Federal Register / Vol. 90, No. 11 / Friday, January 17, 2025 / Proposed Rules 5803 

250.102–1–70 [Amended] 

■ 34. Amend section 250.102–1–70 in 

paragraph (b)(1), by removing ‘‘$75,000’’ 

and adding ‘‘$95,000’’ in its place. 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 35. Amend section 252.204–7007— 

■ a. By revising the provision date; and 

■ b. In paragraph (d)(1)(v), by removing 

‘‘$150,000’’ and adding ‘‘$200,000’’ in 

its place. 

The revision reads as follows: 

252.204–7007 Alternate A, Annual 

Representations and Certifications. 

* * * * * 

Alternate A, Annual Representations 

and Certifications (Date) 

* * * * * 

■ 36. Amend section 252.215–7016 by— 

■ a. Revising the provision date; and 

■ b. Revising and republishing 

paragraph (b). 

The revisions and republication read 

as follows: 

252.215–7016 Notification to Offerors— 

Postaward Debriefings. 

* * * * * 

Notification to Offerors—Postaward 

Debriefings (Date) 

* * * * * 

(b) Postaward debriefing.(1) Upon 

timely request, the Government will 

provide a written or oral postaward 

debriefing to successful or unsuccessful 

offerors for contract awards valued at 

$15 million or more, while protecting 

the confidential and proprietary 

information of other offerors. The 

request is considered timely if received 

within 3 days of notification of contract 

award. 

(2) When required, the minimum 

postaward debriefing information will 

include the following: 

(i) For contracts in excess of $15 

million and not in excess of $150 

million with a small business or 

nontraditional defense contractor, an 

option for the small business or 

nontraditional defense contractor to 

request disclosure of the agency’s 

written source selection decision 

document, redacted to protect the 

confidential and proprietary 

information of other offerors for the 

contract award. 

(ii) For contracts in excess of $150 

million, disclosure of the agency’s 

written source selection decision 

document, redacted to protect the 

confidential and proprietary 

information of other offerors for the 

contract award. 

(3) If a required postaward debriefing 

is provided— 

(i) The debriefed Offeror may submit 

additional written questions related to 

the debriefing not later than 2 business 

days after the date of the debriefing; 

(ii) The agency will respond in 

writing to timely submitted additional 

questions within 5 business days after 

receipt by the contracting officer; and 

(iii) The postaward debriefing will not 

be considered to be concluded until the 

later of— 

(A) The date that the postaward 

debriefing is delivered, orally or in 

writing; or 

(B) If additional written questions 

related to the debriefing are timely 

received, the date the agency delivers its 

written response. 

* * * * * 

■ 37. Amend section 252.216–7010— 

■ a. By revising the clause date; and 

■ b. In paragraph (a)(1), by removing 

‘‘$10 million’’ and adding ‘‘$15 million’’ 

in its place. 

The revision reads as follows: 

252.216–7010 Postaward Debriefings for 

Task Orders and Delivery Orders. 

* * * * * 

Postaward Debriefings For Task Orders 

and Delivery Orders (Date) 

* * * * * 

■ 38. Amend section 252.225–7003 by— 

■ a. Revising the provision date; and 

■ b. Revising and republishing 

paragraph (b). 

The revisions and republication read 

as follows: 

252.227–7003 Report of Intended 

Performance Outside the United States and 

Canada—Submission with Offer. 

* * * * * 

Report of Intended Performance Outside 

the United States and Canada— 

Submission With Offer (Date) 

* * * * * 

(b) The Offeror shall submit, with its 

offer, a report of intended performance 

outside the United States and Canada 

if— 

(1) The offer exceeds $20 million in 

value; and 

(2) The Offeror is aware that the 

Offeror or a first-tier subcontractor 

intends to perform any part of the 

contract outside the United States and 

Canada that— 

(i) Exceeds $950,000 in value; and 

(ii) Could be performed inside the 

United States or Canada. 

* * * * * 

[FR Doc. 2024–31570 Filed 1–16–25; 8:45 am] 

BILLING CODE 6001–FR–P 

OFFICE OF MANAGEMENT AND 

BUDGET 

Office of Federal Procurement Policy 

48 CFR Part 9904 

Conformance of the Cost Accounting 

Standards to Generally Accepted 

Accounting Principles for CAS 404 

Capitalization of Tangible Assets and 

CAS 411 Accounting for Acquisition 

Costs of Material 

AGENCY: Cost Accounting Standards 

Board, Office of Federal Procurement 

Policy, Office of Management and 

Budget. 

ACTION: Advanced notice of proposed 

rulemaking. 

