Last week, Deputy Secretary of War Steve Feinberg released a memorandum proposing big changes to government contract accounting. Titled “Fostering One Strong Industrial Base,” the September 14, 2026 memo outlines four key initiatives:
- Waivers and limits on the federal Cost Accounting Standards (CAS) for a variety of procurements;
- Prioritizing the use of Generally Accepted Accounting Principles (GAAP) over CAS;
- Simplified business system reviews and audits; and
- Revamped criteria for negotiating profit that emphasize subjective factors such as risk and investment.
Together, these proposals could represent the most significant changes to federal procurement in years. Turning the memo into action, however, will not be easy. DOW can implement some elements immediately, but full implementation will likely require approval from the CAS Board, which is an independent body that administers CAS. It may also need Congress to revise the CAS statutes. The memo appears to recognize these constraints, expressly directing DOW personnel to draft recommendations for the CAS Board’s consideration.
In the meantime, contractors should focus on two key questions: (1) How can they capitalize on the opportunities this memo presents for their specific business and pipeline? And (2) how can they do so in a way that remains compliant with existing law, given that the memo does not change current contract terms or regulations? With six-year statutes of limitation, shifting political priorities and personnel, and the ever-present risk of qui tam actions, contractors must weigh all of these factors carefully.
Below, we walk through the memo’s major proposals.
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