- DOW has opened a call for industry feedback on contract accounting reform
- The initiative targets alignment between DOW audit rules and GAAP standards
- The 2026 Navy Summit will explore AI, digital engineering, unmanned systems and more
The Department of War has issued a letter requesting input from defense industrial base and acquisition stakeholders on potential changes to contract accounting practices to reduce compliance costs for commercial suppliers and transform the acquisition process.
As DOW advances acquisition reform to expand commercial supplier participation, government and industry leaders will gather at the Potomac Officers Club’s final DOW-focused summit of 2026. Attend the 2026 Navy Summit on Aug. 27 and join experts as they discuss AI, digital engineering, shipbuilding, unmanned systems, network modernization and other priorities shaping the future maritime force. Save your seat now!
In the July 31 letter, Michael Duffey, under secretary of war for acquisition and sustainment and a 2026 Wash100 awardee, and Michael Powers, acting under secretary of war (comptroller) and chief financial officer, wrote that DOW is exploring common sense contract accounting changes to incentivize participation by commercial suppliers and lower their compliance costs.
What Feedback Is DOW Requesting From Industry?
According to the letter, DOW is seeking industry input on ways to streamline data and audit requirements for business systems, with the goal of building a framework that aligns the department’s requirements with Generally Accepted Accounting Principles, or GAAP, and Section 404(b) control environments of the Sarbanes-Oxley Act of 2002. The request aligns with the department’s Acquisition Transformation Strategy, which calls for maximizing acquisition flexibility by reducing and eliminating regulations and processes that officials consider overburdensome or unnecessary.
DOW said industry feedback will give the department a clearer picture of how commercial suppliers manage complex requirements critical to national defense.
Stakeholders may submit their input and comments to DOW by Aug. 15.
What Changes Has the Cost Accounting Standards Board Already Finalized?
The letter points to related action by the Cost Accounting Standards Board, or CASB, within the Office of Management and Budget’s Office of Federal Procurement Policy. In July, CASB finalized a rule rescinding two cost accounting standards in full and most of the other two as part of efforts to align such standards with GAAP. The rule, which took effect Aug. 7, eliminates 68 of 72 individual requirements across the four standards and removes more than 10,000 words of regulatory text.
CASB is also pursuing rulemaking to eliminate a fifth standard and implement major increases to the CAS thresholds. DOW’s letter frames the rulemaking as an early step toward broader alignment between government and commercial accounting practices and invites continued input through the board’s public comment process.
What Other Acquisition Reform Efforts Has DOW Pursued?
The request for feedback is the latest step in DOW’s broader acquisition reform efforts. In February, DOW released a letter to the defense industrial base and acquisition stakeholders soliciting input on phase two of its Revolutionary Federal Acquisition Regulation Overhaul, or RFO, initiative aimed at accelerating defense procurement and reducing regulatory burden.
Launched in May 2025, the RFO initiative aims to modernize the acquisition framework by reducing unnecessary regulatory requirements and increasing flexibility for program execution.
