Where Cost Accounting Standards Are Heading

Bottom line up front: Our view is that CAS is narrowing and moving toward GAAP, and that it will remain the cost accounting framework for large, cost-type defense work through the end of the decade. The 2026 rules take most mid-tier business units out of full coverage, and many out of CAS, while more than 99 percent of full-coverage dollars stay covered at the large primes. In parallel, the government is moving its cost-risk controls toward contract type, pricing and enforcement: fixed-price is now the default, certified cost or pricing data starts at $10 million for DoD, and the Justice Department lists defective pricing as a priority. For most contractors the compliance workload goes down, while pricing accuracy and False Claims Act exposure matter more.

Perspective as of September 10, 2026. Prepared by Revelation Technologies.

1. Executive Summary

Our read of what changed, what we expect next, and where each size of contractor should start.

What moved

• Thresholds. The FY2026 NDAA (P.L. 119-60, December 18, 2025) set the CAS contract threshold at $35 million and ended the $7.5 million trigger contract. The CAS Board raised full coverage and the Disclosure Statement threshold to $100 million, effective October 1, 2026.
• Standards. The Board rescinded CAS 404, 408, 409 and 411 (effective August 7, 2026) and CAS 407 (effective October 1, 2026), keeping a few provisions inside CAS 405 and 418. Fourteen of the original 19 standards remain.
• Pricing. Certified cost or pricing data starts at $10 million for DoD contracts entered into after June 30, 2026. Nontraditional defense contractors are exempt from TINA, FAR Part 31 and the DFARS business system clauses.
• Contract type. Executive Order 14402 (April 30, 2026) makes fixed-price the default. Non-fixed-price awards need agency-head approval above $100 million at DoD and above $10 million at most civilian agencies, with research and major-system development excepted.
• Oversight. DCAA and DCMA civilian end strength falls about 9 and 15 percent from FY2024 to FY2026, and DCAA is consolidating about 180 locations into 23 hubs.
• Enforcement. False Claims Act recoveries reached a record $6.8 billion in FY2025. DOJ's new National Fraud Enforcement Division lists defective pricing among its priorities.
• Money. The FY2027 request is $1.5 trillion for national defense, on top of $152 billion of reconciliation funding through FY2029 and a $67 billion DoD supplemental request tied to munitions and operations against Iran.

What we expect

• The $35 million and $100 million thresholds hold through 2029. We see low odds of repealing CAS and moderate odds of further GAAP conformance on CAS 415, 416 and the pension standards.
• The CAS Board proposes a cost impact rule in 2027 that moves the FAR 30.6 process into CAS and applies the amended statute, which takes fixed-price work out of 'increased costs in the aggregate'.
• Cost-type contracting concentrates in development and major-system work at the large primes, while services and production move to fixed-price and commercial terms.
• Audit coverage thins and targets pricing. DCAA's return is highest on forward pricing, and we would expect a smaller workforce to go there first.
• Defective pricing and cost mischarging cases increase as DOJ's new division staffs up and older contracts move through the enforcement pipeline.
• The November 3, 2026 midterm elections will shape how the next Congress treats these changes.

Impact at a glance

Where we would start

1. Re-run CAS applicability. Test each business unit, contract and order against the October 1, 2026 rules, including the new tests for indefinite delivery contracts.
2. Clear open noncompliances. The off-ramp from full to modified coverage, at the next cost accounting period starting on or after October 1, 2026, is open only to units with no unresolved noncompliances.
3. Keep estimating and accounting consistent. Consistency is what defends a certified cost or pricing data submission and a False Claims Act inquiry, whether or not CAS applies.
4. Build fixed-price pricing capability. Indirect rate forecasting, cost estimating and should-cost evidence now carry risk that cost-type contracts used to absorb.
5. Formalize agreements. After the Federal Circuit's December 2025 Pratt & Whitney decision, accounting agreements with contracting officers should be documented as FAR 31.109 advance agreements.
6. Design the ERP for the new rules. Section 8 sets out the top 10 ERP design takeaways, from coverage status held as data to calculations an auditor can re-run.

Reading note. Figures come from public sources dated January 2025 through September 10, 2026, listed in the appendix. Where a figure rests on a single secondary source, the text says so. Forecasts are our judgment.

2. CAS Today: The Baseline

What CAS is, who it covers from October 1, 2026, and who administers it.

Cost Accounting Standards (CAS) govern how a contractor measures, assigns and allocates cost to government contracts. They sit in statute at 41 U.S.C. Chapter 15 and in regulation at 48 CFR Chapter 99, and the CAS Board has exclusive authority to issue, amend and interpret them.

CAS answers a different question from the FAR Part 31 cost principles. The cost principles decide whether a cost is allowable. CAS decides whether it is measured and allocated consistently, between the estimate and the actuals and across contracts, so that one customer does not carry cost that belongs to another.

The standards ran from CAS 401 to 420, with 419 reserved, for 19 in total. After the 2026 rescissions, 14 remain in force. Coverage is decided at the contract (or at the order, for multiple-award vehicles) and at the business unit.

Who is covered, and how

Rules effective October 1, 2026 (CAS Board final rule, FR Doc. 2026-17901, September 1, 2026). Multiple-award indefinite delivery contracts are tested at each order; single-award ones at award, on the ceiling value. Units under full coverage only because of the old $50M test may move to modified coverage at their next cost accounting period starting on or after October 1, 2026, if they have no unresolved noncompliances.

Figure 1. CAS coverage from October 1, 2026. Coverage is tested at the contract or order and at the business unit, so one company can hold contracts in more than one tier.

Who administers it

Reading note. CAS, the FAR Part 31 cost principles and the DFARS business system rules are separate regimes with separate thresholds. Leaving CAS does not remove Part 31 on cost-type contracts, incurred cost submissions or audit rights. The DFARS business system clause and its payment withholds apply to CAS-covered contracts, so their reach narrows with the CAS threshold.

3. What Moved in 2025 and 2026

The legislative, regulatory, policy, oversight, enforcement and market changes behind the new CAS perimeter.

The changes arrived from several directions at once. The pages that follow summarize each area and what it means for CAS, and Figures 2 and 3 place the developments on a timeline.

Figure 2. The rules: Congress, the CAS Board, the FAR and DFARS overhaul and executive actions, January 2025 to 2027. Dashed cards are scheduled or expected.

Figure 3. The environment: oversight capacity, enforcement, budget and market developments over the same period.

