12.214
Cost Accounting Standards
Most commercial item contracts are exempt from CAS unless price adjustments are based on actual costs, in which case CAS requirements and clauses must be applied.
Overview
FAR 12.214 clarifies that Cost Accounting Standards (CAS) generally do not apply to contracts and subcontracts for commercial products or commercial services when these are awarded as firm-fixed-price or fixed-price with economic price adjustment contracts, as long as the price adjustment is not based on actual costs incurred. If the price adjustment is based on actual costs, CAS may apply, and contracting officers must refer to FAR 30.201-1 for further guidance. When CAS is applicable, the appropriate CAS provisions and clauses must be included in the contract as prescribed in FAR 30.201.
Key Rules
- CAS Exemption for Commercial Contracts
- CAS does not apply to firm-fixed-price or fixed-price with economic price adjustment contracts for commercial products/services, unless the price adjustment is based on actual costs.
- CAS Applicability for Cost-Based Adjustments
- If a fixed-price contract for commercial items includes price adjustments based on actual costs incurred, CAS may apply per FAR 30.201-1.
- Clause Insertion Requirement
- When CAS applies, contracting officers must insert the appropriate CAS provisions and clauses as directed by FAR 30.201.
Responsibilities
- Contracting Officers: Determine CAS applicability, reference FAR 30.201-1 for cost-based adjustments, and insert required CAS clauses when applicable.
- Contractors: Understand when CAS does or does not apply to their commercial contracts and comply with CAS requirements if applicable.
- Agencies: Ensure oversight and compliance with CAS applicability and clause inclusion.
Practical Implications
- This section exists to reduce unnecessary regulatory burden on commercial item acquisitions by exempting most from CAS, except in specific cost-based scenarios.
- Contractors benefit from simplified compliance for most commercial contracts, but must be vigilant if price adjustments are tied to actual costs.
- Common pitfalls include misunderstanding when CAS applies, especially with economic price adjustment clauses based on actual costs.