DoD Memorandum – Fostering One Strong Industrial Base
In a September 14, 2026 memo, the Deputy Secretary of War directed a sweeping modernization of contract cost and pricing rules to speed acquisition and expand the industrial base. The centerpiece: shifting from government-unique Cost Accounting Standards (CAS) to standard GAAP accounting, using contractors’ existing books rather than new systems. No new accounting systems or special data formats will be required. Any data a contractor provides will be used only for authorized Government purposes and never made available to another company. with Executive Order 14402, fixed-price contracts remain the default, with cost-based contracts reserved for basic research and major system development.
The appendix assigns dozens of actions across the Department: CAS waiver policies and “shadow CAS” prohibitions within 30-60 days, faster commerciality determinations, expanded Other Transactions authority, a profit-policy rewrite rewarding efficiency over cost incurred, consolidated business-system reviews accepting independent audits in place of government review, and quarterly metrics tracking eliminated requirements and new market entrants.
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