FAR 30.6—Subpart 30.6

Responsibility.

FAR 30.601 assigns responsibility for Cost Accounting Standards (CAS) administration and makes clear who handles CAS matters after award. It covers three main topics: the role of the cognizant federal agency official (CFAO) in administering CAS for contracts and subcontracts within a business unit, the contracting officer’s duty to request CAS administration within 30 days after award of a new CAS-covered contract, and the subcontract-award procedures that apply through the CAS clause at 52.230-6. It also addresses the CFAO’s authority to make CAS-related determinations and findings, including whether a change in cost accounting practice or a noncompliance has occurred and how any resulting cost impacts are resolved. Finally, it requires the CFAO to seek and consider auditor advice as appropriate. In practice, this section is important because it centralizes CAS administration, reduces confusion over who decides CAS issues, and helps ensure timely identification and resolution of accounting practice changes and noncompliances that can affect contract pricing and cost recovery.

Materiality.

FAR 30.602 explains how the cognizant Federal agency official (CFAO) decides whether a cost impact is "material" for Cost Accounting Standards (CAS) purposes. It tells the CFAO to use the materiality criteria in 48 CFR 9903.305, requires the decision to be supported by adequate documentation, and allows the determination to be made either before or after a General Dollar Magnitude (GDM) proposal is submitted, depending on the facts. The section also distinguishes what happens when the cost impact is immaterial versus material: if immaterial, the Government takes no contract adjustment action, documents the rationale, and—when the issue is a noncompliance—puts the contractor on notice to correct it and warns that future adjustments may be made if the issue later becomes material. If material, the CFAO must move into the applicable procedures in FAR 30.603 through 30.606, which cover required, unilateral, and desirable changes and CAS noncompliances. In practice, this section is the gatekeeper between a cost impact being closed out administratively and being processed through the more formal CAS adjustment framework.

Changes to disclosed or established cost accounting practices.

Processing changes to disclosed or established cost accounting practices.

FAR 30.604 explains how the Contracting Officer’s representative for cost accounting matters, the CFAO, processes changes to disclosed or established cost accounting practices once the contractor has notified the Government. It covers the full workflow for required, unilateral, and desirable changes; the CFAO’s review of the adequacy and compliance of the contractor’s description; how the Government handles inadequate or noncompliant disclosures; and the special process for a contractor asking that a unilateral change be treated as a desirable change. The section also lays out the role and content of a general dollar magnitude (GDM) proposal, when a detailed cost-impact (DCI) proposal may be used instead, and what each proposal must contain. It further explains how the CFAO evaluates GDM and DCI submissions, when immaterial cost impacts can end the process without adjustments, and when the parties must negotiate cost or price adjustments under FAR 30.606. In practice, this section is the procedural bridge between a cost accounting practice change and the Government’s determination of whether the change affects contract prices, costs, fees, profits, or incentives on CAS-covered contracts and subcontracts.

Processing noncompliances.

FAR 30.605 explains how the Government processes alleged and actual Cost Accounting Standards (CAS) noncompliances before it makes any contract price or cost adjustment. It covers the contracting federal agency’s administrative steps after an auditor reports a possible noncompliance, the contractor’s opportunity to respond, the contracting federal agency official’s (CFAO’s) determination of compliance or noncompliance, and what happens when the cost impact is immaterial. It also addresses how the contractor must correct a noncompliance, including submitting a description of the corrective cost accounting practice change, and how the Government evaluates the resulting cost impact through a general dollar magnitude (GDM) proposal or, in some cases, a disclosure cost impact (DCI) proposal. The section further limits adjustments so the Government recovers no more than its increased costs in the aggregate, including special rules for estimating noncompliances and cost accumulation noncompliances. In practice, this section is the procedural roadmap for turning a CAS issue into a formal determination and, if needed, a negotiated cost impact adjustment without over- or under-recouping Government costs.

Resolving cost impacts.

FAR 30.606 explains how the Cognizant Federal Agency Official (CFAO) resolves the dollar impact of a change in cost accounting practice or a cost accounting noncompliance. It covers coordination with affected contracting officers when the estimated impact on any contract is at least $100,000, the CFAO’s sole authority to negotiate and resolve the impact, and the ability to allocate the impact across one contract, several contracts, all contracts, or another suitable method. The section also limits how different types of cost impacts may be combined, including special treatment for unilateral changes, noncompliances, required changes, and desirable changes, and it allows certain unilateral changes affecting multiple segments to be treated as a single change. It then addresses negotiations, including the requirement to negotiate on behalf of all Government agencies and to issue a negotiation memorandum to the auditor and affected contracting officers. Finally, it covers contract adjustments for material cost impacts, including pro rata allocation, rules for fixed-price and flexibly-priced contracts, special procedures for estimating-cost and cost-accumulation noncompliances, correction of the contractor’s accounting records, adjustment of invoices and vouchers, and execution of bilateral modifications when contract adjustments are made. In practice, this section is the roadmap for turning a CAS change or noncompliance finding into actual contract price, cost, and payment adjustments while preventing the Government from paying more than it should and ensuring the contractor corrects its accounting practices.

Subcontract administration.

FAR 30.607 addresses how Cost Accounting Standards (CAS) administration is handled when a subcontractor, rather than the prime contractor, is the source of a required CAS price adjustment or a determination of noncompliance. It explains the flow of information between contracting officials at different tiers, specifically requiring the CFAO for the lower-tier subcontractor to send the negotiation memorandum or noncompliance determination to the CFAO for the next higher-tier contractor or subcontractor. It also establishes that higher-tier CFAOs may not alter the lower-tier CFAO’s determination, preserving consistency and authority in the CAS administration process. Finally, it covers the situation where a subcontractor refuses to submit a General Dollar Magnitude (GDM) or Detailed Cost Impact (DCI) proposal, stating that remedies are then pursued at the prime contractor level. In practice, this section ensures that CAS issues are handled in an orderly chain of administration, prevents conflicting determinations across contract tiers, and gives the Government a clear enforcement path when a subcontractor does not cooperate.