SUMMARY: The Office of Federal 

Procurement Policy (OFPP), Cost 

Accounting Standards Board (CAS 

Board or the Board), is releasing this 

advanced notice of proposed 

rulemaking (ANPRM) to elicit public 

comments on proposed changes to the 

Cost Accounting Standards (CAS) on 

conformance to Generally Accepted 

Accounting Principles (GAAP) related 

to CAS 404, Capitalization of Tangible 

Assets, and CAS 411, Accounting for 

Acquisition Costs of Material, to GAAP. 

This ANPRM follows issuance of a Staff 

Discussion Paper 85 FR 58399 

(September 18, 2020). 

DATES: Comments must be in writing 

and must be received by March 18, 

2025. 

ADDRESSES: Submit comments to the 

Federal eRulemaking Portal: https://

www.regulations.gov. by searching for 

‘‘CASB 2020–1’’. Select the link 

‘‘Comment Now’’ that corresponds with 

‘‘CASB 2020–1’’. Follow the 

instructions provided on the ‘‘Comment 

Now’’ screen. Please include your name, 

company name (if any), and ‘‘CASB 

2020–1’’ on your attached document. If 

your comment cannot be submitted 

using https://www.regulations.gov, call 

or email the points of contact in the FOR

FURTHER INFORMATION CONTACT section of 

this document for alternate instructions. 

Comments received generally will be 

posted without change to https://

www.regulations.gov, including any 

personal and/or business confidential 

information provided. Public comments 

may be submitted as an individual, as 

an organization, or anonymously (see 

frequently asked questions at https://

www.regulations.gov/faq). To confirm 

receipt of your comment(s), please 

check https://www.regulations.gov, 

approximately two-to-three days after 

submission to verify posting. 


KHAMMOND on DSK9W7S144PROD with PROPOSALS
5804 Federal Register / Vol. 90, No. 11 / Friday, January 17, 2025 / Proposed Rules 

Privacy Act Statement: The CAS 

Board proposes the rule to elicit public 

views pursuant to 41 U.S.C. 1502. 

Submission of comments is voluntary. 

The information will be used to inform 

sound decision-making. Please note that 

all comments received in response to 

this document will generally be posted 

or released in their entirety, including 

any personal and business confidential 

information provided. Do not include 

any information you would not like to 

be made publicly available. 

Additionally, the OMB System of 

Records Notice, OMB Public Input 

System of Records, OMB/INPUT/01, 88 

FR 20913 (available at 

www.federalregister.gov/documents/ 

2023/04/07/2023-07452/privacy-act-of1974-system-of-records), includes a list 

of routine uses associated with the 

collection of this information. 

FOR FURTHER INFORMATION CONTACT: John 

L. McClung, Manager, Cost Accounting 

Standards Board (telephone: 202–881– 

9758; email: john.l.mcclung2@

omb.eop.gov). 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Office of Federal Procurement 

Policy (OFPP), Cost Accounting 

Standards Board (CAS Board), is 

releasing this Advanced Notice of 

Proposed Rulemaking (ANPRM) on the 

conformance of CAS 404, Capitalization 

of Tangible Assets, and CAS 411, CAS 

Accounting for Acquisition Costs of 

Material, to the Generally Accepted 

Accounting Principles (GAAP). In 

accordance with 41 U.S.C. 1502(c), the 

Board is required to consult with 

interested persons concerning the 

advantages, disadvantages, and 

improvements anticipated in the pricing 

and administration of Government 

contracts as a result of the adoption of 

a proposed Standard prior to the 

promulgation of any new or revised 

CAS. 

On September 18, 2020, the Board 

published a Staff Discussion Paper (85 

FR 58399) to solicit views with respect 

to the Board’s initial assessment of CAS 

404 and CAS 411 to conform them, 

where practicable, to GAAP. 

Respondents were invited to comment, 

among other things, on the differences 

identified between CAS and GAAP, the 

frequency and magnitude of issues 

identified with CAS non-compliances, 

and recommendations on any changes 

to the Standards to conform them to 

GAAP. 

This ANPRM reflects input from the 

public, as discussed below, as well as 

research accomplished by the Board in 

the respective subject areas. The Board 

used the side-by-side comparison of 

CAS and GAAP requirements set forth 

in the Staff Discussion Paper to identify 

any material differences. Unique CAS 

requirements were assessed for their 

necessity in protecting the interests of 

the Government or if the existing 

requirements in other CAS standards or 

requirements in other relevant rules 

may protect the interests of the 

Government. 

