The regulatory landscape for government contractors has shifted significantly with the passage of the FY 2026 National Defense Authorization Act (NDAA). One of the most impactful changes is the doubling of the threshold for Full Cost Accounting Standards (CAS) coverage—moving from $50 million to $100 million in net CAS-covered awards.
While this provides much-needed breathing room for mid-tier contractors, the transition from “Modified” to “Full” coverage remains a high-stakes evolution. Moving from compliance with 4 standards to all 19 requires more than just better spreadsheets; it requires a sophisticated, automated ERP strategy.
Understanding the 2026 CAS Landscape
Under the new regulations, contractors must recognize the distinct tiers of compliance:
- Modified CAS Coverage: Requires compliance with 4 specific standards (CAS 401, 402, 405, and 406). This is typically the starting point for firms winning their first large negotiated contracts.
- Full CAS Coverage: Triggered when a contractor receives a single award of $100 million or more, or when the total net CAS-covered awards in the preceding period exceed $100 million. This requires adherence to all 19 standards, covering everything from pension costs to the cost of money.
The “trigger” for applicability at the individual contract level has also seen a dramatic increase, now sitting at $35 million (up from $2.5 million).
Important Note: A contract awarded under modified coverage stays modified for its entire lifecycle, even if the company triggers full coverage later. Managing this “mixed-bag” of contract requirements is a primary source of audit findings.
The Challenge: From 4 Standards to 19
Scaling to Full CAS coverage introduces complexities that manual systems cannot handle. For example:
- CAS 410 & 418: Requires precise allocation of G&A expenses and indirect costs based on “beneficial or causal” relationships.
- CAS 414: Managing the Cost of Money (COM) as an element of contract cost.
- Disclosure Statements: You must file a formal CASB DS-1, documenting every accounting policy. If your system doesn’t match your disclosure, you face “cost impact” penalties.
For a detailed breakdown of these thresholds and the official legislative language, see the FY 2026 NDAA Acquisition Reform Summary.
How Daston’s DCAA on Demand SuiteApp Automates the Transition
As the industry-recognized DCAA and Government Contracting NetSuite experts, Daston built the DCAA on Demand SuiteApp to act as a compliance “bridge.” It allows contractors to scale from Modified to Full CAS without replacing their ERP.
1. Automated Indirect Cost Allocation
Daston’s module handles the multi-tier allocation logic required by CAS 403, 410, and 418. Whether you are using a Total Cost Input (TCI) base or Value-Added base, the system calculates actual, provisional, and target rates in real-time.
2. Cost of Money (CAS 414) Calculations
Calculating the facilities capital cost of money is a manual nightmare for most. Daston automates this calculation within NetSuite, ensuring that this allowable “profit-like” cost is recovered accurately on every invoice.
3. Real-Time Labor Distribution
To satisfy CAS 401 (Consistency), Daston’s Payroll Cost Allocation module ensures that labor is burdened and distributed to projects with a 100% audit trail, matching your general ledger to your timecards exactly.
Why Daston is the Expert Choice in 2026
In an era where the DCAA is aiming to close Incurred Cost audits within 12 months, speed and accuracy are paramount. Daston stands apart because their solution is:
- Built for NetSuite: Not an external “bolt-on” that requires messy data syncing.
- Audit-Ready by Design: The SuiteApp was developed by former DCAA auditors and GovCon CFOs who understand the “why” behind the regulations.
- Future-Proof: As thresholds change (like the 2026 NDAA shifts), Daston updates the SuiteApp logic, so your team doesn’t have to manually reconfigure the system.
Navigating the jump to a $100M+ portfolio shouldn’t be a regulatory hurdle; it should be a milestone of success. With Daston, your accounting system is ready for the audit before it even begins.
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