The Same Memo's Appendix Reopens Forward Pricing Rate Agreements, Estimating System Reviews and DFARS Profit Policy

What changed

The CAS-to-GAAP direction is the headline of the Deputy Secretary's 14 September 2026 memorandum. The appendix is where the cost estimating community should spend its time. Four items stand out.

Forward pricing. DCMA is directed to work immediately with DCAA to overhaul the approach to establishing and maintaining forward pricing rate agreements, drawing on rate data maintained in the ordinary course of business. FPRAs are to be used only where they accelerate recurring, high-volume negotiations and make the process more efficient for both sides. There is no deadline on this one — the word is "immediately."

Business systems. Within 90 days, the Under Secretaries for Acquisition and Sustainment and Comptroller are to consolidate estimating system and material management and accounting system requirements into simplified, commercial-aligned accounting system criteria and retire their separate reviews, issuing class deviations where required. Statutory proposal-integrity protections, inventory accounting standards, and the standards for consistent cost estimation, accumulation and reporting are retained. Outside the covered CAS core, accounting system adequacy is to be assessed against the FAR's condition for the contract type, satisfied by the contractor's GAAP books plus a contract-level ledger meeting applicable allowability rules.

The same paragraph confines earned value management to major development programs and, where the Government retains cost risk, major long-duration production programs, retires the separate government system-validation regime in favor of integrated baseline reviews, and directs acceptance of schedule, actuals and estimate-at-completion data from contractors' native systems. The property review overlay is to give way to government-wide FAR property-stewardship duties. The purchasing system review threshold is to rise. A 90-government-day clock is set for final disposition of a contractor's corrective action plan.

Profit. Within 90 days the Department is to initiate DFARS rulemaking, with industry feedback, to revise profit policy so that negotiated margins reflect value delivered, risk carried and private capital invested rather than merely cost incurred. Commercial benchmarks will inform negotiation objectives but will not constitute caps.

Why it matters for estimating and pricing

The estimating system consolidation is the one that reaches furthest into daily practice. A DFARS estimating system review has been its own discipline, with its own criteria and its own findings. Folding it into accounting system criteria assessed against GAAP books changes what a contractor has to be able to show, and it changes what a disapproved system looks like. The retained language is the part to watch: standards for consistent cost estimation, accumulation and reporting survive the consolidation, which is CAS 401 in substance whatever the label on the review becomes.

On forward pricing, the direction to draw on rates maintained in the ordinary course of business points away from purpose-built FPRA submissions and toward the contractor's own books. That is less work, but it also means the rates the government negotiates against are the rates the contractor actually runs on, with less room to present a rate structure built for the proposal.

One more item deserves attention on fixed-price work. Within 30 days the Department is to publish a joint enforcement-posture statement that, for fixed-price contracts and other transactions where the performer bears the cost risk, a performer who becomes more efficient against a fairly negotiated price keeps the savings for that contract, and the Department captures efficiencies only prospectively at the next negotiation. The statement expressly does not waive remedies for fraud or defective pricing, CAS price adjustments where CAS applies, or final indirect cost rate settlement on cost-reimbursement work.

All of this is direction, not regulation. The class deviations and the DFARS rulemaking are the instruments that will actually change what a contract says, and none of them exist yet. Watch the DPCAP class deviation page.

Primary source

Deputy Secretary of War memorandum, "Fostering One Strong Industrial Base," 14 September 2026, Appendix: Implementation Actions, under the headings Modernize forward-pricing support, Modernize profit policy, Consolidate contractor business systems, Simplify business-system review, and Publish the efficiency assurance.