Congress: the FY2026 NDAA

The FY2026 National Defense Authorization Act (P.L. 119-60, signed December 18, 2025) carried an acquisition reform title that rewrote the CAS thresholds and the Board.

• Sec. 1806, CAS threshold. 41 U.S.C. 1502 now exempts negotiated contracts under $35 million and drops the trigger contract. Exemptions for commercial items, prices set by law and competitively awarded firm fixed-price work apply to the qualifying portion of a contract.
• Sec. 1806, full coverage. Directed the Board to raise the full coverage threshold from $50 million to $100 million, adjusted for inflation.
• Sec. 1806, cost impact. 41 U.S.C. 1503 now excludes firm fixed-price contracts, and portions not redeterminable on cost, from 'increased costs in the aggregate', and caps recovery in a fiscal year at the net increased cost paid for changes made that year. The Board has opened a separate case to implement it.
• Sec. 1806, the Board. Made the CAS Board an independent board within OMB, added staff, required government members with contract administration experience, and bars members from executive-agency audit organizations from January 1, 2028.
• Sec. 1804(c), TINA. Certified cost or pricing data is required above $10 million for DoD prime contracts entered into after June 30, 2026, and for subcontracts under them. Civilian agencies remain at $2.5 million.
• Sec. 1826, nontraditionals. Exempts nontraditional defense contractors from TINA, FAR Part 31 and the DFARS business system clauses, unless a head of contracting activity waives the exemption and notifies Congress.
• Secs. 1821 to 1824, commercial. Limit defense-unique clauses in commercial buys, require a finding that no commercial option fits before a non-commercial buy, and expand Commercial Solutions Openings.
• FY2027 NDAA. The House passed its bill on July 22, 2026, and the Senate Armed Services Committee reported its version 18 to 9 in June; Senate floor action is pending. House provisions would make late submission of cost data no defense to a price reduction and move business systems to risk-based surveillance. The Senate bill would codify the buyback limits in EO 14372 (reported by War on the Rocks).

RevTech perspective. The threshold changes began as an OMB legislative proposal, which the Board says Sec. 1806 'fully codified'. Our view is that the direction has support in both the executive branch and Congress, which is why we expect the thresholds to hold through 2029.

Sources: P.L. 119-60; 41 U.S.C. 1501 to 1503; 10 U.S.C. 3702; FR Doc. 2026-05511; Crowell & Moring (Dec 23, 2025); Breaking Defense (Jul 22, 2026); SASC (Jun 11, 2026); War on the Rocks (Jul 16, 2026).

The CAS Board: thresholds and GAAP conformance

The Board worked on two tracks: raising thresholds, and conforming the standards to GAAP as Sec. 820 of the FY2017 NDAA directed.

• January 17, 2025. Advance notice on conforming CAS 404 and 411 to GAAP.
• September 11, 2025. Final rule on operating revenue and leases (effective October 14, 2025), and a proposal to rescind CAS 404, 408, 409 and 411.
• March 20, 2026. Proposed rules on the new thresholds and on CAS 407. The public agenda opened cases on CAS 415 and 416, planned an advance notice on pension extraordinary events under CAS 412 and 413, and set out a plan to move cost impact coverage from the FAR into CAS.
• July 8, 2026. Final rule rescinding CAS 408 and 411 and most of 404 and 409, effective August 7, 2026. CAS 404-50(d)(1), which limits asset write-ups after a business combination, and parts of 409-50 move into CAS 405. Changes directly caused by conforming CAS 408 carry no contract price adjustment; changes made after the 404, 409 and 411 rescissions do not get that exemption.
• September 1, 2026. Final rules on thresholds and on CAS 407, both effective October 1, 2026. CAS 407 is removed, its standard cost and variance requirements move into CAS 418, and later changes to standard costing are treated as unilateral changes.

RevTech perspective. Our view is that GAAP conformance is now the Board's main agenda. Each rescission removes a reconciliation between the financial books and the Disclosure Statement, but practice changes made after the 404, 409 and 411 rescissions still go through the cost impact process. We would recommend deciding practice by practice what to change.

Sources: FR Docs. 2025-00012, 2025-17480, 2025-17472, 2026-05511, 2026-05512, 2026-13764, 2026-17901 and 2026-17903; public meeting agendas (Jul 2, 2025; Mar 20, 2026); acquisition.gov CAS Board roster (Jul 28, 2026).

The FAR and DFARS overhaul

Executive Order 14275 (April 15, 2025) launched the Revolutionary FAR Overhaul. Class deviations have moved quickly; formal rulemaking has only started.

• FAR Part 31. The model deviation (July 17, 2025) did not substantively change the cost principles. A few items were removed, such as personal-use autos and retainers without a scope of work.
• FAR Part 30. Reorganized into four subparts (GSA deviation effective November 3, 2025). The FAR Council has said cost impact coverage will be removed from the FAR and handled by the CAS Board.
• Formal rulemaking. The first four proposed rules were published June 23, 2026. Parts 15, 30, 31 and 42 are not yet in formal rulemaking.
• DFARS. Overhaul class deviations took effect February 1, 2026, covering Part 230 (the $100 million threshold), Part 231, Part 215 (the $10 million TINA threshold and nontraditional exemptions) and Part 242, which renumbers the business system clauses without changing their criteria or the 5 and 10 percent withhold caps.
• Inflation adjustment. From October 1, 2025, the TINA threshold rose to $2.5 million, the simplified acquisition threshold to $350,000 and the micro-purchase threshold to $15,000. The CAS exemption tracked TINA until Sec. 1806 set the fixed $35 million.

Sources: EO 14275; FR Doc. 2025-16412; acquisition.gov FAR Overhaul pages (Part 30 updated Jul 28, 2026); FR Docs. 2026-12559 to 2026-12562; DPC DFARS overhaul deviation listing; Fox Rothschild (Jul 23, 2025); Wiley (Aug 28, 2026).

Executive orders and DoD acquisition policy

Executive actions have set the direction on contract type, commercial buying and contractor finances.

