What "Compliance" Means for Defense Contractors

Word count: ~970 Specificity markers hit: (4) Common mistake — treating compliance as a project to finish rather than a state to maintain; (5) Decision point — self-assessment vs. third-party assessment; (2) Cost/time estimate — annual affirmation and assessment cycle timing

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"Compliance" gets thrown around so casually in the defense contracting world that it can feel like it means everything and nothing. Some contractors think compliance means filling out paperwork. Others think it means buying security tools. Some think it's a one-time certification they earn and forget about.

None of those are quite right. Let's be direct about what compliance actually means, what it requires, and what happens if you don't have it.

What Compliance Is

In the context of DoD (Department of Defense) cybersecurity, compliance means your organization is meeting the security requirements specified in your contracts — and can prove it.

That second part matters. Meeting requirements isn't enough if you can't demonstrate it. A company might have well-secured systems and still fail a CMMC (Cybersecurity Maturity Model Certification) assessment because they haven't documented their controls, their staff doesn't know the procedures, or their access logs aren't configured correctly. Compliance has two components: implementation and evidence.

The primary standard is NIST SP 800-171 (National Institute of Standards and Technology Special Publication 800-171), which specifies 110 security requirements for protecting CUI (Controlled Unclassified Information — sensitive but unclassified government data) in non-federal systems. CMMC is the DoD's framework for verifying compliance with that standard.

Two Types of Compliance

There are two distinct modes of compliance in the defense space, and which one applies to you depends on your contract:

Self-assessed compliance — You evaluate your own security posture against the required standard, calculate your SPRS (Supplier Performance Risk System) score, and submit it to the DoD's database. This is required for all contractors subject to DFARS (Defense Federal Acquisition Regulation Supplement) 252.204-7012 and is the basis for CMMC Level 1. You affirm annually that your score is accurate.

Third-party assessed compliance — A C3PAO (Certified Third-Party Assessor Organization) conducts an independent assessment of your environment, evaluates your controls against the CMMC standard, and submits their findings to the Cyber AB (the CMMC Accreditation Body). This is required for CMMC Level 2 on most contracts involving CUI. You don't self-report your way to Level 2 certification — an independent assessor certifies it.

The DoD moved toward third-party assessment because self-reported scores had become unreliable. Studies found large gaps between what contractors reported and what their security actually looked like. Third-party assessment fixes that by removing the self-grading problem.

What Gets Checked

Whether you're doing a self-assessment or a C3PAO assessment, the evaluation covers the same ground: 110 security requirements, organized into 14 domains. Assessors look at:

Your documentation — primarily your SSP (System Security Plan), which describes how your organization implements each requirement. Your SSP is the master compliance document. Without it, there's nothing for an assessor to review.

Your technical controls — the actual configuration of your systems. Are access controls in place? Is encryption enabled and FIPS (Federal Information Processing Standard) validated? Are logs being collected and retained? Assessors test these, not just read about them.

Your people — assessors interview staff to verify that documented procedures are actually followed. If your SSP says "users receive annual security training" but your employees can't describe what that training covered, you have a gap.

Your processes — change management, patch schedules, incident response drills. Compliance isn't just technical. The processes that keep controls working over time are part of what gets evaluated.

The Common Mistake

The most common misunderstanding about compliance is treating it as a project to finish rather than a state to maintain.

Contractors will spend months getting their SSP written, their controls implemented, and their documentation organized — and then stop. They pass their assessment (or submit their self-assessment score) and consider the work done. Twelve months later, when the annual affirmation is due, nothing has been maintained, personnel turnover has created gaps, and system changes were made without updating the SSP.

Compliance requires an ongoing maintenance effort: - Annual affirmation that your SPRS score is still accurate - Annual security awareness training for all personnel - Updating your SSP whenever your systems or procedures change - Regular vulnerability scanning and patching - Reviewing and updating your access control lists when personnel join, change roles, or leave

The triennial (every three years) C3PAO assessment is a checkpoint. What you're actually maintaining is the continuous compliance state between assessments.

Your POA&M

Almost every organization going through a CMMC assessment has some gaps. The POA&M — Plan of Action and Milestones — is the document where you track requirements that aren't fully met yet, with a timeline and plan for addressing them.

Having items on your POA&M doesn't automatically mean you fail certification. The rules around POA&M items and certification are detailed in the CMMC assessment process guide. But you can't have open items on practices that CMMC considers high-risk, and your total number of open items matters. The POA&M is a tool for managing the gap between where you are and full compliance — not a permanent parking lot for requirements you don't want to address.

What Non-Compliance Costs

If you falsely attest to CMMC compliance and your systems are later breached or your attestation is investigated, the consequences are serious. The False Claims Act (FCA) applies to false attestations on government contracts — civil penalties can reach $13,000 per false claim plus three times the amount of damages. DoD has already pursued FCA cases against contractors who misrepresented their cybersecurity posture.

Beyond legal risk, non-compliance risks contract loss. As CMMC requirements become embedded in contract awards, a contractor that can't demonstrate compliance loses eligibility to bid.

The Practical Frame

Think of compliance the way you think of financial reporting. Your company's books are never permanently "audited" — they're maintained continuously and audited periodically. Between audits, you don't stop doing accounting. You keep the books accurate so the next audit reflects reality.

Cybersecurity compliance works the same way. Maintain the controls, maintain the documentation, maintain the training. The assessment is the audit. What you're building is the discipline between audits.

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Want to know what a C3PAO actually examines during an assessment? Our Tier 2 guide on the CMMC assessment process breaks down the examine/interview/test methodology, what documentation you need ready, and how assessment findings turn into certification decisions.