By Payam Pourkhomami, President & CEO of OSIbeyond
The Cybersecurity Maturity Model Certification program is a fundamental shift in how the Department of Defense approaches supply chain security.
Once the 48 CFR rule of the Defense Federal Acquisition Regulation Supplement is amended to add CMMC requirements to DOD contracts, contractors across the defense industrial base must achieve compliance or risk losing access to federal contracts worth billions of dollars annually.
While some view CMMC as an administrative burden, this perspective overlooks the broader implications of non-compliance. This article examines five compelling reasons why CMMC compliance is essential for any organization serious about maintaining its position in the defense contracting ecosystem.
Reason 1: Existing Contractual Obligations
The cybersecurity requirements embedded in CMMC are not new impositions on the DIB. Since December 31, 2017, every DOD contractor handling controlled unclassified information has been legally required to implement the 110 security controls specified in NIST SP 800-171 under DFARS clause 252.204-7012.
What CMMC fundamentally changes is the enforcement mechanism. Rather than allowing contractors to self-attest their compliance, the program introduces independent verification to guarantee these long-standing requirements are actually met.
Contractors who fail to demonstrate compliance with the required security controls will not be eligible to be awarded new contracts. Even worse off are those who choose to misrepresent their cybersecurity compliance because they can face potential False Claims Act liability, and the fines can be substantial. Earlier this year, Raytheon Companies and Nightwing Group agreed to pay $8.4 million to resolve False Claims Act Allegations by failing to meet DFARS 252.204-7012 cybersecurity requirements on dozens of contracts.
Beyond immediate financial penalties and contract losses, non-compliance creates cascading consequences. Contractors may face ineligibility for future contract awards, heightened scrutiny during security clearance reviews and lasting reputational damage within the tight-knit defense contracting community.
Reason 2: Taxpayer Money Recipient
Defense contractors operate in a unique position within the American economy as their primary source of revenue comes directly from U.S. government contracts (funds that originate from American taxpayers). In fiscal year 2023 alone, the Department of Defense spent over $431 billion on contract obligations across all 50 states.
This fundamental reality carries with it heightened expectations for responsibility and accountability. When a company accepts taxpayer dollars through defense contracts, it enters into a public trust that extends beyond typical commercial relationships. Government contracting is inherently subject to stricter scrutiny, transparency requirements and compliance obligations precisely because public funds are at stake. Contractors must demonstrate the responsibility to protect the sensitive information and systems that the funds are paying for.
For contractors who argue that CMMC requirements are too difficult or unfair to businesses, the response from DOD officials has been direct: participation in the DIB is voluntary. No company is forced to pursue government contracts. Those who decide the cybersecurity requirements for handling sensitive defense information are too onerous can redirect their business strategies toward commercial sectors where such stringent security controls aren’t mandated.
Reason 3: Competitive Advantage
Contractors without the required CMMC certification level will not be awarded contracts even if they win the bid. This creates an immediate and insurmountable advantage for certified companies as they’re competing in a significantly smaller pool of eligible contractors while non-certified firms are locked out entirely.
Early adopters of CMMC certification stand to gain disproportionate benefits in this evolving marketplace, and some may even become attractive acquisition targets for larger primes seeking to strengthen their supply chain security. This first-mover advantage is especially pronounced given the current capacity constraints in the certification ecosystem, with the number of Certified CMMC Assessors still not being as high as it should be given the fact that there are around 100,000 DIB companies.
Additionally, timely CMMC compliance is a visible demonstration of an organization’s commitment to cybersecurity and reliability that can serve as a differentiator even in competitive bid situations where multiple contractors meet the technical requirements.
Historically, large primes have dominated major defense contracts partly due to their perceived ability to implement robust security controls. However, CMMC’s standardized requirements and independent verification mean that a small machine shop with Level 2 certification has demonstrably met the same security standards as a Fortune 500 defense contractor. This equivalency in security posture allows smaller firms to compete for subcontracts and partnerships that might have previously been out of reach.
Reason 4: Protecting Intellectual Property
The scale of intellectual property theft targeting American businesses is staggering. According to estimates cited by the Department of Defense and various intelligence agencies, the United States loses approximately $225-600 billion annually to IP theft, with a significant portion attributed to cyber-enabled theft from defense contractors.
Defense contractors that operate without robust cybersecurity measures are essentially leaving their doors wide open to intellectual property theft. When foreign adversaries successfully breach contractor systems, they steal competitive advantages that took years and millions of dollars to develop. A good example is China’s rapid advances in stealth technology, which have been directly linked to cyber theft from defense contractors.
The irony is that while contractors often view CMMC as a burden imposed by the government, the security controls it requires primarily benefit the contractors themselves. Implementing multi-factor authentication, encryption, access controls, and incident response capabilities (all required under CMMC Level 2) creates multiple layers of defense against the very cyber intrusions that lead to IP theft. A small manufacturer that develops a proprietary component for military aircraft, for example, stands to lose their entire business model if competitors gain access to their designs through a preventable cyber breach.
Reason 5: Protecting National Security
The DIB faces an unrelenting barrage of cyber attacks that threaten the very foundation of American military superiority. According to the Government Accountability Office, the DOD experienced over 12,000 cyber incidents between 2015 and 2022, and many more likely went unreported or undetected.
U.S. intelligence agencies have been unequivocal in their warnings about the persistent threat posed by nation-state actors. China, Russia, Iran and North Korea are actively exploiting weaknesses in the DIB to steal defense-related research and development, weapon system designs and operational capabilities.
Small and medium-sized contractors represent particularly attractive targets for these attacks. GAO has repeatedly warned that approximately 75 percent of DIB companies are small businesses that often lack dedicated security staff and sophisticated defensive capabilities. When a small machine shop or engineering firm is breached, adversaries can gain access to technical specifications, manufacturing processes, or design elements that compromise entire weapon systems. What’s more, they can then move across the supply chain to infiltrate larger targets.
In this context, CMMC compliance can be seen as a matter of patriotic duty. Whether you’re a Fortune 500 prime contractor or a five-person machine shop, accepting defense contracts means accepting responsibility for safeguarding America’s military advantages and, by extension, the lives of the soldiers, sailors, airmen, marines, guardians and allied warfighters whose missions are sustained by secure, resilient technology.
CMMC Compliance Is Non-Negotiable for GovCons
The five reasons outlined above demonstrate that compliance touches every aspect of a contractor’s business, from legal obligations and financial viability to competitive positioning and national security responsibilities.
For contractors still weighing the costs and benefits of CMMC compliance, the calculation should be clear. The risks of non-compliance (contract loss, legal liability, intellectual property theft and exclusion from future opportunities) far outweigh any short-term costs of implementation. Indeed, organizations that embrace CMMC requirements and invest in robust cybersecurity will find themselves well-positioned for success in an increasingly security-conscious marketplace.
