Cost Accounting Standards Board rules apply to which type of contracts?

The correct answer highlights that the Cost Accounting Standards Board (CASB) rules apply to negotiated contracts and subcontracts. This is because the Cost Accounting Standards were established to promote consistency and uniformity in the cost accounting practices used by government contractors, particularly those engaged in negotiated procurements.

Negotiated contracts typically involve a degree of discussion and agreement on the terms and pricing between the contractor and the government, as opposed to fixed-price contracts, which have predetermined prices. Because of this negotiation process, there is a greater need for standardized cost accounting practices to ensure that costs are allocated properly and that the government is paying a fair price for goods or services.

Certain thresholds also determine the applicability of CAS, with negotiated contracts exceeding $2 million generally being within the purview of CAS. Firm-fixed-price contracts, while they may be subject to some federal acquisition regulations, do not specifically invoke the same requirements as negotiated contracts. Therefore, the broader category of negotiated contracts and subcontracts is the focus of CAS regulations.

Casual references to fixed-price contracts may mislead one to think they are applicable under CAS, but because these contracts have less variability and complexity in pricing arrangements, the necessity for detailed cost accounting standards is less significant. By focusing on negotiated contracts,