II. CAS 404 

A. Overview 

CAS 404 requires contractors, for the 

purposes of cost measurement, to 

establish and adhere to policies with 

respect to capitalization of the 

acquisition costs of tangible assets. CAS 

404 establishes criteria which the 

contractor’s policies and procedures 

should satisfy. CAS 404 was initially 

published February 27, 1973 at 38 FR 

5318. The preamble for the original 

publication of CAS 404 acknowledged 

that: 

Work preliminary to the development of 

this Standard was initiated as the result of 

recognition that the general subject of fixed 

asset accounting has been the source of 

continuing problems between contractors 

and the Government concerning equitable 

determinations of the costs attributable to 

performance of specific contracts. 

The Board ultimately decided after 

careful consideration of public 

comments that this standard would 

establish the beginning point for fixed 

assets and focus solely on the 

‘‘determination of the acquisition costs 

to be capitalized as opposed to those 

which are charged against revenues of 

the current period [as depreciation]’’. 

CAS 404 was modified in 1996 by the 

addition of CAS 404–50(d) to address 

issues relating to the treatment of gains 

or losses attributable to tangible capital 

assets subsequent to mergers or business 

combinations by government 

contractors. This added language 

requires tangible capital assets of an 

acquired company to be capitalized by 

the buyer at the seller’s net book value, 

if the assets generated cost on 

government contracts in the most recent 

cost accounting period prior to the 

business combination; otherwise, the 

assets, which did not generate cost on 

government contracts, may be assigned 

a portion of the purchase price of the 

acquired entity not to exceed their fair 

value. 

With the exception of the 

requirements added in 1996 by CAS 

404–50(d)(1), the principal need for the 

promulgation of the initial CAS 404 no 

longer exists. GAAP has been revised 

significantly with additional content 

since the original promulgation of CAS 

404 in 1974. 

Furthermore, as explained in greater 

detail in the response to public 

comments in subsection b., below, a 

comparison of CAS 404 with pertinent 

GAAP content revealed significant 

overlap and nearly completely 

equivalent requirements with the noted 

exception of CAS 404–50(d). For all 

other requirements in CAS 404, a 

comparable requirement exists in 

GAAP, FAR or other CAS Standard that 

would protect the Government’s 

interests and promote uniformity and 

consistency. The alignment is so close 

as to make CAS 404 nearly duplicative 

of GAAP in all cases except CAS 404– 

50(d)(1). Where such comparable 

requirements exist between CAS and 

GAAP, the CAS 404 requirement can be 

eliminated. 

In addition to the CAS 404–50(d) 

requirements for assets acquired 

through a business combination, there 

are two other potential differences 

between CAS and GAAP that require 

further consideration: (i) the CAS 

requirements for a minimum 

capitalization threshold, and (ii) written 

statements of accounting policies and 

practices. As described below in 

subsection b., the Board has 

provisionally concluded that reliance on 

GAAP would materially achieve 

uniformity and consistency necessary 

for Government contracting related to 

these two differences. 

In summary, the Board has 

provisionally concluded that CAS 404, 

with the exception of CAS 404–50(d)(1), 

has become unnecessary to protect the 

Government’s interests which may be 

achieved through reliance on GAAP and 

other CAS Standards. Therefore, the 

Board is considering a proposed rule 

that would eliminate CAS 404 and 

retain the requirements CAS 404– 

50(d)(1) by relocating them to 9904.418– 

50 and seeks comment on such action 

in this ANPRM. This action would be 

consistent with the Board’s guiding 

principles for conforming CAS to GAAP 

because it would eliminate CAS content 

to minimize the burden on contractors 

while protecting the interests of the 

Federal Government. Furthermore, the 

Board’s conclusion on CAS 404 would 

align with the guiding principles to rely 

on coverage in GAAP when it would 

materially achieve uniformity and 

consistency in cost accounting without 

bias or prejudice to either party, rely on 

other CAS Standards which may protect 

the Government’s interests, and 

eliminate CAS coverage no longer 

necessary. 


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Federal Register / Vol. 90, No. 11 / Friday, January 17, 2025 / Proposed Rules 5805 

B. Summary of Public Comments 

The Board received four sets of public 

comments to the SDP. These comments 

came from industry associations and 

companies. The Board appreciates the 

efforts of all parties that submitted 

comments and found the depth and 

breadth of the comments to be 

informative. Responses to specific 

comments for CAS 404 are as follows: 

1. Minimum capitalization threshold. 

The Board observed in the SDP that 

CAS prescribes a specific ceiling for a 

monetary capitalization threshold 

(currently not to exceed $5,000), and 

GAAP does not. 

Comment: Four respondents provided 

comments to this potential difference 

identified by the Board. All four stated 

that the conceptual framework of GAAP 

would provide reasonable limitations 

for selecting capitalization thresholds 

and consistently following them. Two 

respondents also observed additional 

FAR requirements and market forces 

that would curb unreasonably high 

thresholds and protect the government’s 

interests. 

