The White House Office of Management and Budget’s Cost Accounting Standards Board is proposing to eliminate dozens of accounting requirements for federal contractors that it considers “unnecessary and redundant.”
The OMB’s CAS Board, which is chaired by the Office of Federal Procurement Policy, published two proposed rules to eliminate more than 60 requirements that it hopes to finalize by early next year as part of its overhaul of the federal acquisition regulatory process.
The OMB said the current rules force contractors to unnecessarily keep two sets of overlapping books and the rules have remained largely unchanged for over 50 years.
The proposed changes will update measuring and assigning costs for compensated personal leave, capitalization and depreciation of capital assets, and acquisition costs of material. Instead, the federal government will now rely on GAAP to protect the government’s interests and enable taxpayers to receive the contractor’s best value in these areas.
“Holding contractors responsible for properly and transparently accounting for their costs is good stewardship, but forcing contractors to maintain overlapping books and records is wasteful and creates barriers that discourage talented companies from working with the Government to meet the needs of our taxpayers,” said Kevin Rhodes, senior advisor to OMB director Russell Vought, in a statement Wednesday.
The deregulatory moves are expected to result in fewer unique records and processes that contractors need to maintain, fewer government oversight activities required by CAS requirements, and opportunities for reliance on financial audits being performed by commercial firms for GAAP compliance.
The CAS Board plans to significantly accelerate its work on additional conformance of federal cost accounting standards to GAAP. The Office of Federal Procurement Policy is working on streamlining the 2,000 pages of Federal Acquisition Regulations back to their statutory roots and rules that are essential to sound procurement. The OMB believes that would alleviate the need for cost accounting standards by emphasizing practices where CAS doesn’t apply, such as where the agency is relying on fixed-price competitively awarded contracts for commercial solutions.