• EO 14222 (February 26, 2025). Required contract reviews for termination or modification, and new payment justification systems.
• EO 14240 (March 20, 2025). Consolidates buying of common goods and services at GSA.
• EOs 14265 and 14271 (April 2025). Commercial solutions and other transactions first at DoD, and written justification for non-commercial buys across government.
• Warfighting Acquisition System (November 7, 2025). Replaces program executive offices with Portfolio Acquisition Executives, prefers commercial buying and Commercial Solutions Openings, and makes other transactions the default for software.
• EO 14372 (January 7, 2026). Bars buybacks and dividends by contractors DoD identifies as underperforming until they remediate, and ties executive incentive pay to delivery. No DFARS clause has been published.
• EO 14402 (April 30, 2026). Makes fixed-price contracts 'the default and preferred method of procurement'. Non-fixed-price awards need agency-head approval above $100 million at DoD, $35 million at NASA, $25 million at DHS and $10 million elsewhere. DoD's deviation applies to new solicitations from July 15, 2026.

RevTech perspective. Our view is that EO 14402 could move more dollars out of CAS than the threshold rule, which the Board expects to keep over 90 percent of covered dollars. A firm fixed-price contract awarded on adequate price competition, or on commercial terms, is exempt from CAS at any value.

Sources: Federal Register and White House texts of EOs 14222, 14240, 14265, 14271, 14372 and 14402; FAR Council guidance (May 6, 2026); DoD Class Deviation 2026-O0045; Wiley and WilmerHale (Nov 2025).

Oversight capacity: DCAA and DCMA

The agencies that administer and audit CAS are smaller and more centralized than a year ago.

• DCAA workforce. Civilian end strength of 3,836 in FY2024, 3,781 in FY2025 and 3,489 estimated for FY2026, per the FY2026 budget justification.
• DCAA footprint. A 2025 reorganization replaced regional directorates with Land, Sea and Air directorates. Phase 3, announced April 2026, consolidates about 180 locations into headquarters and 23 hubs over several years.
• DCAA results. The FY2025 Report to Congress, as summarized by HKA, shows $788.4 billion examined, $18.8 billion of audit exceptions and $5.3 billion of net savings. The return was $16.20 per dollar on forward pricing and $1.80 on incurred cost, and the share of incurred cost findings sustained rose to 42.6 percent.
• DCMA workforce. Civilian end strength of 10,343 in FY2024 and 8,773 estimated for FY2026, with FY2026 reductions in contract administration and in cost and pricing.
• Shutdown. The October 1 to November 12, 2025 lapse was the longest on record. A Comptroller memo extended DCAA's 12-month deadline for incurred cost audits, and advisors report shorter contractor response windows since.
• Workforce context. GAO reports DoD's civilian workforce fell about 78,000, or about 10 percent, in 2025.

RevTech perspective. We would expect slower contracting-officer actions on final rates, Disclosure Statements and cost impacts, alongside targeted and faster pricing audits. The threshold rule reduces the Disclosure Statements and cost impact proposals DCMA has to process, which partly offsets its smaller staff.

Sources: DCAA and DCMA FY2026 O&M budget justifications (Jun 2025); Crowell & Moring (Apr 9, 2025); Redstone GCI (Dec 5, 2025; Apr 22, 2026); HKA (Jun 4, 2026); GAO-25-107558; GAO-26-108100.

Enforcement and litigation

Enforcement has grown as audit capacity has shrunk, and much of it is aimed at pricing.

• FCA totals. DOJ reported a record $6.8 billion of False Claims Act settlements and judgments in FY2025 and a record 1,297 qui tam filings. DoD-related recoveries were about $634 million.
• Pricing cases. Recent resolutions include Raytheon ($428 million, defective pricing and double billing, October 2024), Lockheed Martin ($29.7 million, F-35 defective pricing, February 2025), L3 Technologies ($62 million, TINA, May 2025) and W International ($10.5 million, overcharging, March 2026).
• DOJ organization. A National Fraud Enforcement Division became effective August 24, 2026. Its August 13 priorities memo calls procurement fraud, including defective pricing and billing fraud, a critical priority.
• Beyond cost. FCA theories now reach cybersecurity (Honeywell Aerospace, September 2026), diversity certifications (IBM, $17 million, April 2026) and customs duties (the Trade Fraud Task Force passed $1 billion in July 2026).
• Pratt & Whitney (Fed. Cir., December 5, 2025). An accounting agreement with DCMA that was not documented as a FAR 31.109 advance agreement was unenforceable, and the contracting officer could not bind the government against the FAR.
• Raytheon (ASBCA, June 2026). Penalties upheld for expressly unallowable lobbying and M&A costs in incurred cost proposals.
• Textron (Fed. Cir., April 2025). A CAS 413 pension claim was time-barred because it accrued at the plan curtailment, not when administrative processing ended.

RevTech perspective. Our view is that the threshold relief reduces the number of contracts subject to CAS while enforcement of pricing and billing accuracy keeps increasing. TINA, FAR Part 31 and the False Claims Act still apply to work that leaves CAS.

Sources: DOJ releases (Feb 6, 2025; Jan 16, 2026; Mar 17, 2026; Jul 14, 2026; Sep 1, 2026); PilieroMazza (Feb 10, 2026); Mayer Brown (Aug 18, 2026); Holland & Knight (Apr 2026); Sec'y of Defense v. Pratt & Whitney, 160 F.4th 1224; Bloomberg Law (Jun 25, 2026); Textron v. U.S., No. 23-1042.

Budget and demand

Defense funding is rising, which keeps CAS-covered volume growing at the primes even as the perimeter narrows.

• FY2026. After a 43-day lapse and two continuing resolutions, the full-year DoD appropriation was enacted February 3, 2026 at $839.2 billion.
• Reconciliation. The One Big Beautiful Bill Act (July 4, 2025) added $152.3 billion for DoD through FY2029, including about $29 billion for shipbuilding, $24.4 billion for Golden Dome and missile defense, and $25 billion for munitions.
• FY2027. The request is $1.5 trillion for national defense, including $350 billion through reconciliation. A continuing resolution runs to December 11, 2026, and the House budget resolution carries $60 billion of the reconciliation amount.
• Supplemental. The June 24, 2026 request is $87.6 billion, $67.1 billion of it for DoD, including $21 billion to replace munitions and $17.3 billion for Operation Epic Fury operating costs.
• Munitions. Seven-year framework agreements for PAC-3 and THAAD rely on contractor-funded capacity. The PAC-3 multiyear reached $58.62 billion in July 2026 as an undefinitized contract action.
• Other transactions. DoD OT obligations were about $18 billion in FY2024 and roughly flat in FY2025 (GovSpend), about 4 percent of DoD contract obligations.

