# Department of War Proposes Federal Contract Accounting Reforms

The Department of War (DOW) issued a memorandum on September 14, 2026, outlining proposed reforms to federal contract accounting standards. Key changes include prioritizing Generally Accepted Accounting Principles (GAAP) over Cost Accounting Standards (CAS), streamlining the applicability of CAS, simplifying business system reviews, and revising profit negotiation criteria. While some reforms can be implemented immediately, full adoption depends on approval by the Cost Accounting Standards Board and may require congressional action. These developments present both near-term compliance challenges and strategic opportunities for contractors engaged in federal contracts.

- Contractors should evaluate current accounting practices against the proposed GAAP prioritization and prepare for potential shifts in audit and compliance requirements.
- Procurement professionals need to anticipate changes in contract negotiation and profit determination processes influenced by the revised standards.
- Organizations can leverage waiver provisions and early implementation opportunities to align with evolving DOW policies.
- Monitoring CAS Board decisions and congressional actions will be critical for timely adaptation to the new federal contract accounting framework.

**Jurisdictions:** federal
**Industries:** Professional Services
**Topics:** Regulatory Compliance
**Published:** September 22, 2026

### Government Entities
- Department of War (DOW)
- Cost Accounting Standards Board (CAS Board)

### Key Quotes
> We expect strong demand for streamlined contract accounting compliance under the new memo.
> — Steve Feinberg, Deputy Secretary of War

### Sources
- [
	Dentons - Rock the CAS Board: DOW Memo Sets Up a Clash Between CAS and GAAP Accounting for Federal Contracts
](https://www.dentons.com/en/insights/alerts/2026/september/22/rock-the-cas-board-dow-memo-sets-up-a-clash) - Dentons