DoW Memo Directs Shift of Contractor Cost Accounting From CAS to GAAP

Reported details remain thin: on September 14, 2026, Deputy Secretary of War Steve Feinberg signed a memorandum titled "Fostering One Strong Industrial Base," directing the Department of War (DoW) to shift away from government-unique Cost Accounting Standards (CAS) and toward generally accepted accounting principles (GAAP). For contractors, that is not a technicality. CAS governs allowability of direct and indirect costs, overhead allocation and the cost basis used to price proposals; GAAP treats many of those judgments differently. A GAAP-based pricing regime could reshape how future bids are built, require reconciliation of accumulated contract-cost data, change negotiated and ceiling price structures, and alter the accounting basis for revenue recognition on long-term work. Sophisticated counsel should review pending solicitations, existing indefinite-delivery vehicles and teaming arrangements for stranded cost-accounting investments, and weigh whether transition clauses, protests or claims strategies are warranted. What to watch: whether the memo is immediately operative or depends on FAR/DFARS and agency contract-clause changes, which clauses are revised, how pending bids and option periods are handled, and whether primes or subcontractors respond through the bid protest process. The excerpt does not establish a transition timetable, so scope and enforceability should be treated as unconfirmed pending the full text.