The Federal Acquisition Regulation (FAR) 48 CFR Rule introduces significant updates to how Controlled Unclassified Information (CUI) is managed within federal contracts. For small and midsized defense contractors, the rule brings both challenges and opportunities. This guide provides an in-depth look at the rule’s key provisions, what they mean for contractors, and how businesses can prepare for compliance.
Expanded Scope of NIST Requirements
Under the FAR 48 CFR Rule, the security requirements outlined in NIST 800-171 and 800-172 now apply to all federal contracts that involve covered data. Previously, these requirements were primarily associated with Department of Defense (DoD) contracts. Now, any contractor working with any federal agency must implement these cybersecurity standards, creating a consistent baseline of protection for sensitive information.
What This Means for Contractors:
This expansion means taking a closer look at your current cybersecurity measures. Start by assessing your existing systems to identify gaps in meeting NIST standards. Once you know where you stand, it’s important to establish or enhance your system security plans (SSPs) and put continuous monitoring practices in place to ensure ongoing compliance.
Key Action: Begin by reviewing NIST SP 800-171 Revision 2 and NIST SP 800-172 to understand the specific security controls required for your systems. You can access these publications on the NIST website.
You can also access our free NIST SP 800-171 self-assessment tool.
Source: Found in Section IV.C.2 of the FAR 48 CFR preamble, which discusses compliance with NIST SP 800-171 and SP 800-172 requirements for contractors working with federal agencies.
Standardized CUI Identification with SF XXX
The rule introduces a new standard form (SF XXX) designed to identify whether a contract involves CUI, specify its categories, and outline safeguarding requirements. This form is a huge step in ensuring uniformity in how agencies and contractors address CUI thus reducing some long-standing confusion on identifying CUI and streamlining the process, while also creating simplicity for contractors that work with multiple federal agencies.
Key Action: Familiarize yourself with these SF XXX forms and their instructions to effectively integrate it into your contracting process.
Source: Detailed in Section 4.403-4 and related provisions. The SF XXX standardizes how CUI is identified and managed in contracts.
Third-Party Assessments at Agency Discretion
Unlike previous mandates that required third-party assessments across the board, the new rule gives individual agencies the chance to decide whether third-party validation of compliance is necessary. This flexibility recognizes that not all contracts or contractors require the same level of scrutiny. However, it does mean that contractors must remain on their toes or rather, assessment-ready, as an audit can be required at any time.
Preparing for Possible Assessments:
Staying prepared involves more than just meeting the minimum standards; it requires a proactive approach. Contractors should ensure their documentation, such as system security plans (SSPs) and training records, is always up to date and accurate. Also, working with a trusted third-party assessor ahead of time can help identify and address potential vulnerabilities, making it easier to pass any required validations without delays or surprises.
Key Action: Ensure compliance readiness by implementing internal assessments using tools like NIST’s 800-171A assessment guide or our free NIST 800-171 Self-Assessment Tool.
Source: Section 4.403-6 of the FAR highlights agency discretion for validation actions and third-party assessments for critical programs and assets.
Official Cost Estimate for Compliance
For the first time, the government has provided an official estimate for implementing NIST SP 800-171 Revision 2 at $175,700 for small businesses. The cost estimate includes several key components, such as upgrading technology infrastructure, implementing necessary software solutions, training employees to manage CUI securely, and in many cases, hiring external consultants to assist with compliance prep. Contractors can now leverage this critical benchmark as they build budgets, evaluate their readiness, and pursue vendors and tools to support their compliance goals.
| Category | Initial Year Cost (Small Business) | Recurring Annual Cost (Small Business) | Initial Year Cost (Other Business) | Recurring Annual Cost (Other Business) |
| Labor Costs | $148,200 | $98,800 | $543,400 | $494,000 |
| Hardware and Software Costs | $27,500 | $5,000 | $140,000 | $80,000 |
| Total labor and Hardware/Software Costs | $175,700 | $103,800 | $683,400 | $574,000 |
| Total Estimated Cost for 5,875 Contractors | $861,808,500 | $509,139,000 | $1,524,706,500 | $1,065,919,000 |
Budgeting for Compliance:
The $175,700 price tag may seem daunting to small and mid-sized businesses, but it’s essential to view it as an investment in both security and business viability. Many federal contracts now hinge on demonstrating robust cybersecurity measures to protect sensitive data and failing to comply could mean missing out on lucrative opportunities.
