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Navigating CMMC and the Proposed FAR Cybersecurity Rule: What Federal Contractors Need to Know

Posted by: Kevin Hancock November 12, 2024 CMMC

In today’s rapidly evolving digital landscape, the need for robust cybersecurity in federal contracting has never been more critical. Federal contractors, particularly those working with the Department of Defense (DoD), are now faced with stringent regulations designed to protect sensitive government information. Two key regulations shaping this space are the Cybersecurity Maturity Model Certification (CMMC) and the proposed Federal Acquisition Regulation (FAR) cybersecurity rule. 

As these regulations move closer to full implementation, contractors must act now to ensure they are prepared for compliance or risk losing lucrative government contracts. In this blog, we will break down the complexities of CMMC, the proposed FAR rule, and what steps contractors need to take to stay ahead. 

Understanding the Cybersecurity Maturity Model Certification (CMMC) 

What is CMMC? 

The DoD developed the CMMC framework to safeguard Controlled Unclassified Information (CUI) and Federal Contract Information (FCI) within the defense industrial base (DIB). The CMMC framework requires contractors to adhere to specific cybersecurity practices, depending on the sensitivity of the information they handle. Its primary aim is to ensure that contractors and subcontractors have effective cybersecurity programs in place to prevent data breaches and other cyber threats. 

Originally proposed in 2020, CMMC evolved from earlier cybersecurity frameworks, such as Defense Federal Acquisition Regulation Supplement (DFARS) 252.204-7012. The final CMMC rule, released in October 2024, formalizes the framework and sets the stage for phased implementation over the next several years. Failure to comply with CMMC requirements can not only disqualify contractors from DoD contracts, but can also lead to penalties and reputational damage. 

CMMC Levels Explained 

The CMMC framework consists of three distinct levels, each representing varying degrees of cybersecurity maturity and controls: 

  1. CMMC Level 1 (Foundational): This level applies to contractors handling FCI and requires compliance with 15 requirements derived from FAR 52.204-21. Contractors must conduct an annual self-assessment, attested by a senior company official. 
  1. CMMC Level 2 (Advanced): Targeted at contractors handling CUI, Level 2 mandates compliance with 110 cybersecurity controls based on NIST SP 800-171 r2. Contractors must complete either a self-assessment annually or undergo a third-party assessment by a Certified Third-Party Assessment Organization (C3PAO) every three years. 
  1. CMMC Level 3 (Expert): This highest level applies to contractors handling high-value CUI. It includes all Level 2 requirements, plus 24 additional controls from NIST SP 800-172A. Level 3 certification must be performed by the Defense Industrial Base Cybersecurity Assessment Center (DIBCAC) every three years. 

The CMMC Certification Process 

Contractors aiming for CMMC certification at Levels 2 or 3 must undergo assessments conducted by C3PAOs. These third-party assessments verify compliance with required controls. For those at Level 1 or some Level 2 contractors, self-assessments are permitted, but they must be documented, and results must be submitted to the DoD’s Supplier Performance Risk System (SPRS). 

CMMC Implementation Timeline 

CMMC’s implementation will occur in phases, allowing contractors time to adapt and achieve compliance. The DoD’s final rule, released in October 2024, outlines a phased schedule, with enforcement expected by 2025. Contractors can begin the certification process now to ensure they are ready once CMMC becomes fully enforceable. 

The Proposed FAR Rule: Standardizing Cybersecurity for Federal Contractors 

Overview of the Proposed FAR Rule 

In October 2023, the FAR Council introduced a proposed rule that aims to standardize cybersecurity requirements across all federal agencies, not just the DoD. The rule is part of President Biden’s broader effort to improve national cybersecurity, following Executive Order 14028, “Improving the Nation’s Cybersecurity.” 

The proposed FAR rule targets federal contractors working with unclassified federal information systems (FIS), ensuring they adhere to standardized cybersecurity controls regardless of the agency they work with. This rule aims to bring uniformity and clarity, especially for contractors who handle sensitive data. 

Key Components of the Proposed FAR Rule 

The proposed rule introduces two new FAR clauses that will govern cloud-based and non-cloud-based information systems: 

  1. FAR 52.239-XX: This clause applies to contracts using cloud-based services. Contractors must comply with the Federal Risk and Authorization Management Program (FedRAMP) and the Federal Information Processing Standard (FIPS) 199 impact levels. It requires contractors to implement appropriate security and privacy safeguards based on the risk levels. 
  1. FAR 52.239-YY: This clause governs non-cloud-based services. Contractors must comply with NIST SP 800-53 standards, perform regular assessments, and implement security controls according to the designated impact levels. This clause also requires contractors to provide timely access to their systems for government audits and inspections. 

