Application of CAS to Indefinite Delivery Vehicles (IDVs)

Paul Bailey’s Comments to the CASB

In the ongoing discussion about Cost Accounting Standards (CAS) coverage for Indefinite Delivery Vehicles (IDVs), the CASB has identified six potential approaches. Capital Edge Consulting’s Partner, Paul Bailey,  submitted a letter to the CASB addressing the application of CAS to IDVs, evaluating six proposed approaches for determining CAS applicability to individual task or delivery orders within these contracts. Of the six approaches, Bailey emphasizes that only the "Order-by-Order" approach is clear and manageable without creating administrative burdens.

Key Approaches and Comments:

Approach #1 - Order-by-Order:

Each order under an IDV would be treated as an individual contract, with CAS applying only if the order meets coverage thresholds. This method is supported by the Section 809 Panel and provides clarity in applying exemptions (e.g., for small businesses or fixed-price orders).

Comment: This approach is preferred because it simplifies the administration and ensures proper application of exemptions.

Approach #2 - Maximum Award Value:

CAS would apply to all orders if the IDV’s total value meets coverage thresholds, regardless of individual order size.

Comment: This approach is not recommended, as it could impose CAS on orders that should be exempt, creates unnecessary compliance burdens, and complicates administrative record-keeping.

Approach #3 - Minimum Award Value:

CAS would apply to all orders if the IDV's minimum guaranteed amount meets the coverage thresholds.

Comment: This approach is undesirable due to inconsistencies in CAS application across agencies and the administrative burden it would impose.

Approach #4 - Cumulative Threshold:

CAS would apply once the total value of all orders under an IDV exceeds the coverage threshold.

Comment: This approach is not favorable as it could lead to inconsistent treatment of CAS and unnecessary administrative complexity.

Approach #5 - Combination (Order-by-Order for Multiple Award IDVs, Maximum Award Value for Single Award IDVs):

This approach uses the order-by-order method for multiple award IDVs but applies CAS to single-award IDVs based on their maximum value.

Comment: This approach is not recommended due to the inclusion of the maximum award value method from Approach #2, which carries similar issues.

Approach #6 - Combination (Order-by-Order for Multiple Award IDVs, Cumulative Threshold for Single Award IDVs):

This method uses the order-by-order approach for multiple award IDVs and applies the cumulative threshold for single-award IDVs.

Comment: This approach is not supported due to the issues associated with the cumulative threshold from Approach #4.

Additional Recommendations:

Bailey also highlights the Section 809 Panel’s recommendation for CASB to revise guidance on hybrid contracts, suggesting that CAS application could be refined to improve precision and attract more companies to the government contracting marketplace.

In conclusion, Bailey strongly supports the "Order-by-Order" approach (Approach #1) and discourages the adoption of other, more administratively complex methods. Download and read the entire letter outlining each approach to understand how these approaches could impact your business.

Capital Edge Consulting is a professional services company comprised of adept problem solvers who deliver tangible results to address today’s most complex U.S. government contracting challenges. Capital Edge helps clients address the challenging regulatory, contractual, and compliance requirements of U.S. federal contracts and we have experience working with a wide variety of industries that provide goods or services to the federal government including industries such as biotech and healthcare, nuclear energy, education, information technology, non-profit, professional services, defense, and software.