Response: Although GAAP does not 

provide for a specific minimum 

capitalization threshold, the Board has 

provisionally determined that the 

competitive constraints, disclosure 

statement requirements, and retention of 

CAS 401, which requires contractors 

subject to CAS to consistently follow 

their disclosed practices, should 

adequately protect the governments 

interest in the absence of the current 

prescriptive capitalization threshold. 

The risk of variations in the 

capitalization threshold, given the 

constraints discuss further below, 

would generally only result in 

immaterial differences in the 

assignment of cost between cost 

accounting periods. 

2. Written statements of accounting 

policies and practices. The second 

potential difference the Board noted is 

the requirement to have a written policy 

for capitalization. GAAP does not 

explicitly require a written statement for 

capitalization policy; however, 

typically, written documentation would 

exist because it would be required as 

evidence of internal controls during 

audits of Sarbanes-Oxley compliance 

and of financial reporting. 

Comment: All respondents believed 

that written policies and procedures 

would exist absent the perspective 

requirement currently contained CAS. 

For example, in meeting the GAAP 

requirements, contractors maintain 

conventions and guidelines for the 

consistent treatment of the costs of 

acquiring tangible capital assets. Such 

conventions represent reasonable limits 

and are maintained to satisfy the GAAP 

requirements for consistency and 

accurate accounting. In addition, 

contractors subject to CAS would still 

have to consistently follow their 

disclosed practices (CAS 401) and the 

information would also be included in 

a disclosure statement. 

Response: Although GAAP does not 

explicitly require a written statement for 

capitalization policies, the Board agrees 

with the respondents and has 

provisionally determined that these 

written statements would continue to 

exists in the absence of the current 

explicit CAS requirement. The 

cumulative requirements that will 

remain in CAS 401, which requires 

comparison of actual practices year over 

year, Disclosure Statements and current 

practices to comply with GAAP would 

adequately protect the governments 

interest absent the expressed 

requirement to maintain policies and 

procedures required by CAS. In 

addition, FAR and DFARs accounting 

system requirements also make written 

policies and procedures, such as on 

capitalization, necessary. 

3. Assets acquired through a business 

combination. Another difference noted 

by the Board is the requirements in CAS 

for treatment of tangible assets acquired 

in a business combination. CAS 404– 

50(d) and (e) refer to two financial 

accounting treatments for business 

combinations: ‘‘purchase method’’ and 

‘‘pooling of interest method.’’ As noted 

in the SDP, these methods could be 

found in financial accounting literature 

at APB Opinion 16. Subsequently, 

financial accounting treatment has been 

revised several times. 

In June 2001, FASB revised its 

approach for accounting for business 

combinations in Statement Financial 

Accounting Standards No. 141, which 

superseded APB Opinion 16 and 

adopted a single-method approach 

requiring that all business combinations 

be accounted for by the purchase 

method. The purchase method requires 

that the cost attributed to the plant and 

equipment of the acquired entity be ‘‘the 

current replacement cost for similar 

capacity unless the expected future use 

of the assets indicates a lower value to 

the acquiring entity.’’ 

July 2009, the FASB Accounting 

Standards Codification (ASC) became 

authoritative for GAAP, and ASC 805– 

20–30–1 requires acquirers to measure 

tangible capital assets at the acquisition 

date fair values, which would be the 

same as replacement value at 

acquisition date. Replacement value 

refers to the amount a similar condition 

and used asset would cost. The CAS 

Board notes, however, that FASB Topic 

105—Generally Accepted Accounting 

Principles provides APB Opinion 16 

and FASB Statement No. 141 are 

considered grandfathered guidance 

allowing for the continued application 

of the superseded accounting standards 

for business combination transactions 

that have an ongoing effect in an entity’s 

financial statements. As part of the 

codification, GAAP has also 

transitioned to the term ‘‘acquisition 

method’’ rather than ‘‘purchase 

method’’ for this accounting treatment 

of business combinations. 

Regarding the cost treatment of 

tangible assets acquired in a business 

combination accounted for under the 

purchase method, the Board noted that 

under CAS 404–50(d)(2) when the 

acquired company has tangible assets 

that did not generate depreciation or 

cost of money allocated to Federal 

contracts the assets are assigned a 

portion of the purchase price of the 

acquired company, not to exceed their 

fair value. However, under CAS 404– 

50(d)(1) when the acquired company 

has tangible assets that generated 

depreciation or cost of money allocated 

to Federal contracts, the assets are 

measured by the acquirer at the net book 

value. By comparison, for both 

circumstances, GAAP would require 

that the assets be measured by the 

acquirer at fair value. Absent the 

requirements of CAS 404–50(d)(1) the 

government would be at risk if an asset 

was increased in value such that the 

combined depreciation recognized by 

the both the acquired company and the 

acquiring company for government 

contracts exceeds the historic cost for 

which the asset was originally 

purchased for use. 

