Proposing a Simpler Exemption

Proposing a Simpler Exemption.

On November 19, 2012 the Office of Federal Procurement Policy (OFPP) and the Cost Accounting Standards (CAS) Board issued an invitation for public comments concerning a proposed modification to the existing “commercial item” exemption. (77 Fed. Reg. 69422). The proposed change eliminates the detailed listing of permissible contract types included in the exemption found at CFR 9903.201-1(b)(6).  This will likely provide an exemption for more contracts that clearly should not be subject to CAS coverage.

The CAS Board “believes that there is an inconsistency in the regulatory text” of the exemption between the current exemption wording and “other applicable statutory and regulatory provisions.”  The Board wants to expand the scope of contracts exempt from CAS and to allow for a more generalized statement.

Currently, the exemption reads: “Firm fixed-priced, fixed price 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.”


The proposed rule would change the exemption to read: “Contracts and subcontracts for the acquisition of commercial items.”

Under the current wording, there have been contracts that should have been considered CAS-exempt (because the price was commercial or market based and was not based on a traditional cost build up plus a fee or profit!) but were not. The proposed wording allows for a broader and simpler determination of whether a contract is subject to the CAS or not.  We believe that this change should prove to benefit contractors providing commercial items to the Federal Government.

The Background and Summary contained within the Federal Register notice give a detailed background of the current regulatory framework and foundations of Commercial Item acquisition initiated through the 1994 Federal Acquisition Streamlining Act (PL-103-355) through the 2003 Service Acquisition Reform Act (PL 108-136).

If you have comments, they are due by January 18, 2013 and can be submitted through the Federal eRulemaking Portal at and type “(b)(6) commercial item exemption” in the comment box and follow the instructions for submitting comments.

Need more training in CAS? The next Cost Accounting Standards & Preparing the Disclosure Statement training will be held in Washington, DC on December 6-7. 

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