On October 6, 2026, the Defense Contract Audit Agency (DCAA) issued Audit Alert 26-CCLD-010(R) to its auditors on the nontraditional defense contractor (NDC) exemptions in Section 1826 of the Fiscal Year 2026 National Defense Authorization Act (2026 NDAA). Section 1826 expressly exempts products and services provided by NDCs under Department of War (DoW) contracts, subcontracts, and agreements from ten requirements, including certified cost or pricing data under 10 U.S.C. § 3702, the Federal Acquisition Regulation (FAR) Part 31 cost principles, Defense Federal Acquisition Regulation Supplement (DFARS) 215.407, and seven DFARS business system clauses.1 Much of the DCAA alert restates the statute and catalogs the five DFARS class deviations issued to date (Parts 215, 231, 234, 244, and 245). This Client Advisory focuses on what is new: DCAA’s view of its continuing role on NDC contracts, which has not been addressed in the 2026 NDAA or the class deviations.
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