CASB-DS is required under Criterion 2, you must submit it before award of the first CAS-covered contract in the immediately following cost accounting period. However, since the information required to ascertain whether or not you have met this criterion is not readily available on the first day of your fiscal year, the CAS rules allow for a grace period for submission. If your first covered award under this criterion is made within 90 days of the start of the cost accounting period, you are not required to file until the end of the 90 days.

When responding to the certification requirements regarding CASB-DS submission, responders often make their selection without considering all the choices and CASB-DS submittal requirements. The FAR 52.230-1, Cost Accounting Standards Notices and Certification solicitation clause offers the following four choices:

  1. Certificate of Concurrent Submission of Disclosure Statement.This requires you certify that you are submitting the CASB-DS with your proposal. This choice should be made if you meet Criterion 1 above and do not have a CASB-DS on file related to an existing contractual requirement.
  2. Certificate of Previously Submitted Disclosure Statement.This choice should be made if you meet Criterion 1 above and do not have a CASB-DS on file related to an existing contractual requirement.
  3. Certificate of Monetary Exemption.This choice should be made if you do not meet either Criterion 1 or Criterion 2 above.If your offer meets Criterion 1, then do not choose his selection.
  4. Certificate of Interim Exemption.This choice should be made if you meet Criterion 2 above, and do not meet Criteria 1. If your offer meets Criterion 1, then do not choose this selection.

Many of those offering that meet Criterion 1 or Criterion 2 will improperly choose selection 3, Certificate of Monetary Exemption, since they also meet this Criterion. This can result in a delay of their contract award or worse, as submission of an adequate CASB-DS, when required, is a statutory requirement that cannot be ignored by U.S. government acquisition officials.


  • Be aware of your exemption choices when completing your CAS certifications.
  • If you are a prime or upper tier contractor, modify the flow-down solicitation clause to include or otherwise provide a list of exemptions to lower tier suppliers to assist in their exemption identification.
  • Recognize the hierarchy of choices when determining you CASB-DS submittal requirements.

© 2015

Icon for Thompson Greenspon
Thompson Greenspon

This blog post was provided by Thompson Greenspon. If you have questions or concerns regarding this content, please contact us.