52.230-6
Administration of Cost Accounting Standards
Contractors subject to CAS must rigorously notify, document, and justify all cost accounting practice changes and noncompliance, or risk payment withholdings and unilateral contract adjustments.
Overview
FAR 52.230-6, Administration of Cost Accounting Standards (CAS), establishes detailed requirements for contractors and subcontractors subject to CAS. It outlines procedures for reporting, justifying, and administering changes to cost accounting practices, as well as addressing noncompliance. The clause defines key terms, sets forth notification and proposal submission requirements, and prescribes methods for calculating cost impacts. It also details the responsibilities for flow-down to subcontracts and the consequences for failing to comply with reporting or adjustment obligations.
Key Rules
- Notification and Description of Changes
- Contractors must notify the Cognizant Federal Agency Official (CFAO) of any changes to cost accounting practices, including required, unilateral, or desirable changes, and submit detailed descriptions and impact statements within specified timeframes.
- Cost Impact Proposals
- When requested, contractors must submit General Dollar Magnitude (GDM) or Detailed Cost Impact (DCI) proposals to quantify the effect of changes or noncompliance on contract costs, using prescribed calculation methods and formats.
- Noncompliance Procedures
- Contractors must address noncompliance by submitting corrective action descriptions and cost impact analyses, and agree to contract modifications and repayments as necessary.
- Subcontract Administration
- Contractors must flow down CAS requirements to applicable subcontracts, provide required notifications to the CFAO, and ensure subcontractor compliance.
- Government Remedies
- Failure to comply may result in payment withholdings or unilateral contract adjustments by the CFAO.
Responsibilities
- Contracting Officers/CFAOs: Review and approve contractor submissions, determine cost impacts, enforce remedies for noncompliance, and oversee subcontract reporting.
- Contractors: Notify and describe changes, submit cost impact proposals, flow down requirements to subcontracts, and repay any increased costs to the Government.
- Agencies: Monitor compliance, process contract modifications, and ensure proper administration of CAS requirements.
Practical Implications
- This clause ensures transparency and consistency in cost accounting for CAS-covered contracts, protecting the Government from increased costs due to changes or noncompliance. Contractors must maintain robust internal controls and timely communication with the CFAO. Common pitfalls include late notifications, incomplete cost impact analyses, and failure to flow down requirements to subcontracts, all of which can result in financial penalties or contract adjustments.