When contractors want to make an accounting practice change the government wants to make sure it does not pay increased costs.  The cost accounting standards prescribes an often onerous cost impact process to demonstrate costs are not increased and even non-CAS covered contracts must informally follow similar steps.  A proposed governmentwide rule seeks to lessen the requirement to submit cost impact estimates or contract price adjustments for cost type contracts by using a three-step sequence of submissions where settlement is encouraged at the lowest step possible:

an initial evaluation to determine materiality of the changes

if the cost is material, a general dollar magnitude (GDM) proposal reflecting the minimum data needed to resolve the cost impact

if the GDM proposal is insufficient a detailed cost impact proposal.

For resolving the cost impact the rule will Require the “cognizant federal agency official” (CFAO) to invite COs to participate in negotiation of their respective contracts if the impact is over $100,000 (currently $10,000).

Allow the CFAO to use an alternative method rather than adjusting all affected contracts as long as the government does not pay in the aggregate more that it would have paid without the accounting change.

The proposed procedure would apply to voluntary changes, mandatory changes or CAS noncompliances.  The current rule is intended to be a more simple version of a proposed change being put forth by the Cost Accounting Standards Board.

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