inquiring mind2

Retreadfed: Thank you. That FAR clause makes it clear to me that I can certify that contracts meet the Modified CAS coverage determination as the flowchart shows. Update: I spoke to the consultant and he is very intrigued with my interpretation and is doing further research to see if there are any CASB guidances / clarifications that would contradict my interpretation. Vern: Regarding your point that a regulation has to be viewed as a whole, I think that makes my interpretation stronger as that would mean that one shouldn't stop reading at the end of (a)(1) and disregard (b)(1). Since there isn't a statement in the regulation that states "if the business unit is performing a full CAS covered contract, all CAS covered contracts are determined to be full coverage," and the contract being determined meets the requirements in (b) Modified coverage, the contract can be determined as modified. The business unit will be subject to full CAS as long as there is a full CAS covered contract being performed, as stated in (a)(1). Each contract will still be determined full or modified per the whole regulation. Thank you all for this healthy debate and making valid points. I have taken the advice of advocating my position.

h2h: Thanks for the input and advice. The reason I am doing a critical analysis is to certify our business unit as a Non-traditional DOD Contractor (definition shown below). If in the next twelve months, we can determine any DOD contracts awarded as modified coverage, we can then certify as Non-traditional. The contract that is full coverage that will be on going is under a non-DOD agency.

Vern: I appreciate the thoughts and I believe this is probably the thought process of the consultant. My only debate with this thought process is your statement: I don't see "if the business unit were not already subject to full coverage" in the regulation in (b)(1), so my interpretation is that you can read sections (a) and (b) independently. If you meet a criteria in (b) for modified, then the contract can be determined as subject to modified CAS, although the business unit will still be subject to Full CAS as long as there is one contract that was determined as Full CAS still active. Why would it state in (b)(2): if the full determination continued beyond the "same cost accounting period"? Wouldn't it state "Thereafter, any covered contract awarded during the trigger contract's performance must also be subject to full CAS coverage? The CAS regulation starts with: My interpretation of this is that each contract should be determined either full or modified. The business unit will be subject to full CAS during the performance of a contract that was determined to be full CAS (the $50 million triggers), but each contract independently should be determined as full or modified and if it meets the requirements in 9903.201-2(b)(1) and (2), it can be determined modified. Although, I dislike (with a passion) the use of the DCAA Manual and I will admit that relying on the logic of the flowchart in the DCAA Manual is very hypocritical for me, it does make the regulation ambiguity more clear and shows that section 9903.201-2(a) doesn't block the ability to determine a contract to be subject to modified CAS even if the business unit may still be subject to full CAS for other contracts. I think we can all agree that the regulation is not as clear as it could be. I appreciate the input.

Retreadfed: Thanks for your input and opinion.

Vern: Yes, you are correct on all counts (except the "nobodies" part), but I want to make sure I wasn't overlooking something or if someone on the forum has been in a similar situation and has received determination perhaps from a CO or cognizant ACO, that my interpretation is correct, it would help the debate I'm sure to have with the higher manager and have a follow up with the consultant with me on the telecom this time.

here_2_help: In your opinion, are covered contracts eligible for Modified coverage if there is a current Full covered contract being performed, but it was awarded 2 years ago and the contractor wasn't awarded $50 million or more in covered contracts in the previous accounting period and there has not been a single award of $50 million or more in the current accounting period?

Retreadfed: I am not with an educational institution. My interpretation of the CAS regulation is that each contract is determined independently for Full or Modified coverage by working through the DCAA Manual flowchart (link in original post, page 17). This interpretation leads me to believe that a contract can be determined to be a Modified CAS contract subsequent to being awarded a contract that was determined to be Full CAS and still performing that Full CAS, but the contractor has not been awarded $50 million of CAS covered contracts in the preceding accounting period, and has not been awarded a CAS covered $50 million award in the current accounting period.

Vern, I don't think I have an exact answer to your question. The feedback I received through a higher manager that spoke to the consultant was that once a contractor is determined to be Full CAS covered, all future CAS covered contracts would be Full CAS covered. The manager also conveyed that to no longer be Full CAS covered, all CAS covered contracts would have to end and no CAS covered contracts awarded for a full year from the last one ending. This scenario is very unlikely, so under this interpretation, the contractor would always be Full CAS covered. In your quoted text of the regulation: This doesn't have the same words as the flow chart, which states: I also see that the regulation states: This makes the flow chart logic make sense. I have always used the flowchart on each contract to determine if the contract was CAS covered, then if it was Full or Modified CAS. I would like to push back to the higher manager and the consultant, but wanted to make sure my interpretation (stated in my original post) isn't faulty and know there are a lot of experienced and very knowledgeable people running and contributing to this forum, who could help me with this.

Once a contractor triggers the Full CAS covered threshold, when can it determine that a contract is only Modified CAS and can a business unit get back to only being Modified CAS covered? I understand that once a contractor has triggered the Full CAS covered threshold, that all subsequent contracts in that accounting period that are not exempt from CAS would also be Full CAS. My interpretation of the CAS Coverage and Disclosure Statement Determination flow chart in the DCAA Contract Audit Manual (Figure 8-1-1) (http://www.dcaa.mil/Content/Documents/CAM/chapter_08_-_cost_accounting_standards.pdf) is that determination for Full or Modified CAS coverage is made for each contract. For example, a business unit receives an award of $10 million, which is not exempt from CAS. The business unit has not received $50 million or more in net CAS-covered awards in the preceding cost accounting period, nor received a single CAS-covered contract / subcontract of $50 million or more during the current cost accounting period, but is performing on a contract that was determined to be Full CAS covered that was awarded 2 years ago. My interpretation, is that the contract would be determined to be Modified CAS covered. I have received an interpretation from a consultant that if you are currently performing on a contract that was determined to be Full CAS covered, then all contracts that are not exempt from CAS would also be determined to be Full CAS covered, even if that contract was awarded 2 years ago and in the preceding year you did not receive $50 million or more in CAS-covered awards, and the current award isn't $50 million. I understand that the business unit would need to keep it's Accounting System in a way that meets Full CAS as long as there is one Full CAS covered contract. The reason for the question is that my interpretation would mean a business unit could get back to only being Modified CAS covered if all Full CAS covered contracts ended and the business unit has not hit one of the $50 million triggers listed earlier. I'm interested to know how others on this forum interpret the CAS determination.