FAR 12.214—Cost Accounting Standards.
Plain-English Summary
FAR 12.214 addresses when the Cost Accounting Standards (CAS) do and do not apply in commercial-item contracting, and what the contracting officer must do when CAS does apply. The section focuses on contracts and subcontracts for the acquisition of commercial products or commercial services, with a specific exemption for firm-fixed-price contracts and fixed-price contracts with economic price adjustment so long as the price adjustment is not based on actual costs incurred. It also points readers to FAR 30.201-1 for the separate rule governing fixed-price with economic price adjustment contracts and subcontracts when the adjustment is based on actual costs incurred. In practical terms, this section is a gatekeeper: it helps determine whether a commercial acquisition stays outside the CAS regime or must carry the appropriate CAS provisions and clauses. For contractors, it affects pricing, accounting system expectations, and compliance obligations; for contracting officers, it determines whether CAS-related clauses must be inserted into the solicitation and contract. The section exists to preserve the streamlined treatment of most commercial acquisitions while ensuring CAS coverage where the pricing structure makes cost-based accounting standards relevant.
Key Rules
CAS generally does not apply
CAS does not apply to contracts and subcontracts for commercial products or commercial services when the contract type is firm-fixed-price or fixed-price with economic price adjustment, as long as the price adjustment is not based on actual costs incurred. This is the core commercial-item exemption in this section.
Cost-based price adjustments are different
If a fixed-price with economic price adjustment contract or subcontract for commercial products or commercial services uses a price adjustment based on actual costs incurred, this section does not provide the exemption. The contracting officer must look to FAR 30.201-1 to determine CAS applicability.
Commercial status matters
The rule applies specifically to acquisitions of commercial products and commercial services. If the acquisition is not commercial, this section does not provide the same CAS relief and other CAS rules may apply.
Insert required CAS clauses when applicable
When CAS does apply, the contracting officer must insert the appropriate provisions and clauses prescribed in FAR 30.201. The section does not itself list the clauses; it directs the contracting officer to the CAS prescription rules.
Subcontracts are covered too
The rule applies not only to prime contracts but also to subcontracts for commercial products or commercial services. Contractors must therefore consider CAS flowdown and subcontract structure when evaluating compliance obligations.
Responsibilities
Contracting Officer
Determine whether the acquisition is for commercial products or commercial services and whether the contract type falls within the CAS exemption. If CAS applies, insert the appropriate provisions and clauses prescribed in FAR 30.201 and ensure the solicitation and contract reflect the correct CAS treatment.
Contractor
Identify whether the proposed contract or subcontract structure triggers CAS coverage, especially where pricing includes economic price adjustment terms tied to actual costs incurred. Ensure pricing, accounting, and subcontracting approaches align with the applicable CAS status and any required clauses.
Subcontractor
Comply with CAS requirements when the subcontract is subject to CAS and accept any applicable flowdown clauses. Evaluate whether the subcontract is for commercial products or commercial services and whether the pricing arrangement affects CAS applicability.
Agency/Acquisition Team
Support accurate commercial-item and contract-type determinations and coordinate with contracting personnel to ensure the correct CAS prescriptions are used. Maintain consistency between acquisition planning, solicitation terms, and contract administration.
Practical Implications
Most commercial firm-fixed-price and non-cost-based EPA contracts avoid CAS, which reduces administrative burden and simplifies pricing and compliance.
A common pitfall is assuming every fixed-price with economic price adjustment contract is exempt; if the adjustment is based on actual costs incurred, FAR 30.201-1 must be checked.
Contracting officers should not rely on the commercial-item label alone; they must also confirm the contract type and the basis for any price adjustment before deciding CAS applicability.
Contractors should review subcontract terms early, because CAS can still matter at the subcontract level and may affect flowdowns and accounting requirements.
If CAS applies, missing the required clauses can create compliance and administration problems later, so the clause prescription step is critical at award time.
Official Regulatory Text
Cost Accounting Standards (CAS) do not apply to contracts and subcontracts for the acquisition of commercial products or commercial services when these contracts and subcontracts are firm-fixed-price or fixed-price with economic price adjustment (provided that the price adjustment is not based on actual costs incurred). See 30.201-1 for CAS applicability to fixed-price with economic price adjustment contracts and subcontracts for commercial products or commercial services when the price adjustment is based on actual costs incurred. When CAS applies, the contracting officer shall insert the appropriate provisions and clauses as prescribed in 30.201 .