Sources: CRS R48891 (Apr 2, 2026); Covington (Jul 14, 2025); NPR and CSIS (Apr 2026); CRFB (Sep 3, 2026); CSIS (Aug 18, 2026); Breaking Defense and CRS IN12700 (Jun 2026); Lockheed Martin (Jan 29 and Jul 29, 2026); GAO-25-107546; GovSpend (Jan 23, 2026).

Prime economics, new entrants and the market

The large primes are absorbing development losses, a smaller pension recovery and new limits on shareholder returns, while new entrants and small firms face a different set of changes.

• Fixed-price development. Lockheed Martin took $1.7 billion of classified-program losses in Q4 2024 and about $1.6 billion more in Q2 2025. Northrop Grumman's B-21 losses total about $2 billion. Boeing recorded further KC-46A and T-7A charges.
• The primes' stance. Northrop's CEO has said the company will not bid fixed-price development without a mature design, Lockheed's CEO that there are 'no longer any must-win competitions', and Boeing's CEO that development on recent wins is cost-plus.
• CAS pension. The FAS/CAS pension operating adjustment is shrinking unevenly: Northrop's fell to $7 million in Q1 2026 from $63 million a year earlier, while Lockheed guides to about $1.37 billion for 2026.
• Shareholder returns. Buybacks and dividends at Lockheed, RTX, Northrop and General Dynamics fell from $4.2 billion in Q1 2025 to $2.7 billion in Q1 2026, per figures cited by Senators Lee and Warren. Lockheed and RTX made no buybacks in the first half of 2026.
• Capex. 2026 capital spending plans rose, for example Lockheed from $1.6 billion to $2.5 to $2.8 billion (Breaking Defense), which flows into depreciation, cost of money and overhead pools.
• Tariffs. Section 232 metals tariffs reached 50 percent in 2025. The Supreme Court struck down the IEEPA tariffs on February 20, 2026, and refunds on cost-type contracts may have to be credited to the government.
• New entrants. Defense tech venture funding set a record in 2025 ($49.1 billion on PitchBook's definition). The Army signed enterprise agreements with Palantir (up to $10 billion, July 2025) and Anduril (up to $20 billion, March 2026).
• M&A. Stout reports 2025 as the strongest year for aerospace, defense and government services M&A since 2021, with 347 US deals.
• Civilian services. DoD canceled $5.1 billion of contracts in April 2025, including $1.8 billion of consulting, and GSA pressed the largest consulting firms toward outcome-based pricing. Booz Allen's FY2026 revenue fell 6.4 percent.
• Small business. SBA suspended more than 1,000 8(a) firms after a financial data call, and the 8(a) share of prime dollars fell to 3.7 percent in FY2025. SBA proposed on August 20, 2026 to consolidate size standards in a way it estimates would make about 37,000 firms small again. SBIR and STTR were reauthorized through 2031 on April 13, 2026.

Sources: Company filings and releases (Boeing Jan 27, 2026; Lockheed Jul 23, 2026; Northrop Apr 21, 2026; RTX Jul 23, 2026); Defense News; FlightGlobal; Seattle Times; Sen. Lee (Aug 11, 2026); Breaking Defense (Feb 5, 2026); CRS LSB11398; Covington (Mar 2026); Defense News (Jan 20, 2026); Army releases; Stout (Jan 28, 2026); DoD memo (Apr 10, 2025); Washington Technology (May 26, 2026); SBA (Jun 11 and Jun 25, 2026); Holland & Knight (Aug 20, 2026); Crowell & Moring (Apr 14, 2026).

4. The Trends Behind the Headlines

What the individual changes add up to.

Taken together, the changes point in a consistent direction. Each trend below carries what we saw, our read of what it means for CAS, and our confidence in it.

T1. The CAS perimeter narrows at the bottom and holds at the top

• Coverage starts at $35 million per contract and full coverage at $100 million from October 1, 2026.
• The Board expects about 60 percent fewer covered segments and about 30 percent fewer full-coverage entities (773 to 564), while keeping $1.21 trillion of $1.22 trillion in full-coverage dollars.
• Nontraditional status turns on full coverage, so the higher threshold lets growing firms keep it longer.

What it means for CAS: CAS becomes a regime for large, cost-type defense programs and the business units that perform them. Most mid-tier units move to modified coverage or out of CAS.

Confidence: High. The statute is enacted and the rules are final.

T2. CAS moves toward GAAP, standard by standard

• CAS 404, 407, 408, 409 and 411 are rescinded, leaving 14 standards.
• Cases on CAS 415 and 416 are open, and an advance notice on pension extraordinary events is planned.
• The Board is now independent within OMB, and the DCAA seat ends in 2028.

What it means for CAS: Fewer differences between the financial books and the government books, and fewer reconciliations. The allocation standards (403, 418, 420) and the pension standards (412, 413) carry most of the money, and we would expect them to change last, if at all.

Confidence: High on direction; moderate on the pace for the pension and allocation standards.

T3. Cost risk shifts from accounting rules to contract type and pricing

• EO 14402 makes fixed-price the default, and DoD's deviation applies to new solicitations from July 15, 2026.
• Certified cost or pricing data starts at $10 million for DoD contracts after June 30, 2026.
• Commercial Solutions Openings and other transactions are the preferred path for software and new entrants.
• The primes decline fixed-price development, and later B-21 production lots carry an economic price adjustment clause.

What it means for CAS: More work is exempt because it is competitively awarded fixed-price or commercial. Contractors carry cost risk through their bids, so estimating, indirect rate forecasting and pricing evidence matter more than disclosure compliance.

Confidence: High for services and production; moderate for development, which EO 14402 excepts.

T4. Oversight gets thinner, centralized and aimed at pricing

• DCAA civilian end strength is down about 9 percent from FY2024 to FY2026, and DCMA about 15 percent.
• DCAA is consolidating into 23 hubs, and its return is highest on forward pricing.
• The share of incurred cost findings sustained rose to 42.6 percent in FY2025.

What it means for CAS: Fewer CAS compliance audits and slower cost impact settlements, alongside targeted pricing reviews with shorter response windows.

Confidence: High for the next two years.

T5. Enforcement grows as audit capacity shrinks

• Record FCA recoveries and qui tam filings in FY2025.
• DOJ's new fraud division names defective pricing and billing fraud as priorities.
• Courts are enforcing formalities, penalties and time limits (Pratt & Whitney, Raytheon, Textron).

