Today, the Office of Federal Procurement Policy, Cost Accounting Standards (CAS) Board (Board), issued a Notice of Proposed Rule, published in 75 Fed. Reg. 64684, to eliminate the exemption from CAS for contracts and subcontracts executed and performed entirely outside the United States, its territories and possessions (the "overseas exemption" at 48 CFR 9903.201-1(b)(14)).

After reviewing the exemption's history and background, and the public comments it received in response to a 2009 Notice of Request for Information (RFI) regarding the continued appropriateness of the overseas exemption, the Board has proposed to eliminate the exemption for the following reasons:

  • The statutory basis that was used to justify the exemption when it was first promulgated no longer exists;
  • There is no accounting basis for the exemption, as the place of contract execution and performance is not germane to fundamental principles and methods used to account for the costs of contract performance, and the exemption does not help to achieve consistency and uniformity in cost accounting practices used to measure, assign and allocate costs to Government contracts, the primary objective of CAS; and
  • Based on the data submitted in response to the 2009 RFI, the Board projects the volume of affected contractors and subcontractors to be relatively small.

Comments on the proposed rule should be submitted on or before December 20, 2010.