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I am trying to determine if my company is exempt from the requirements of CASB regulations (Public Law 91-379) as amended and FAR Part 30. We are pursuing a services contract with the US Government and we are being asked to comply with these regulations. We are a small business with revenues of approximately $20 million.
Thank you,
Anonymous
Response:
Answer from our General Counsel who is a former ACO for Air Force.
http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=a0ce67ca3852703c6041b1f9ceb831d3&rgn=div8&view=text&node=48:7.0.11.26.4.2.1.2&idno=48
Exemptions to Cost Accounting Standards coverage are found in 48 Code of Federal Regulations 9903.201-1(b)(3). CFR 9903.201-1(b)(3) states small businesses are exempt from having to comply with CAS. This exemption applies to compliance with cost accounting standards. Companies must still comply with Federal Acquisition Regulations (FAR).
One other caveat, I assume that by making the statement "We are a small business with revenues of approximately $20 million" that the individual is aware of the definition of "small business" in government contracting. It uses the same definition as does the Small Business Administration. The formal definition of "small business" varies by industry (i.e. NAICS code). In some industries it is determined by the number of employees, in others by sales.
Bob Scherba (RScherba@williams-int.com)
Response:
In your e-mail the contract driving the question is a service type contract, but you do not give the value of the contract, therefore, I will have to make some assumptions to answer the question.
Public Law 91-379 and FAR 30 require negotiated contracts (and flow-down subcontracts) in excess of $500,000 must comply with the Cost Accounting Standards (CAS). The language is interesting - "in order to get paid" the contractor must comply with CAS. So my first assumptions are: the contract is negotiated; and in access of statutory amount which would require the Contracting Officer (CO) to insert the clause. To double check the COs logic, there should be an accompanying FAR clause 52.230-02 "Cost Accounting Standards (Apr 1998) in the contract clause section. So with these few assumptions I did my review of the rules:
1) Service Contracts are usually issued in accordance with FAR Part 37 so that was first place I looked for relief to the CAS requirements, but found none.
2) I then went to FAR 30 and looked for anything that would exempt the contract. FAR 30 is the section that defines the requirement which require CAS. There is a clause FAR 30.201-05 "Waiver" which gives the head of an agency authority to waive CAS if the contract is under $15,000,000 and the contractor is engaged in the sale of commercial items, and has no other contracts subject to CAS. Other than these items there was no direct relief.
The CASB regulations do state that the Board may waive all or part of the requirement if the contractor refuses to accept the requirements and no other source is available to meet the contracting agencies needs. But the regulation puts a heavy burden of justification to waive on the agency. This tact probably would not be good for future U. S. Government business.
A couple of general comments - If this is the first solicitation or RFP the company received requiring the CAS compliance then they need to discuss with the CO and the government audit agency the need for a Disclosure Statement, and whether one is needed to be in place at the time of award. This could be a labor intensive project for any contractor going at it for the first time.
Most agencies have electronic contract writing (CONWRITE) where the CO plugs in a number of key factors and the computer pumps out a draft contract, I would believe the CAS requirement in the draft contract is the direct result of CONWRITE.
In closing please know the "small business" community has for a long time been pushing congress to raise the contract value requiring CAS to something more reasonable. But as of this date the $500,000 is the law.
Dale Wallis (Dale.E.Wallis@aero.org)
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