Comment: Three respondents 

provided comments to this potential 

difference identified by the Board. All 

three agreed if CAS 404 was eliminated 

that this provision should be retained as 

a procurement Policy in the FAR 

31.205–52, as noted by the Board in the 

SDP. However, all three also urged to 

the Board that if CAS 404 was 

eliminated CAS 405 should also be 

revised to avoid a potential unintended 

consequence and harm to contractors 

related to inclusion of unallowable costs 

in allocation bases. 

Response: The Board believes this 

difference between CAS and GAAP may 

create an exposure of unknown 

materiality. The Board agrees with the 

commenters’ observation that risk could 

be mitigated by a procurement policy 

through modification of the FAR. 

However, the Board has provisionally 

concluded that the underlying issue 

relates to the measurement of costs and 


KHAMMOND on DSK9W7S144PROD with PROPOSALS
5806 Federal Register / Vol. 90, No. 11 / Friday, January 17, 2025 / Proposed Rules 

therefore should be addressed by the 

Board. For these reasons, the Board is 

considering a proposed rule that would 

retain the requirements in CAS 404– 

50(d)(1) and move them to a new 

section in 9904.418–50. The retention 

would also prevent the potential 

unintended consequence and harm to 

contractors related to inclusion of 

unallowable costs in allocation bases 

raised in the comments. This proposed 

action would be consistent with the 

Board’s guiding principles to eliminate 

content from CAS where GAAP, other 

CAS Standards or other relevant rules 

may protect the interests of the 

Government. In addition, the Board 

provisionally concluded that moving 

the retained requirement to another 

Standard rather than maintaining CAS 

404 with minimal content would best 

achieve the goal of streamlining CAS. 

The Board is seeking comments on such 

actions in this ANPRM. 

III. CAS 411 

A. Overview 

CAS 411, initially published May 5, 

1975 at 40 FR 19425, provides criteria 

for the accounting for acquisition costs 

of material used during the course of a 

contract. CAS 411 also includes 

provisions on the use of inventory 

costing methods. The preamble for the 

original publication of CAS 411 

acknowledged that— 

Preliminary work on the development of 

this Standard resulted from the absence of a 

requirement in agency regulations that the 

same costing method be used for similar 

categories of material within the same 

business unit and that the method be 

consistently applied. 

The principal need for the 

promulgation of the initial CAS 411 no 

longer exists. GAAP has been revised 

significantly with additional content 

and changes in requirements since the 

original promulgation of CAS 411 in 

1975. The majority of the CAS 411 

standard has remained static since the 

initial promulgation. The standard, 

however, was corrected in 1992 (57 FR 

34167) to make clear that it does not 

cover accounting for the acquisition 

costs of tangible capital assets nor 

accountability for Governmentfurnished materials. 

Furthermore, as explained in greater 

detail in the response to public 

comments in subsection b., below, a 

comparison of CAS 411 with pertinent 

GAAP content revealed significant 

overlap and nearly completely 

equivalent requirements. The Board 

identified that a comparable 

requirement existed in GAAP, FAR or 

other CAS Standard that would protect 

the Government’s interests and promote 

uniformity and consistency. The 

alignment is so close as to make CAS 

411 nearly duplicative of GAAP. The 

Board reasoned that where such 

comparable requirements exist between 

CAS and GAAP, the CAS 411 

requirement could be eliminated. 

The Board identified two potential 

differences between CAS and GAAP 

that required further consideration. The 

CAS requires written statements of 

accounting policies, and uses the terms 

‘‘moving’’ and ‘‘weighted’’ average in 

relation to inventory costing methods, 

while GAAP simply uses ‘‘average’’. As 

described below in subsection b, the 

Board has provisionally concluded that 

reliance on GAAP would materially 

achieve uniformity and consistency 

necessary for Government contracting 

related to these two differences. In 

addition, as it relates to written 

statements of accounting policies, 

contractors whose activities that would 

trigger full CAS coverage and have been 

subject to CAS 411 would still be 

required to disclose these practices as 

part of their required CAS Disclosure 

Statement. 

For the reasons stated above, the 

Board is considering a proposed rule 

that would eliminate CAS 411 in its 

entirety. This action would be 

consistent with the Board’s guiding 

principles for conforming CAS to GAAP 

because it would eliminate CAS content 

to minimize the burden on contractors 

while protecting the interests of the 

Federal Government. Furthermore, the 

Board’s provisional conclusion on CAS 

411 would align with the guiding 

principles to rely on coverage in GAAP 

when it would materially achieve 

uniformity and consistency in cost 

accounting without bias or prejudice to 

either party, rely on other CAS 

Standards which may protect the 

Government’s interests, and eliminate 

CAS coverage no longer necessary. 

