# DoD Overhauls Contractor Accounting Standards

The Department of Defense (DoD) and Department of War (DoW) are implementing a significant overhaul of defense contractor accounting and compliance requirements, led by Deputy Secretary Steve Feinberg. This reform replaces the government-unique Cost Accounting Standards (CAS) with Generally Accepted Accounting Principles (GAAP) to reduce regulatory burdens, expand competition, and accelerate weapons production. The policy emphasizes fixed-price contracts where market conditions exist, streamlines audits to focus on risk, and revises profit policies to reward value and risk management rather than cost alone. Implementation deadlines are set within the next 30 to 90 days, with phased adoption expected to simplify contractor engagement and align defense acquisition with private-sector practices. However, ongoing challenges include unclear guidance, uneven application across commands, and the need for contractors to adapt compliance and pricing strategies amid evolving rules.

- **Why this matters:** Procurement professionals should prepare for reduced accounting and audit burdens, enabling broader participation from commercial firms and startups.
- The shift to GAAP and fixed-price contracts signals a move toward market-driven pricing and streamlined oversight, impacting contract negotiation and risk management.
- Contractors must monitor forthcoming rulemakings and adjust business systems and profit models to align with new DoD policies.
- Organizations should anticipate transitional challenges due to implementation uncertainties and varying command-level adoption, requiring proactive communication and compliance planning.

**Jurisdictions:** federal
**Industries:** Defense & Military
**Topics:** Regulatory Compliance
**Published:** September 18, 2026

### Government Entities
- Department of Defense (DoD)
- Department of War (DOW)
- Cost Accounting Standards Board (CASB)
- Defense Contract Audit Agency (DCAA)
- Defense Contract Management Agency (DCMA)

### Key Quotes
> Our nation’s greatest strength is its private sector, and our defense industry must harness and mimic it – unleashing industry first, and protecting taxpayers by confining our most burdensome oversight tools to the narrow set of work that genuinely demands them.
> — Steve Feinberg, Deputy Secretary of War

> Where there is a market -- competition, comparable sales, reliable price history -- the market sets the price. Where there is no market - major sole-source development and procurement - we will rely on cost data drawn from a company's existing records.
> — Steven Feinberg, Deputy Defense Secretary

> By making GAAP the baseline and reserving government-unique requirements for situations where they are truly necessary, the department can reduce unnecessary compliance costs, lower barriers to entry and make it easier for commercial companies to do business with the department.
> — Rich Brady, Chief Executive Officer, Society of Defense Financial Management

### Sources
- [U.S. Department of War orders defense procurement overhaul to cut contractor costs, widen competition and speed weapons production](https://defence-industry.eu/u-s-department-of-war-orders-defense-procurement-overhaul-to-cut-contractor-costs-widen-competition-and-speed-weapons-production) - Defence Industry Europe
- [Military acquisition professionals: What should the public know about the defense budget?](https://www.reddit.com/r/1102/comments/1wh2abf/military_acquisition_professionals_what_should) - reddit-1102
- [Pentagon Memo Seeks to Eliminate Industrial Base Barriers](https://www.executivegov.com/articles/war-department-memo-industrial-base-accounting-reform) - ExecutiveGov