Impact on Contractors 

The proposed FAR rule will apply to all federal contractors, regardless of whether they work with the DoD or other federal agencies. Contractors will need to meet these baseline cybersecurity standards to remain eligible for federal contracts. The rule places a strong emphasis on continuous monitoring, incident reporting, and security assessments, making it essential for contractors to implement and maintain a comprehensive cybersecurity program. 

How CMMC and the FAR Rule Work Together 

Similarities and Differences 

Both CMMC and the proposed FAR rule share a common goal: to enhance the cybersecurity posture of federal contractors. However, they differ in scope and application. 

  • CMMC Focus: CMMC is specifically designed for DoD contractors and focuses on protecting CUI and FCI. It features a tiered certification process, with assessments conducted by third-party organizations or self-assessments depending on the level. 
  • FAR Rule Focus: The FAR rule, on the other hand, applies to all federal contractors, not just those working with the DoD. It standardizes cybersecurity requirements across unclassified federal information systems, ensuring contractors handling both cloud-based and non-cloud-based services meet a baseline set of controls. 

FAR vs. DFARS: Key Differences 

While the FAR and the DFARS govern federal contracting, they differ in scope and focus. FAR applies to all federal contractors and establishes baseline procurement policies, including cybersecurity controls, for contracts across civilian and defense agencies. DFARS, on the other hand, is specifically designed for DoD contracts, adding additional requirements for defense contractors, particularly those handling CUI. For instance, DFARS 252.204-7012 mandates compliance with the 110 security controls outlined in NIST SP 800-171 to safeguard CUI within the DIB. DFARS is generally more stringent, reflecting the sensitive nature of defense-related work. Federal contractors may be required to comply with both FAR and DFARS clauses, depending on the nature of their contracts. 

There is significant overlap between the CMMC and FAR frameworks, particularly in their reliance on NIST standards. Contractors may find that achieving CMMC certification can help them meet many of the FAR rule’s cybersecurity obligations, but it’s important to review contracts carefully to ensure compliance with both. 

Preparing for Compliance: What Contractors Need to Know 

Steps to Prepare for CMMC Certification 

To prepare for CMMC certification, contractors should take the following steps: 

  1. Develop a System Security Plan (SSP): Document how your organization implements the required security controls and identify any controls not implemented in your current cybersecurity posture. 
  1. Conduct Gap Assessments: Regularly perform internal assessments to identify areas where you fall short of CMMC requirements and take corrective action as needed. 
  1. Engage C3PAOs: If you are seeking CMMC Level 2 or 3 certification, engage with a Certified Third-Party Assessment Organization (C3PAO) to schedule your assessment early. Demand for C3PAOs is expected to increase, and early engagement can prevent delays. 

Meeting Proposed FAR Rule Obligations 

For contractors affected by the FAR rule, here’s how to prepare: 

  1. Implement Security Controls: Ensure your organization meets the NIST SP 800-53 controls required for both cloud-based and non-cloud-based systems. 
  1. Prepare for Audits: Be ready to provide system access and documentation for government audits. This includes maintaining comprehensive records of your security controls and procedures. 
  1. Incident Reporting: Establish a robust system for detecting and reporting cyber incidents in a timely manner, as required by both the FAR rule and CMMC. 

The Importance of Proactive Cybersecurity 

Contractors should be proactive in building a strong cybersecurity program. Waiting until these rules are fully enforceable could result in missed contract opportunities and costly delays. By preparing early, contractors can not only meet current requirements but also position themselves for future regulations. 

Key Takeaways for Federal Contractors 

  1. Compliance is Not Optional: Both CMMC and the proposed FAR rule are critical for contractors to maintain eligibility for federal contracts. Failure to comply can lead to disqualification or penalties. 
  1. Stay Agile: Cybersecurity regulations are constantly evolving, and contractors must remain agile to meet new and updated requirements. CMMC and FAR compliance are just the beginning. 
  1. Start Preparing Now: Early preparation is key. Contractors should start by conducting internal reviews, engaging with third-party assessors, and documenting compliance through SSPs. 

Conclusion: Contractors Must Adapt to CMMC and FAR requirements 

As the government strengthens its cybersecurity regulations, contractors must adapt to the new requirements outlined in both CMMC and the proposed FAR rule. By taking proactive steps now, contractors can ensure they are ready when these regulations become fully enforceable. 

Don’t wait—start your CMMC compliance journey today. Visit the CMMC Ready Suite and sign up for a demo to see how we can help streamline your path to certification. Start preparing today to stay competitive in the federal marketplace.