B. Summary of Public Comments 

The Board received four sets of public 

comments to the SDP. These comments 

came from industry associations and 

companies. The Board appreciates the 

feedback. Responses to specific 

comments for CAS 411 are as follows: 

1. Written statements of accounting 

policies and practices. The Board noted 

that GAAP does not explicitly require 

written statements of accounting 

policies and practices, while CAS 411– 

40(a) requires written statements of 

accounting policies and practices for 

accumulating the costs of material and 

for allocating costs of material to cost 

objectives. 

Comment: All commenters 

acknowledged GAAP does not explicitly 

require a written statement of 

accounting policies and practices, 

however approximately 70% of the AIA 

member companies surveyed and 77% 

of FEI commercial companies surveyed 

do in fact have specific written policies 

and procedures addressing this area. 

Commenters noted the Board, during 

the promulgation of CAS 411, had 

acknowledged that many companies 

had written policies and practices in 

place before the CAS 411 requirement 

existed. Further, companies subject to 

CAS 411 are also required to submit 

Disclosure Statements. They also noted 

that Enterprise Resource Planning (ERP) 

software systems would be another 

existing source for written statements of 

accounting practices related to how the 

costs of material are accumulated and 

allocated. ERP software systems are 

used by contractors to manage their dayto-day business activities related to 

material management and accounting 

for such activity include documented 

business scripts that document how the 

system works. 

Response: Although GAAP does not 

explicitly require a written statement for 

accounting policies and practices for 

accumulating the costs of material and 

for allocating costs of material to cost 

objectives, the Board has provisionally 

determined that these written 

statements would continue to exists in 

the absence of the current explicit CAS 

requirement. The cumulative 

requirements that will remain in CAS 

401, Disclosure Statements and current 

practices to comply with GAAP would 

adequately protect the government’s 

interest absent the expressed 

requirement to maintain policies and 

procedures required by CAS. 

2. Average cost method for inventory 

costing. The second difference noted by 

the Board in the SDP related to the 

average cost method for measuring 

inventory. CAS provides for the use of 

the moving average cost method or the 

weighted average cost method. Both of 

these methods are explicitly defined in 

CAS 411–30, including how the cost 

would be computed under each method. 

CAS 411–30(a)(6) defines ‘‘moving 

average’’ as ‘‘an inventory costing 

method under which an average unit 

cost is computed after each acquisition 

by adding the cost of the newly acquired 

units to the cost of the units of 

inventory on hand and dividing this 

figure by the new total number of 

units.’’ CAS 411–40(a)(7) defines 

‘‘weighted average cost’’ as ‘‘an 

inventory costing method under which 

an average unit cost is computed 

periodically by dividing the sum of the 


KHAMMOND on DSK9W7S144PROD with PROPOSALS
Federal Register / Vol. 90, No. 11 / Friday, January 17, 2025 / Proposed Rules 5807 

cost of beginning inventory plus the cost 

of acquisitions by the total number of 

units included in these two categories.’’ 

By comparison, GAAP simply provides 

for the use of an ‘‘average’’ method 

without defining or describing specific 

average methods. GAAP does make 

clear in ASC 330–10–30–9 that ‘‘the 

major objective in selecting a method 

[for inventory costs] should be to choose 

the one which, under the circumstances, 

most clearly reflects periodic income.’’ 

The Board understood this to mean that 

the method selected must result in a 

measurement of costs matched against 

revenue from a sale. The matching 

principle between cost and revenue in 

GAAP is similar to the CAS concept of 

matching the cost to a contract—both of 

which result in periodic income. As a 

result, although GAAP doesn’t explicitly 

define acceptable average methods, 

there is some constraint to the variations 

a contractor could elect to use in 

compliance with GAAP. 

Comment: Commenters noted the 

Board is correct in that GAAP does not 

define specific ‘‘average’’ inventory 

costing methods, however their research 

of various GAAP pronouncements and 

discussions with member companies’ 

GAAP accountants failed to uncover an 

average method beyond weighted 

average and moving average methods. 

Additionally, 100% of the AIA and FEI 

member companies surveyed use either 

the moving average, weighted average or 

standard cost method for inventory 

costing. Furthermore, in today’s world, 

the logic behind inventory valuation 

methods is built into very expensive 

ERP systems and is not changed 

haphazardly. FEI noted that a survey of 

member companies showed that 

changes are overwhelmingly driven (i.e., 

82%) by either new ERP system 

implementations/upgrades or 

organization type transaction activities 

(e.g., M&A). None of the respondents 

noted they make changes to ERP 

systems in order to solely change 

inventory valuation/costing methods. 