What it means for CAS: A cost accounting problem that once led to a cost impact negotiation can become an FCA matter when it overlaps with a certification. Documentation and consistency are the defense.

Confidence: Moderate to high. Cases lag the conduct by several years.

T6. More money flows through fewer, larger programs

• A $1.5 trillion FY2027 request, $152 billion of reconciliation funding through FY2029 and a $67 billion DoD supplemental request.
• Seven-year munitions frameworks with contractor-funded capacity and large undefinitized actions.
• Prime capital spending plans rose for 2026.

What it means for CAS: Full-coverage dollars at the primes grow even as the perimeter shrinks. Undefinitized actions require certified cost or pricing data at definitization, and capacity investment runs through depreciation, cost of money (CAS 414 and 417) and allocation (CAS 403 and 418).

Confidence: Moderate. FY2027 appropriations and reconciliation are unresolved.

T7. Contractor finances come under direct policy scrutiny

• EO 14372 limits buybacks, dividends and executive pay for underperformers, and the Senate FY2027 bill would codify it.
• Buybacks and dividends at four large primes fell 36 percent year over year in Q1 2026.
• The CAS pension recovery is shrinking unevenly across the primes.

What it means for CAS: Program delivery data and finance data need to connect, because remediation plans and incentive pay will be judged on delivery. Pension recovery under CAS 412 and 413 is a smaller cash source than in prior years for some primes.

Confidence: Moderate. The DFARS clause has not been published.

T8. The entry path widens for new and growing firms

• Sec. 1826 exempts nontraditional defense contractors from TINA, FAR Part 31 and the business system clauses.
• Record defense tech venture funding in 2025 and large Army enterprise agreements with Palantir and Anduril.
• SBA's proposed size standards would make about 37,000 firms small again.

What it means for CAS: More defense work is performed by firms that do not enter CAS. Primes will buy more from suppliers outside CAS, which puts more weight on the prime's own cost and price analysis.

Confidence: High on direction; moderate on how often agencies use waivers to pull firms back in.

T9. Compliance becomes a data and systems question

• Coverage is now tested at the order for multiple-award vehicles and by portion of a contract for exempt work.
• Surveys show wide AI use in GovCon finance (Deltek Clarity: 90 percent; Unanet GAUGE: 70 percent), with few mature programs (5 percent 'fully developed' in Clarity).
• DCAA has automated its incurred cost adequacy checks, per advisor reports.

What it means for CAS: Coverage status, certified data status and nontraditional status need to live as attributes in the contract and project records, and the calculations behind rates and estimates need to be traceable in the system of record.

Confidence: High.

5. Outlook: 2026 to 2029

Our expectations through 2029, the scenarios around them, and the signposts that would change our view.

Likelihood is our judgment. High means we would plan on it, Moderate means we would prepare for it, and Low means we would watch it.

What we expect, and when

Scenarios

Signposts to watch

• CAS Board. Federal Register activity on the cost impact case, CAS 415 and 416, and the CAS 412 and 413 advance notice.
• FY2027 NDAA conference. House Secs. 804, 805 and 808 and Senate Sec. 815, as numbered in the chamber bills.
• Appropriations. What follows the December 11, 2026 continuing resolution, and the supplemental.
• Midterm elections, November 3, 2026. Committee leadership and oversight priorities for the 120th Congress.
• DFARS. A clause implementing EO 14372, and formal rules for the $10 million TINA threshold and Sec. 1826.
• DCAA. The FY2026 Report to Congress, expected in spring 2027, and the pace of hub consolidation.
• DOJ. The first procurement resolutions from the National Fraud Enforcement Division.
• SBA. The final size standards rule and the outcome of the 8(a) terminations.
• DoD's CAS-to-GAAP review. Requested in the FY2026 NDAA joint explanatory statement and not yet published, as far as we can find.

6. Impact by Contractor Size

How the trends land on small businesses, mid-tier contractors and large primes, and where we would start in each.

In this paper, small businesses are firms that qualify as small for their primary NAICS code. Mid-tier contractors are other-than-small firms whose business units typically hold individual awards between $10 million and $100 million. Large primes have business units with $100 million or more of annual CAS-covered awards.

Exposure by trend and segment

Levels are our judgment. High: significant new exposure or cost. Moderate: a manageable change. Low: little direct effect. Opening: a net benefit for firms that act on it.

Small businesses

• CAS: Exempt at any value
• TINA: $10M DoD; $2.5M civilian
• Net: Lighter rules, more pricing risk

Contracts with small businesses are exempt from CAS at any value, and the 2026 rule leaves that exemption in place. The changes that matter to small firms are in contract type, eligibility and what happens when they grow.

What changes

• Graduation is less abrupt for CAS. A firm that outgrows small status can win awards under $35 million without CAS, since the $7.5 million trigger contract is gone.
• Fixed-price becomes the default, so time-and-materials and cost-type services convert to fixed-price or outcome pricing, fastest at civilian agencies.
• Certified cost or pricing data starts at $10 million on new DoD work, which removes most small-business submissions.
• Eligibility is less stable: more than 1,000 8(a) firms suspended, a 5 percent small disadvantaged business goal, and discretionary set-asides on orders under multiple-award contracts.
• SBA's size standards proposal would make about 37,000 firms small again, adding competitors inside the small pool and runway for firms near the cap.

Where the exposure sits

• Fixed-price losses where indirect rates are not forecast well or estimates are thin.
• FAR Part 31 and incurred cost submissions still apply to cost-type work, and a DCAA pre-award accounting system review still gates it.
• False Claims Act exposure on cybersecurity (CMMC) and on size or socioeconomic certifications.
• Set-aside revenue loses value in a sale under SBA's January 2026 recertification rules.

Where the opening is

• SBIR and STTR are reauthorized through 2031, with new Phase II awards up to $30 million.
• Nontraditional status and Commercial Solutions Openings open DoD work without TINA or Part 31.
• Subcontract demand from munitions, shipbuilding and missile defense programs.

What we would do

1. Keep a DCAA-ready accounting system. Adequacy for cost-type awards still depends on the DFARS accounting system criteria, whether or not CAS applies.
2. Price fixed-price work from actuals. Forecast indirect rates, track estimate to actual by job, and keep pricing files that would support a request for other-than-certified data.
3. Plan the graduation. Model when the firm leaves small status under current and proposed size standards, and which awards would cross $10 million and $35 million.
4. Treat certifications as controls. Cybersecurity, size and socioeconomic certifications carry FCA exposure.

