Just thinking about those high- stakes scenarios is enough to make anyone feel a little uneasy.

Mishandling government data can end contracts and trigger costly lawsuits, as Massachusetts-based Morse Corp learned in 2023 with a $4.6 million False Claims Act settlement. This resulted from relying on a non-FedRAMP cloud service for Controlled Unclassified Information (CUI), and misreporting compliance scores. That was an early warning. Starting in November 2025, every Department of Defense contractor must meet enforceable cybersecurity obligations before an award, at every contract option, and throughout performance.

Here are 5 steps on how to avoid the mistakes that can destroy eligibility for DoD projects 👇🏽

Step 1: Know Your Data (New CUI Compliance Basics)

Every contractor must map and document where Federal Contract Information (FCI) and Controlled Unclassified Information (CUI) lives in their systems. Compliance obligations now flow through the entire supply chain, and prime contractors are accountable for subcontractor compliance. Most contractors handling defense CUI will need third-party certification rather than just self-assessment.

⚠️ Risk: Overlooking data flows or subcontractor compliance can disqualify bids.

✅ Action: Map systems and verify SPRS status for all subcontractors.

Step 2: Verify FedRAMP Authorization

MSP compliance does not automatically cover the Cloud Service Provider (CSP). Contractors must confirm whether cloud environments are truly FedRAMP Moderate/High authorized, not commercial versions. Always require documented proof: ATO, 3PAO validation, and alignment with DFARS 252.204-7012 and NIST SP 800-171.

⚠️ Risk: Relying solely on vendor claims can leave systems non-compliant.

✅ Action: Demand and verify FedRAMP documentation directly from the source.

Step 3: Mandatory Rules, Avoidable Costs

By November 2028, all covered contracts must show full CMMC compliance in SPRS, with only limited grace periods. Contractors who rely on “FedRAMP-equivalent” solutions may face mid-contract migrations that cost double or triple their original budgets. Planning ahead with FedRAMP-authorized solutions turns unpredictable risks into planned investments.

⚠️ Risk: Cutting corners today can create forced, high-cost migrations later.

✅ Action: Invest in FedRAMP-authorized solutions before bidding.

Step 4: Understand Key Rules

Three core rules define most compliance: FAR 52.204-21 for FCI, DFARS 252.204-7012 for CUI (including 72-hour incident reporting), and NIST SP 800-171 for CMMC scoring. A January 2025 FAR proposed rule will extend FedRAMP requirements across federal contracts. Understanding these rules helps protect current contracts and future eligibility.

⚠️ Risk: Misinterpreting rules can jeopardize both awards and renewals.

✅ Action: Align contract obligations with the correct FAR, DFARS, and NIST requirements.

Step 5: Build a Strategy for CMMC Level 2 and NIST Scoring

Strong compliance strategies go beyond checking boxes—they support trust, security, and competitive advantage. Key steps include choosing FedRAMP-authorized services, scoring NIST requirements honestly, training staff to avoid shortcuts, and engaging expert support. This holistic approach turns compliance into a business asset.

⚠️ Risk: Inaccurate scoring or shortcuts can lead to penalties and legal liability.

✅ Action: Combine accurate self-assessments, trained staff, and expert guidance for sustainable compliance.

The safest approach isn’t adding more tools - it’s developing a strategy that fits your operations.

Managed solutions may be part of that strategy, but it’s important to remember that regulatory requirements extend to solution providers as well, and any cloud services used must be FedRAMP-authorized.

A strong compliance plan should be tailored to your business model, safeguard sensitive data, and meet evolving DoD requirements without creating unnecessary complexity.

We’ll help you design tactical solutions that fit your operations, so compliance is both achievable and sustainable.

Are You Ready for DFARS & CMMC Compliance?

Do I know if my contracts involve FCI, CUI or ITAR information?

Federal Contract Information (FCI), Controlled Unclassified Information (CUI), International Traffic in Arms Regulations (ITAR) trigger different compliance levels. Knowing which applies is the first step.

Do I know where FCI or CUI lives in my environment and how it flows in and out of my systems?

Mapping data flow, including those through vendors, subcontractors, and remote access, helps prevent overlooked exposure points.

Am I using FedRAMP Moderate (or higher) for CUI?

Commercial cloud services aren’t enough. DFARS 252.204-7012 requires FedRAMP Moderate baseline security for CUI.

Have I verified vendor FedRAMP documentation?

Don’t take a vendor’s word for it. Confirm authorization directly through the FedRAMP marketplace.

Do I have an up-to-date NIST 800-171 score?

Accurate scoring is critical. Contracting officers review these scores in award decisions, and inaccurate or inflated reporting can lead to both contract risk and potential legal liability.

Have I budgeted for compliance before bidding?

Compliance costs are real but waiting until after award can lead to mid-contract migrations that are far more expensive.