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I had a question. My company has just graduated to a large business and now I believe we have to follow CAS rules. Does anyone on this forum know how the implementation process works for a newly large business?

Thanks,

Patrick

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pdog, just because you are a large business does not mean you have to comply with the CAS on every contract.  Contracts are subject to the CAS, not contractors.  In this regard, look at the exceptions to CAS coverage in the CASB's rules.

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Retreadfed is, unfortunately, wrong. You have to comply with several of the Standards if you have a cost-type contract, regardless of your exemption status.

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1 hour ago, here_2_help said:

Retreadfed is, unfortunately, wrong. You have to comply with several of the Standards if you have a cost-type contract, regardless of your exemption status.

H2H is wrong in what he said.  Note that I said you do not have to comply with the CAS on every contract.  While you may have to comply with some Standards on contracts subject to the cost principles, not just cost reimbursement contracts,  that does not make those contracts CAS covered.

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Retread, I have tried to avoid responding. Alas, I am weak and must correct you. This is the kind of advice that gets contractors in trouble.

Of course you are CORRECT that CAS applies contract by contract. You can't have a noncompliance with a contract that is exempt from CAS.

HOWEVER, CAS and FAR require a contractor to be consistent in its cost accounting practices. A contractor, especially one that was recently a small business, would be foolish to establish two or more cost accounting systems or business units simply because only a few of its contracts were CAS-covered. Far better--and far more commonly--contractors have one and only one cost accounting system where all contracts are treated consistently (absent special allocations). Thus, if one contract is CAS-covered, then effectively all contracts are CAS-covered with respect to application of cost accounting practices. To do otherwise (without setting up a separate business unit with a separate cost accounting system) is to violate both the CAS rules addressing consistency as well as the FAR rules in Part 31 that also demand consistency with respect to direct vs. indirect cost determinations.

Thus, while you are pedantically correct you are, in practice, wrong.

Respectfully, H2H

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29 minutes ago, here_2_help said:

Retread, I have tried to avoid responding. Alas, I am weak and must correct you. This is the kind of advice that gets contractors in trouble.

Of course you are CORRECT that CAS applies contract by contract. You can't have a noncompliance with a contract that is exempt from CAS.

HOWEVER, CAS and FAR require a contractor to be consistent in its cost accounting practices. A contractor, especially one that was recently a small business, would be foolish to establish two or more cost accounting systems or business units simply because only a few of its contracts were CAS-covered. Far better--and far more commonly--contractors have one and only one cost accounting system where all contracts are treated consistently (absent special allocations). Thus, if one contract is CAS-covered, then effectively all contracts are CAS-covered with respect to application of cost accounting practices. To do otherwise (without setting up a separate business unit with a separate cost accounting system) is to violate both the CAS rules addressing consistency as well as the FAR rules in Part 31 that also demand consistency with respect to direct vs. indirect cost determinations.

Thus, while you are pedantically correct you are, in practice, wrong.

Respectfully, H2H

Absolutely agree with you, Help. We had FFP construction contracts with several large Defense contractors and negotiated mods and changes, using their disclosure information and consistent with their CAS covered accounting systems. We also consulted regularly with their DCAA assigned “in plant” auditors.  

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H2H, you re assuming too many facts to make a definitive statement.  Many contractors only have contracts for commercial items, which are exempt from the CAS.  Also, many contractors only have FFP contracts that are awarded competitively without the submission of any cost data.  These contracts are also exempt from the CAS.  If these contractors change from an SB into a large business, there would be little reason to change their accounting practices to accommodate the CAS, which would still be inapplicable.  My point in my original post was to state that just because a concern is no longer small, it does not necessarily follow that it has to be concerned with the CAS.  Whether the CAS will apply to the contracts the concern has depends on the concern's business model and how the CASB's rules apply to that model.

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