Mid-tier contractors

• CAS: Largely exempt or modified
• DS-1: Segments at $100M only
• Net: Largest relief, most decisions

Mid-tier business units see the biggest change. Awards under $35 million are exempt, awards of $35 million or more bring modified coverage at units below the $100 million prior-period test, and the Disclosure Statement attaches only to segments that meet the $100 million test.

What changes

• Units under full coverage only because of the old $50 million test can move to modified coverage at their next cost accounting period starting on or after October 1, 2026, if they have no unresolved noncompliances.
• Multiple-award vehicles are tested at each order. Single-award vehicles are tested at award on the ceiling value, which can bring small orders under CAS.
• Contracts from $10 million to $35 million need certified cost or pricing data without CAS.
• The DFARS business system clause and its withholds apply to CAS-covered contracts, so fewer contracts carry withhold exposure.
• Private equity roll-ups combine segments with different practices, and CAS 404-50(d)(1), now in CAS 405, still limits asset write-ups after a combination.

Where the exposure sits

• Treating the threshold change as permission to relax cost discipline, when defective pricing exposure sits on the $10 million to $35 million band.
• Staying on full coverage by default because an old noncompliance was not closed.
• Changing practices without assessing contracts that remain covered, which still follow the cost impact process.
• Fixed-price conversion of services at civilian agencies, where the approval threshold is $10 million.

Where the opening is

• Lower compliance cost and fewer Disclosure Statement revisions.
• Nontraditional status stays available until a unit performs a full-coverage DoD contract, now a $100 million test.
• Growth as suppliers to primes on munitions and shipbuilding, and as fixed-price service providers.

What we would do

1. Re-run applicability by unit, contract and order. Include the indefinite delivery tests and the portion-of-contract exemptions.
2. Decide on the off-ramp. Close open noncompliances with the cognizant federal agency official before the next cost accounting period begins.
3. Keep one set of practices. Hold estimating and accounting consistent even where CAS no longer requires it, since that consistency defends a certification.
4. Strengthen estimating. Certified data between $10 million and $35 million now rests on the estimating system without CAS behind it.
5. Weigh nontraditional status. For DoD pursuits, compare the value of the Sec. 1826 exemptions with the cost of staying outside full coverage.

Large primes

• CAS: Full coverage retained
• Dollars: Over 99% stay covered
• Net: Some relief, more margin pressure

The large primes keep full coverage where the dollars are. Their relief comes from GAAP conformance and the amended cost impact statute; their pressure comes from contract type, cash and enforcement.

What changes

• Five standards are gone, which removes reconciliations for capitalization, standard costs, compensated absences, depreciation and material costing, subject to the provisions moved into CAS 405 and 418.
• Disclosure Statements attach to segments that meet the $100 million test, which can relieve smaller segments of large companies.
• Once the Board implements the amended 41 U.S.C. 1503, fixed-price work no longer counts in aggregate increased costs for accounting changes.
• Munitions multiyears and large undefinitized actions require certified cost or pricing data at definitization, and contractor-funded capacity runs through depreciation and cost of money.
• EO 14372 ties buybacks, dividends and executive incentive pay to delivery for identified underperformers.

Where the exposure sits

• Defective pricing and billing cases, which DOJ now lists as priorities.
• Accounting agreements with contracting officers that are not documented as advance agreements (Pratt & Whitney).
• Penalties on expressly unallowable costs in incurred cost proposals (Raytheon).
• Suppliers leaving CAS and TINA coverage, which puts more cost and price analysis on the prime's purchasing system.

Where the opening is

• Simpler books where GAAP and CAS now agree.
• Lower cost impact exposure on accounting changes once the Board implements the statute.
• Rising volume on munitions, missile defense and shipbuilding.

What we would do

1. Rebaseline Disclosure Statements. Update for the rescinded standards and the segment-level threshold, and decide practice by practice what to change, since only the CAS 408 conformance changes are exempt from price adjustment.
2. Inventory agreements. Re-paper informal accounting agreements as FAR 31.109 advance agreements.
3. Build definitization capability. Price undefinitized actions and multiyears with certified data sweeps and traceable estimates.
4. Re-paper the supply chain. Update subcontract CAS and TINA flowdowns, and strengthen cost and price analysis for suppliers outside CAS.
5. Connect delivery and finance data. Remediation plans and incentive pay under EO 14372 will be judged on delivery.

7. What We Would Recommend

Actions we would take now, the systems work behind them, and a 90-day plan by segment.

Across all contractors

1. Re-run CAS applicability as of October 1, 2026. By business unit, contract, order and portion of contract.
2. Close open noncompliances. They block the off-ramp to modified coverage and carry into any FCA review.
3. Keep estimating and accounting consistent. Whether or not CAS applies, consistency supports certified data and allowability.
4. Build pricing capability for fixed-price work. Indirect rate forecasting, basis-of-estimate evidence and should-cost support.
5. Formalize agreements. Document accounting agreements as FAR 31.109 advance agreements.
6. Re-paper flowdowns. Update subcontract CAS and TINA clauses for the new thresholds and for nontraditional suppliers.
7. Tighten certification controls. Certified data sweeps, cybersecurity, size and socioeconomic representations, and tariff refunds on cost-type contracts.
8. Follow and comment on the Board's rulemaking. The cost impact case, CAS 415 and 416, and the pension advance notice.

Section 8 turns these actions into ERP design takeaways, with the SAP S/4HANA objects we would use.

A 90-day plan

8. Top 10 ERP Design Takeaways

What the CAS outlook means for ERP design, and the SAP S/4HANA objects we would use.

Each takeaway ties a forecast from Section 5 to a design choice, and Figure 4 shows where each one lands in the ERP flow. The SAP S/4HANA references reflect the Aerospace and Defense environments we support; the same principles apply to Deltek Costpoint, Unanet or Oracle.

The takeaways at a glance

Figure 4. Where the takeaways land in an ERP design. Numbers refer to the takeaways in Section 8.

01. Hold CAS, TINA and commercial status as data on contracts, orders and subcontracts

Forecast behind it: From October 1, 2026, CAS is tested at the contract, at each order under a multiple-award vehicle, on the ceiling of a single-award vehicle, and by portion of a contract for commercial or competitive fixed-price work. We expect those tests to hold through 2029 (T1, T9).

