GRC for Defense Contractors: What It Means in Practice

Word count: ~1,050 Tier: 1 Specificity markers hit: (1) NIST/CMMC control reference — NIST SP 800-171, RA.L2-3.11.1; (4) Common mistake — treating GRC as compliance only; (5) Decision point — where to start based on company size/stage

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GRC stands for Governance, Risk, and Compliance. You'll see it everywhere in defense contracting circles, often used as a catch-all for anything security and regulatory. That vagueness isn't helpful when you're a contractor trying to figure out what you actually have to do.

GRC is the framework you use to make decisions about cybersecurity. Governance is who decides. Risk is what you're deciding about. Compliance is the set of rules you're measuring yourself against. For defense contractors, that third piece — Compliance — is dominated by CMMC, the Cybersecurity Maturity Model Certification, and the underlying standard it enforces: NIST SP 800-171 (the National Institute of Standards and Technology's publication that defines 110 cybersecurity controls for protecting Controlled Unclassified Information, or CUI).

If you handle CUI — technical drawings, contract data, export-controlled specifications — you need all three legs of this stool working together. Let's go through each one.

Governance: Who's in Charge of Cybersecurity

Governance means having clear ownership and decision-making authority over your security program. In large organizations, that's a CISO (Chief Information Security Officer). In small defense contractors — say, a 30-person engineering firm — it might be the owner, the IT manager, or a part-time consultant.

What matters isn't the title. It's that someone has defined authority to:

• Set security policies and require people to follow them
• Approve changes to systems that touch CUI
• Report on security status to company leadership
• Make budget decisions about security investments

Without governance, nothing else holds. Risk assessments don't get acted on. Policies sit in a folder. Training gets skipped when the project deadline looms. CMMC assessors look for evidence of governance in your System Security Plan (SSP) — the document that describes how your organization implements each of the 110 required controls. If your SSP can't say who owns security and what authority they have, that's a gap.

For small contractors, a practical first step: designate someone, put it in writing, and make sure that person has explicit sign-off authority for security-relevant decisions. Even a one-paragraph role description beats nothing.

Risk: What You're Actually Protecting Against

Risk management is how you figure out where to focus. You can't protect everything equally, so you need a systematic way to decide what matters most.

For CMMC purposes, risk management starts with your CUI — where it lives, which systems store or transmit it, and who has access. From there, you identify threats (someone getting unauthorized access, data being lost or stolen, a system failing) and assess which threats are most likely and most damaging.

The output is a risk register — risks ranked by likelihood and impact, with your response for each: mitigate, accept, or transfer. CMMC requires that you have this process. Control RA.L2-3.11.1 requires you to "periodically assess the risk to organizational operations, assets, and individuals." Your risk register and assessment methodology are the evidence for that control.

Compliance: The Rules You're Measured Against

Compliance is what most people jump to first — and that's usually the wrong order. Compliance tells you the minimum bar. Risk management tells you where the real problems are. Governance tells you who's solving them.

For defense contractors, the compliance stack looks like this:

• DFARS 252.204-7012 (Defense Federal Acquisition Regulation Supplement clause): Requires contractors to implement NIST SP 800-171 and report cyber incidents within 72 hours.
• NIST SP 800-171 Rev 2: The 110 controls that define what "implemented" looks like.
• CMMC Level 2: Third-party verification that you've actually implemented those 110 controls. Required for most contracts involving CUI.
• FAR 52.204-21: A lighter set of 15 basic security requirements that applies even to contractors who only handle FCI (Federal Contract Information) without CUI.

When in doubt, pull the relevant clauses from your contract and look for DFARS 252.204-7012. If it's there, you're in the NIST SP 800-171 / CMMC Level 2 world. If your role is more limited — basic contract administration without CUI — FAR 52.204-21 may be your only applicable threshold.

The Common Mistake: Running These in Silos

The biggest GRC failure mode for small and mid-size defense contractors is treating compliance as the whole program.

It goes like this: a contractor gets CMMC on their radar, hires a consultant, produces an SSP, buys a few tools, checks the boxes. They're "compliant." But six months later, an employee leaves, someone grants admin rights to the wrong person, a cloud service gets added without a security review — and nothing in the organization catches it because there's no governance process watching for drift, and no risk management process that would have flagged the new service as a CUI risk.

CMMC certification is a three-year cycle with annual affirmations. The assessment is a snapshot. What keeps you compliant between assessments is the governance and risk management side of GRC — the parts that most compliance-first programs skip.

A functional GRC program isn't a one-time project. It's a set of recurring activities: quarterly access reviews, annual risk assessments, periodic policy reviews, ongoing security training. These don't have to be elaborate. A 15-person contractor can run an effective GRC program with a shared spreadsheet, a designated owner, and a simple annual review cycle. The practices in NIST SP 800-171 tell you what to do. Your GRC structure is how you sustain it.

Where to Start

If you're early in the process, here's a practical sequence:

Step 1 — Establish governance first. Designate a security owner. Define their authority in writing. Get sign-off from company leadership. This takes a day, not a month.

Step 2 — Scope your CUI environment. Before you assess risk or build controls, you need to know what you're protecting. Map where CUI comes in, where it's stored, which systems touch it, and who has access.

Step 3 — Conduct a gap assessment against NIST SP 800-171. Compare your current state against the 110 controls. The NIST SP 800-171A assessment guide (available free at csrc.nist.gov) walks through each control and what the assessor looks for. A basic gap assessment for a small contractor takes 2–4 weeks with outside help.

Step 4 — Build your risk register. Use your gap findings to prioritize. Fix the highest-risk gaps first — typically access control failures and missing encryption, since these are where most data exposure events originate.

Step 5 — Start documenting. Your SSP is a living document. Start filling it in as you implement controls. An SSP written from scratch the month before your assessment is a thin document. One built over 12 months of implementation is a credible one.

GRC sounds like consultant vocabulary. But the underlying idea is simple: someone's in charge, you know what the risks are, and you can prove you're following the rules. That's the foundation every CMMC program rests on.

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Want to go deeper on the compliance side? The next step is understanding exactly what the 110 NIST SP 800-171 controls require and how they're assessed — see our guide to the 14 NIST 800-171 control families, or start a conversation with the CMMC Advisor bot to scope your specific situation.