The House Armed Services Committee has released a draft of the NDAA that would change two critical areas of government contracting: Bid protests and the cost accounting standards. First, the HASC proposes to sanction incumbent contractors who file supposedly meritless GAO protests. Second, its draft raises the dollar thresholds for applying the Cost Accounting Standards, changes the membership of the CAS Board, and directs DoD to consider options for streamlining CAS.

The proposals were part of the HASC chairman’s 2026 NDAA mark-up, which was released by the press on Sunday, and while the committee will likely continue to revise the draft bill, they shed light on the committee’s current thinking. Below, we summarize both proposed changes.

1. A New Government Claim for Disgorgement to Discourage Incumbent Protests

Section 816 of the draft would require incumbent protesters to disgorge profits or fees on a DoD bridge contract after a GAO protest, if GAO dismissed the case in a final decision finding it lacked a “reasonable legal or factual basis.” To obtain disgorgement, the government would file a claim on a “covered contract,” which is defined as a “contract with the Department of Defense entered into with the incumbent contractor for the acquisition of goods or services by the Department during the disgorgement period that are the same or substantially similar to goods or services to be acquired by the Department under the contract previously awarded to the incumbent contractor.”

In turn, the “disgorgement period” is “the period of performance under a contract that was awarded or extended because the Department of Defense received notice of a protest by the incumbent contractor and was prohibited from awarding a new contract during the pendency of such bid protest under section 3553(c) of title 31, United States Code.” Section 3553(c) provides for an automatic stay of contract award after a protest, which is one of the key remedies available at GAO.

Reading the definitions together, the draft contemplates that the government could file claims for disgorgement from an incumbent on a bridge contract that was awarded “because of” the automatic stay in a GAO protest.

The draft also sets out a process for the government to claim disgorgement, explaining that the government would need to follow the claim procedures in the Contract Disputes Act, 41 U.S.C. §§ 7101-7109 (CDA). The CDA permits contractors to appeal DoD claims to the Armed Services Board of Contract Appeals or Court of Federal Claims. Contractors could thus dispute whether the government’s claim meets the disgorgement criteria and whether a bridge contract was indeed awarded “because” of a protest. In a notable omission, the draft makes no comment on how the government would quantify profit or fee, which could be a key point for disputes.

2. New CAS Coverage Thresholds, Streamlining, and CAS Board Membership Rules

Next, Section 1824 of the draft bill makes several changes to CAS. To start, it would amend the dollar thresholds for applying CAS, narrowing the universe of CAS-covered contracts.

To understand the new proposed dollar thresholds, it is important to understand the current ones. CAS is a set of 19 accounting standards plus accounting administration rules. At present, assuming no subject matter exemption applies (e.g., commercial, small business, etc.), a contractor’s first award for $7.5 million or more is subject to CAS. CAS 9903.201-1(b). Any further non-exempt award for $2 million or more is also covered, so long as the contractor is performing CAS-covered awards of at least $7.5 million at the time of award. As a baseline, an award below $50 million is subject to “modified” CAS, meaning only 4 of the 19 accounting principles; contracts in excess of $50 million are subject to “full” CAS, i.e., all 19 principles. CAS 9903.201-2(a)-(b). And, when a contractor has had $50 million in net CAS-covered awards in its preceding cost accounting period, the contractor’s next CAS-covered award is subject to full CAS, even if that next award is for less than $50 million. Id.

The draft bill would effectively replace the $7.5 million and $2 million thresholds in CAS with just one threshold of $10 million, amending the “mandatory” minimum dollar values in 41 U.S.C. § 1502(b)(1). Further, it would double the full CAS threshold from $50 million to $100 million, directing the Administrator for Federal Procurement Policy to revise CAS 9903.201-2 to that end. Collectively, these new thresholds would likely reduce the number of awards subject to CAS. The bill’s preamble explains that these changes would help to account for “economic factors,” which is presumably a reference to inflation, since the CAS thresholds were last updated in June of 2000. See 65 Fed. Reg. 36768 (June 9, 2000).

In addition, the draft legislation directs the Secretary of Defense to “identify actions necessary to streamline requirements for compliance with the cost accounting standards” and specifically to “reduce or eliminate such requirements” in certain cases where “reliance on a similar requirement under generally accepted accounting principles (GAAP)” could apply instead. This part of the draft is consistent with other proposed legislation contemplating a similar effort, and the CAS Board is already considering options for making CAS more efficient. For example, according to a July 2, 2025 notice of agenda, the CAS Board is considering whether to raise the CAS thresholds and what steps it can take to conform CAS to generally accepted accounting principles. See 90 Fed. Reg. 29048 (July 2, 2025).

Finally, starting in 2028, the bill would prohibit an “individual who is a member of an audit entity of an executive agency (excluding an audit entity of the Government Accountability Office)” from serving on the CAS Board. Among other changes to the CAS Board, the bill would also provide for a senior employee or retired employee of a government contractor with substantial experience with CAS-covered contracts to be a voting member of the Board. The changes thus tend to emphasize industry input, which could help the Board to assess the practical impact of CAS on contractors going forward.

Contractors should be mindful of all these potential changes and consider the impacts in advance. While the HASC’s draft is likely to evolve over time, the current proposals shed light on the committee’s preferences and concerns. Dentons will continue to monitor federal contracting developments in these areas.