Design:

• Carry coverage (full, modified or exempt), the exemption reason, TINA status and threshold regime, commercial determination, nontraditional status and contract type as attributes on the contract, line item and order.
• Derive the same attributes onto each cost object, so postings, allocations and reports inherit them.
• Mirror them on subcontracts and purchase orders, with the flowdown clause set driven by the thresholds and an alert when a modification crosses $10 million or $35 million.

In SAP S/4HANA: Custom fields on the sales contract and order, or on the Dassian contract, CLIN and flowdown clause library; carried to the WBS element through CI_PRPS and to journal entries through a coding block extension; supplier and purchasing document fields for the subcontract side.

Matters most for: Mid-tier and large contractors, and small businesses taking on cost-type work as they grow.

02. Map the ERP organization to CAS business units and segments

Forecast behind it: Full coverage and the Disclosure Statement now attach to the segment that meets the $100 million test, and the off-ramp to modified coverage is decided by business unit (T1).

Design:

• Define which company codes, profit centers or segments make up each CAS business unit and segment, and hold that mapping under change control.
• Report net CAS-covered awards by segment for each cost accounting period, so the $100 million test and the off-ramp run from system data.
• Model home office and intermediate home office allocations (CAS 403) explicitly, since acquisitions and roll-ups change them.

In SAP S/4HANA: Company code, profit center and segment design; a CDS view that sums covered awards by segment and period; allocation cycles for home office expense.

Matters most for: Mid-tier and large contractors, and firms making acquisitions.

03. Run one set of cost accounting practices for estimates, actuals and billing

Forecast behind it: As CAS coverage narrows, TINA and the False Claims Act remain. Consistency between how a firm estimates and how it accumulates cost is the evidence that defends a certification (T3, T5).

Design:

• Use the same pools, allocation bases and cost element groups in plan versions, forward pricing, actuals and billing.
• Keep rate logic inside the ERP. Spreadsheets can analyze rates, but the calculation of record should sit in the system.
• When a unit leaves full coverage, keep its disclosed practices unless there is a business reason to change them.

In SAP S/4HANA: Costing sheets or the Dassian overhead engine applied to plan and actual; the same allocation cycles run in plan and actual versions; billing rates held with validity periods.

Matters most for: All contractors, and mid-tier units moving out of CAS in particular.

04. Make the indirect rate forecast a system process

Forecast behind it: Fixed-price is now the default, multiyear and undefinitized awards are growing, and DCAA's return is highest on forward pricing (T3, T4, T6).

Design:

• Hold multi-year plan versions for each pool and base, with scenarios for volume changes such as a lost or added program.
• Track actual, provisional billing and forecast rates side by side, with an approved version history.
• Feed bids and forward pricing rate proposals from the same forecast.

In SAP S/4HANA: Plan data in ACDOCP; SAP Profitability and Performance Management (PaPM) or the Dassian forward rate engine for rate modeling; planned overhead through the costing sheet.

Matters most for: All contractors: small firms pricing fixed-price work, and large primes pricing multiyears.

05. Tie estimates to cost history and freeze certified data at cutoff

Forecast behind it: Certified cost or pricing data still applies from $10 million on DoD work, undefinitized actions need it at definitization, and DOJ lists defective pricing as a priority. The House FY2027 NDAA would make late submission of cost data no defense to a price reduction (T5, T6).

Design:

• Link each basis of estimate to the cost history behind it: hours, rates, material and subcontract prices by WBS element.
• Snapshot the data known at the certification date, and run a sweep that compares it with later actuals and quotes.
• Keep estimate versions and approvals with the proposal record.

In SAP S/4HANA: An estimating tool, standalone or ERP-native, that reads actuals from the Universal Journal (ACDOCA) and writes versioned estimates to plan versions; document management for the cutoff record.

Matters most for: Mid-tier and large contractors with sole-source or undefinitized work.

06. Segregate unallowable costs at the point of posting

Forecast behind it: CAS 405 applies under modified coverage and now holds provisions moved from 404 and 409. The ASBCA upheld penalties for expressly unallowable costs in 2026, and the share of DCAA incurred cost findings sustained rose to 42.6 percent (T4, T5).

Design:

• Flag unallowable and expressly unallowable costs by account and at the transaction, with derivation rules and a reviewer workflow.
• Build the incurred cost submission schedules from ERP data, with the exclusions visible.
• Keep the trail from the invoice or expense report to the schedule line.

In SAP S/4HANA: Dedicated unallowable G/L accounts or a journal entry field, with substitution and validation rules; CDS views that produce the incurred cost schedules.

Matters most for: All contractors with cost-type work.

07. Build cost impact simulation into accounting change control

Forecast behind it: The CAS Board plans to move cost impact from FAR 30.6 into CAS, which we expect to see proposed in 2027, applying a statute that leaves fixed-price work out of aggregate increased costs. Practice changes after the 404, 409 and 411 rescissions go through that process (T2).

Design:

• Treat a change to a disclosed practice (pool, base, capitalization, depreciation, standard cost) as a controlled change with a Disclosure Statement reference.
• Re-run allocations under the old and new practice in a simulation version, and summarize the difference by contract type, since fixed-price and flexibly priced work are treated differently.
• Keep the old practice's results for the general dollar magnitude and detailed cost impact proposals.

In SAP S/4HANA: Allocation and costing sheet changes moved through transports with change documents; simulation in a separate version; contract type held on the WBS element.

Matters most for: Large primes, and mid-tier units that stay on modified coverage.

08. Retire CAS-only books where GAAP now governs

Forecast behind it: CAS 404, 407, 408, 409 and 411 are rescinded, and we expect further conformance on 415 and 416 (T2).

Design:

• Inventory ledgers, depreciation areas, accruals and variance rules kept only for the rescinded standards, and retire them where GAAP and the FAR 31.205 cost principles now govern.
• Keep the provisions the Board moved into CAS 405 (the asset write-up limit after a business combination and parts of 409-50) and into CAS 418 (standard cost variances at the production unit).
• Assess the cost impact before changing a practice on covered contracts.

In SAP S/4HANA: Asset Accounting depreciation areas, compensated absence accruals, and standard cost and Material Ledger variance settlement.

Matters most for: Large primes, and mid-tier units leaving full coverage.

09. Join delivery performance to cost

Forecast behind it: EO 14372 ties buybacks, dividends and executive incentive pay to on-time delivery for underperformers, and the Senate FY2027 bill would codify it (T7).