Commenters also noted that they are not 

aware of any circumstances where the 

use of an average method compliant 

with GAAP would not be acceptable for 

accounting for government contracts. 

AIA further noted it was not aware of an 

average costing method compliant with 

GAAP beyond the moving average or 

weighted average methods. In addition, 

commenters noted that the guiding 

principles of GAAP align identically 

with the fundamental requirements of 

CAS 411, so even if there was another 

inventory average costing method for 

GAAP, such method would almost 

certainly be acceptable for accounting 

for government contracts. GAAP’s 

guiding principles require the use of a 

consistently applied inventory method 

that is rational, reasonable and matches 

inventory costs with revenues. Identical 

to GAAP, CAS 411 requires that the 

inventory costing method chosen must 

be, ‘‘used in a manner which results in 

systematic and rational costing of issues 

of material to cost objectives. The same 

costing method shall, within the same 

business unit, be used for similar 

categories of material.’’ (Ref: 9904.411– 

40(e)). Commenters view the principles 

and requirements of GAAP in this area 

are more restrictive than CAS. 

Response: The Board appreciates the 

efforts of the associations and their 

members to gather and provide this 

information and analysis. Based on the 

comments and additional research 

conducted by the Board, the Board has 

not identified any additional ‘‘average’’ 

inventory costing methods beyond 

weighted or moving. The Board has 

provisionally concluded that CAS 411 

and the corresponding requirements in 

GAAP are not materially different. 

Furthermore, the Board has also 

provisionally concluded that GAAP, 

FAR and other Standards may protect 

the Government’s interests. Therefore, 

the Board is considering a proposed rule 

that would eliminate CAS 411 and rely 

on GAAP to achieve the uniformity and 

consistency required for Government 

contracting. This action would be 

consistent with the Board’s guiding 

principle to eliminate content from CAS 

where reliance on GAAP would 

materially achieve uniformity and 

consistency in cost accounting without 

bias or prejudice to either party. 

IV. Paperwork Reduction Act 

The Paperwork Reduction Act, Public 

Law 96–511, does not apply to ANPRM 

because these actions impose no 

paperwork burden on offerors, affected 

contractors and subcontractors, or 

members of the public requiring the 

approval of OMB under 44 U.S.C. 3501, 

et seq. 

V. Executive Orders 12866, 13563, 

14094 and the Regulatory Flexibility 

Act 

Executive Orders (E.O.s) 12866, 

13563, and 14094 direct agencies to 

assess all costs and benefits of available 

regulatory alternatives and, if regulation 

is necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). E.O. 13563 emphasizes the 

importance of quantifying both costs 

and benefits, of reducing costs, of 

harmonizing rules, and of promoting 

flexibility. The economic impact of the 

ANPRM is expected to be minor because 

the affected contractors and 

subcontractors are those who are 

already subject to CAS and would seek 

to rely more heavily on GAAP, which 

these contractors are using in their 

commercial transactions. Accordingly, 

the ANPRM is not a significant 

regulatory action and, therefore, are not 

subject to review under section 6(b) of 

E.O. 12866, Regulatory Planning and 

Review, as amended by E.O. 14094, 

Modernizing Regulatory Review. 

List of Subjects in 48 CFR 9904 

Government procurement, Cost 

accounting standards 

Christine J. Harada, 

Senior Advisor Office of Federal Procurement 

Policy, and Chair, Cost Accounting Standards 

Board, performing by delegation the duties 

of the Administrator for Federal Procurement 

Policy. 

For the reasons set forth in the 

preamble, The Federal Procurement 

Policy Office proposes to amend 48 CFR 

part 9904 as set forth below: 

PART 9904—COST ACCOUNTING 

STANDARDS 

■ 1. The authority citation for part 9904 

continues to read as follows: 

Authority: Pub. L. 100–679, 102 Stat. 4056, 

41 U.S.C. 422. 

Subpart 9904.404—[Removed and 

Reserved] 

■ 2. Remove and reserve subpart 

9904.404. 

Subpart 9904.411—[Removed and 

Reserved] 

■ 3. Remove and reserve subpart 

9904.411. 

■ 4. In § 9904.418–50, add paragraph (i) 

to read as follows: 

§ 9904.418–50 Techniques for application. 

* * * * * 

(i) The capitalized values of tangible 

capital assets acquired in a business 

combination shall be assigned to these 

assets as follows: All the tangible capital 

assets of the acquired company that 

during the most recent cost accounting 

period prior to a business combination 

generated either depreciation expense or 

cost of money charges that were 

allocated to Federal government 

contracts or subcontracts negotiated on 

the basis of cost, shall be capitalized by 

the buyer at the net book value(s) of the 


KHAMMOND on DSK9W7S144PROD with PROPOSALS
5808 Federal Register / Vol. 90, No. 11 / Friday, January 17, 2025 / Proposed Rules 

asset(s) as reported by the seller at the 

time of the transaction. 