If the estimated cost is challenging, there are options to explore. Programs such as cybersecurity grants and state-level initiatives often provide financial assistance to help businesses strengthen their security posture. There are also providers that can help you implement cost-effective solutions for your business.
We, Ardalyst, have taken a pledge to create opportunities for organizations of all sizes by committing to the development of quality products and services at prices that won’t force you to choose between comprehensive cybersecurity and your budget. Learn more here.
Key Action: Take a strategic approach to budgeting by breaking the $175,700 figure into manageable segments, such as initial technology investments, staff training, and ongoing monitoring. Review the full cost breakdown in the Federal Register for additional insights.
Source: The cost estimate is outlined in Section IV.C. of the FAR documentation, providing contractors with a realistic financial benchmark for compliance.
FedRAMP Moderate Requirement for Cloud-Based CUI
The rule explicitly states that CUI stored in the cloud must meet FedRAMP Moderate requirements. No equivalency standards are permitted. Contractors must verify that their cloud service providers meet these specific standards. If your current provider is not compliant, it’s imperative to transition to one that is. Beyond just checking compliance, contractors should also review their cloud infrastructure to ensure seamless integration with FedRAMP Moderate standards. Investing in a compliance cloud environment not only fulfills regulatory requirements but it also enhances your data security, bolstering trust with federal agencies and other partners.
Key Action: Consult the FedRAMP marketplace to identify approved cloud providers.
Source: Section IV.B of the FAR documentation explains the necessity for FedRAMP Moderate compliance for cloud environments involving CUI.
Accelerated Cyber Incident Reporting
Cyber incidents involving CUI must now be reported within 8 hours of discovery, significantly shorter than the previous 72-hour requirement under DFARS 252.204-7012. This change is a big step in mitigating risks to sensitive information. Contractors should be rethinking and upgrading their incident response strategies. You’ll want to ensure your team is equipped to detect and respond to potential breaches quickly, with clear protocols for escalating issues and notifying the appropriate federal authorities. Preparing for this tighter timeline requires not only technical adjustments but also frequent drills and training to instill a sense of readiness. Also, contractors must preserve affected system images and logs for 90 days after a reported CUI incident.
Key Action: Learn more about the reporting requirements in Section IV of the FAR 48 CFR documentation.
Source: Reporting requirements are outlined in Section IV.C.2.b.
How to Stay Ahead
Adapting to the FAR 48 CFR Rule requires a proactive approach to cybersecurity and compliance. It starts by taking small, deliberate steps to ensure your team is prepared with proper training and understands the importance of protecting CUI. Investing in your team’s knowledge through ongoing education can create a culture of compliance that permeates your organization. Additionally, consider partnering with cybersecurity experts who can give your systems a thorough check-up, identify vulnerabilities, and guide you on the best path toward audit readiness.
Don’t forget the resources available to you! NIST’s Cybersecurity Framework and federal small business assistance programs are treasure troves of practical advice and support – both financial and strategic. You can also take advantage of our resource library. By taking these steps, you’ll not only meet federal standards but also position your business as a reliable and trusted partner in the defense sector.
If all this feels overwhelming, remember you don’t have to do it alone. Tesseract offers tailored solutions to guide you through compliance preparation, ensuring your organization is fully equipped for CMMC certification. Whether you’re just starting your compliance journey or looking to refine your approach, we provide the expertise you need to succeed. Don’t wait! Contact us today to plan your path to CMMC compliance and position your organization for long-term success. Book your consultation and start your free Tesseract trial.