Design:

• Hold schedule, delivery and estimate-at-completion measures in the same data model as cost and revenue.
• Report performance by contract and program in the form a remediation plan would use.
• Keep earned value, material management and delivery records consistent with the finance view.

In SAP S/4HANA: Project System with Dassian PPC for earned value; deliveries and DD250 records from sales and logistics; CDS views joining both to the Universal Journal.

Matters most for: Large primes and major-system suppliers.

10. Keep audited calculations reproducible in the system of record, with AI on top

Forecast behind it: Oversight is smaller, centralized and faster, DCAA has automated its adequacy checks, and AI use in GovCon finance is wide but immature (T4, T9).

Design:

• Produce audit packages (rate build-ups, labor distribution, incurred cost schedules) from governed ERP data with lineage, so a request can be answered in days.
• Use AI to draft forecasts, variance explanations and audit responses, with each figure traceable to a calculation an auditor can re-run.
• Keep role-based access, change logs and retention aligned with audit rights.

In SAP S/4HANA: CDS-based data products; timekeeping controls in CATS; AI assistants, SAP Joule or others, reading governed data; document retention.

Matters most for: All contractors.

RevTech perspective. Our view is that the 2026 changes favor contractors whose systems can show, at the contract and order level, which rules apply and why. We would recommend holding coverage status and pricing evidence as data in the ERP, with a named owner, in place of a spreadsheet maintained at year end.

Appendix: Thresholds, Terms and Sources

Reference thresholds, the terms used in this paper, and the sources behind the figures.

Key thresholds

Terms used in this paper

Sources

Primary sources are listed first in each group. Secondary sources (law firm, advisory and press summaries) were used where a primary text was not available, and the body notes where a figure rests on one of them. Dates are publication dates.

Statute and regulation

• FY2026 NDAA, P.L. 119-60 (Dec 18, 2025); 41 U.S.C. 1501 to 1503 and 10 U.S.C. 3702, uscode.house.gov.
• CAS Board final rule, Increase of Monetary Thresholds, FR Doc. 2026-17901 (Sep 1, 2026), effective Oct 1, 2026.
• CAS Board final rule, CAS 407, FR Doc. 2026-17903 (Sep 1, 2026), effective Oct 1, 2026.
• CAS Board final rule, Conformance of CAS to GAAP (CAS 404, 408, 409, 411), FR Doc. 2026-13764 (Jul 8, 2026), effective Aug 7, 2026.
• CAS Board proposed rules and agendas: FR Docs. 2025-00012 (Jan 17, 2025), 2025-12292 (Jul 2, 2025), 2025-17472 and 2025-17480 (Sep 11, 2025), 2026-05511, 2026-05512 and 2026-05513 (Mar 20, 2026).
• FAR inflation adjustment, FAC 2025-06, FR Doc. 2025-16412 (Aug 27, 2025).
• FAR Overhaul proposed rules, FR Docs. 2026-12559 to 2026-12562 (Jun 23, 2026); acquisition.gov FAR Overhaul Part 30 page (updated Jul 28, 2026).
• DPC DFARS Overhaul class deviations (2026-O0006, -O0032, -O0038, -O0045, -O0048, -O0050).

Executive orders and policy

• Executive Orders 14222 (Feb 26, 2025), 14240 (Mar 20, 2025), 14265 (Apr 9, 2025), 14271 and 14275 (Apr 15, 2025), 14347 (Sep 5, 2025), 14372 (Jan 7, 2026) and 14402 (Apr 30, 2026).
• Secretary of War memo, Transforming the Defense Acquisition System into the Warfighting Acquisition System (Nov 7, 2025).
• FAR Council guidance implementing EO 14402 (May 6, 2026).

Oversight and enforcement

• DCAA and DCMA FY2026 Operation and Maintenance budget justifications (Jun 2025).
• GAO-25-107558 (May 19, 2025); GAO-26-108100 (May 29, 2026); GAO-25-107546 (Sep 2025).
• DOJ, False Claims Act FY2025 statistics (Jan 16, 2026), and settlement releases cited in the text.
• Sec'y of Defense v. Pratt & Whitney, 160 F.4th 1224 (Fed. Cir. Dec 5, 2025); Textron Aviation Defense v. U.S., No. 23-1042 (Fed. Cir. Apr 3, 2025).
• HKA, DCAA Annual Report FY2025 summary (Jun 4, 2026); Redstone GCI (Dec 5, 2025; Apr 22, 2026); PilieroMazza (Feb 10, 2026); Mayer Brown (Aug 18, 2026); Bloomberg Law (Jun 25, 2026).

Budget, market and industry

• CRS R48891 (Apr 2, 2026); CRS IN12700; CRS LSB11398; CRFB (Sep 3, 2026); CSIS (Apr 10 and Aug 18, 2026).
• Company filings and releases: Boeing (Jan 27, 2026), Lockheed Martin (Jan 29, Jul 23 and Jul 29, 2026), Northrop Grumman (Apr 21, 2026), RTX (Jul 23, 2026), General Dynamics (Jul 29, 2026).
• SBA releases (Jun 11 and Jun 25, 2026); Holland & Knight (Aug 20, 2026); Crowell & Moring (Apr 14, 2026).
• Defense News (Jan 20, 2026); Stout (Jan 28, 2026); Breaking Defense (Feb 5, Jun and Jul 22, 2026); Washington Technology (May 26, 2026).
• Deltek Clarity 2026 (GovConWire, May 13, 2026); Unanet and CohnReznick GAUGE 2026 (Jun 16, 2026).

Commentary and analysis

• Covington, Inside Government Contracts (Dec 15, 2025; Jul 31 and Sep 1, 2026); Crowell & Moring (Dec 23, 2025); Hunton (Sep 2, 2026); McCarter & English (Jan 13 and Sep 8, 2026); Wiley (Nov 2025; Aug 28, 2026); WilmerHale (Nov 11, 2025); Forvis Mazars (Feb 11, 2026); BDO (Feb 13, 2026); War on the Rocks (Jul 16, 2026).

---

Disclaimer. This paper reflects the perspective of Revelation Technologies as of September 2026 and draws on public sources available at that date. It is not legal, tax or accounting advice. Thresholds, rules and effective dates cited here should be confirmed against the current statute, 48 CFR Chapter 99, the FAR and DFARS, and with counsel and the cognizant federal agency official before a decision is made. Forecasts are our judgment and will move as the environment does.