[FR Doc. 2025–00012 Filed 1–16–25; 8:45 am] 

BILLING CODE 3110–01–P 

DEPARTMENT OF TRANSPORTATION 

Office of the Secretary 

49 CFR Part 13 

[Docket DOT–OST–2020–0229] 

RIN 2105–AE97 

Procedures for Considering 

Environmental Impacts 

AGENCY: Office of the Secretary (OST), 

U.S. Department of Transportation 

(DOT). 

ACTION: Proposed rule; withdrawal. 

SUMMARY: The Department of 

Transportation (the Department) is 

withdrawing a notice of proposed 

rulemaking (NPRM) issued on 

November 23, 2020, that proposed to 

amend its National Environmental 

Policy Act (NEPA) implementing 

procedures. 

DATES: As of January 17, 2025, the 

NPRM, ‘‘Procedures for Considering 

Environmental Impacts,’’ published on 

November 23, 2020 (85 FR 74640), is 

withdrawn. 

ADDRESSES: U.S. Department of 

Transportation, 1200 New Jersey Ave. 

SE, Washington, DC 20590, 202–366– 

9152. 

Electronic Access: You can view and 

download related documents and public 

comments by going to the website 

https://www.regulations.gov. Enter the 

docket number DOT–DOT–OST–2020– 

0229 in the search field. 

FOR FURTHER INFORMATION CONTACT: 

April Marchese, Director, Infrastructure 

Permitting Improvement Center, 202– 

366–4416, april.marchese@dot.gov. 

SUPPLEMENTARY INFORMATION: 

Background: NEPA establishes a 

national environmental policy of the 

Federal Government to use all 

practicable means and measures to 

foster and promote the general welfare, 

create and maintain conditions under 

which man and nature can exist in 

productive harmony, and fulfill the 

social, economic, and other 

requirements of present and future 

generations of Americans. 42 U.S.C. 

4331(a). Section 102(2) of NEPA 

establishes the procedural requirements 

to carry out the policy stated in section 

101 of NEPA. It requires Federal 

agencies to consider the environmental 

effects of proposed actions in their 

decision-making and prepare detailed 

environmental statements on 

recommendations or reports and other 

major Federal actions significantly 

affecting the quality of the human 

environment. 42 U.S.C. 4332(2)(C). 

On November 23, 2020, the 

Department issued an NPRM that 

proposed to amend its NEPA 

implementing procedures (85 FR 

74640). Specifically, the Department 

proposed to revise its current 

procedures, DOT Order 5610.1C, 

‘‘Procedures for Considering 

Environmental Impacts,’’ originally 

published in 1979, 44 FR 56420 (Oct. 1, 

1979), and codify them in the Code of 

Federal Regulations. These revisions 

were never finalized due to a variety of 

factors. Therefore, the DOT Order 

5610.1C is still in effect and will 

continue to be in effect until updates are 

made through a public review process. 

DOT received 49 comments in response 

to the proposed rule. Comments were 

submitted by ten State or local 

departments of transportation (State 

DOTs); two other State agencies, nine 

transportation interest groups (trade 

associations); and 24 private entities 

and citizens. DOT received one 

comment from a member of Congress. 

DOT received three other comment 

letters that were outside of the scope of 

the rulemaking. The comments received 

have been reviewed and will aid in any 

further revisions that are made to DOT 

Order 5610.1C to update and modernize 

DOT’s NEPA procedures. 

On June 3, 2024, President Biden 

signed into law the Fiscal Responsibility 

Act of 2023 (FRA, Pub. L. 118–5). The 

FRA made revisions to the NEPA statute 

with the aim of streamlining the 

environmental review process. In 

addition, there have been further 

refinements in agency best management 

practices in the environmental review 

and permitting process that should be 

incorporated into the DOT NEPA 

procedures prior to finalizing. 

Reason for Withdrawal 

Given the revisions to the NEPA 

statute and updates to best management 

practices across the Government for the 

environmental permitting and review 

process, DOT is withdrawing the 

proposed rule for DOT’s NEPA 

implementing procedures. Any 

revisions that are made will be issued 

for notice and public comment prior to 

being finalized. 

Issued in Washington, DC, under 

authority delegated in 49 CFR 

1.25a(a)(2): 

Christopher Coes, 

Assistant Secretary of Transportation Policy. 

[FR Doc. 2025–01199 Filed 1–16–25; 8:45 am] 

BILLING CODE 4910–9X–P 


KHAMMOND on DSK9W7S144PROD with PROPOSALS