Government contracting compliance 101: Everything you should know

Organizations that work with the US government must adhere to strict procedures covering procurement protocols, non-discrimination policies, and rigorous cybersecurity. That’s because working with government agencies often involves handling sensitive and legally protected data, and failure to comply can result in financial and legal consequences.

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To effectively approach government contracting compliance, you must be prepared to align with stringent standards such as the Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation Supplement (DFARS), FedRAMP, and the requirements outlined in NIST 800-171 (which forms the foundation of CMMC).

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In this article, we’ll break down notable regulations and frameworks for government contractors and the challenges you may face while pursuing them.

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Government contracting compliance: What it means for your organization

Organizations that work with the US government must meet strict quality and security standards, and compliance frameworks are an effective way to standardize those requirements. These regulations frameworks apply to organizations across a wide range of industries, including defense contractors, cloud service providers, and other entities that process or store government data. 

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Adhering to government standards positions your organization as a credible partner, bringing in benefits such as:

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• Reduce risk of financial penalties: Non-compliance and data breaches involving sensitive information can lead to significant financial fines, loss of contracts, and long-term reputational damage. Strong compliance lowers those risks.
• Streamlined operations: Having clearly defined policies and procedures helps you operate smoothly and minimizes the risks of delays and inefficiencies.
• Building trust: Having demonstrable proof of alignment with standards favored by government agencies helps you show the maturity of your security posture to potential partners.
• Unique competitive edge: Government-oriented standards include industry-best practices that give you a competitive edge even in both government and commercial markets. This is especially true for cloud service providers, who cannot sell to the US federal government until they get their FedRAMP authorization.

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{{cta_withimage27="/cta-blocks"}} | CMMC checklist

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FAR and DFARS

The Federal Acquisition Regulation (FAR) is a regulation introduced on April 1st, 1984 with the intention to provide federal agencies with clear policies and procedures that establish a standard for purchasing supplies and services. Compliance with FAR is mandatory for both government agencies and organizations they contract.

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The Defense Federal Acquisition Regulation Supplement (DFARS) extends FAR for Department of Defense (DoD) contracts. DFARS introduces additional security and reporting requirements, particularly around handling Controlled Unclassified Information (CUI).

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That means, if your contract involves handling CUI, you must comply with DFARS—which incorporates NIST 800-171 and now requires alignment with CMMC, the DoD’s certification framework built on NIST 800-171—to ensure your data security practices meet DoD criteria. Proposed updates to FAR also aim to make NIST SP 800-171 compliance a core obligation across federal contracting by standardizing how CUI requirements are identified and scoped.

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To meet FAR and DFARS requirements, you need to implement a code of conduct, establish reporting protocols, and conduct regular training to ensure your employees understand and adhere to the rules.

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NIST 800-171

NIST 800­­-171 is a special publication that provides organizations with controls for efficiently handling and securing CUI. Any organization intending to work with the US government and process CUI must achieve compliance with NIST.

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Compliance can be useful even for organizations that don’t intend to handle CUI since NIST can strengthen their security posture with stringent requirements across 17 families (as of rev 3):

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1. Access Control
2. Maintenance
3. Security Assessment and Monitoring
4. Awareness and Training
5. Media Protection
6. System and Communications Protection
7. Audit and Accountability
8. Personnel Security
9. System and Information Integrity
10. Configuration Management
11. Physical Protection
12. Planning
13. Identification and Authentication
14. Risk Assessment
15. System and Services Acquisition
16. Incident Response
17. Supply Chain Risk Management

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Achieving compliance with NIST 800-171 doesn’t require a formal audit, and it doesn’t offer a certificate. You provide evidence of compliance to potential partners, who then determine whether your measures are sufficient.

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Note: CMMC is built directly on the security controls in NIST SP 800-171, so many of the requirements overlap. However, CMMC adds formal certification and maturity levels, which is why we’ll discuss it separately below.

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CMMC

CMMC is a government framework developed by the DoD, sometimes also referred to as the Department of War under recent executive authority. Its purpose is to enhance the security posture of the Defense Industrial Base (DIB) and ensure the security of Federal Contract Information (FCI) and CUI.

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Any organization that wants to work with the DoD must obtain a CMMC certification. The framework outlines requirements across 14 control domains, which incorporate practices from other frameworks such as NIST 800-172 and NIST 800-171 Rev 2.

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The DOD recognizes that contractors and subcontractors handle different types of information, so the CMMC is structured into three certification levels, based on the complexity and sensitivity of the data you handle:

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1. CMMC Level 1: Aimed at organizations that primarily handle FCI and encompasses six out of 14 control areas. To obtain a certificate, conduct an internal assessment and enter your results into the Supplier Performance Risk System (SPRS).
2. CMMC Level 2: Intended for organizations that handle both FCI and less critical CUI, this level covers 110 practices across all 14 areas. Certification requires either a self-assessment or an audit by a certified auditor (C3PAO), the results of which must be uploaded to the CMMC Enterprise Mission Assurance Support Service (eMASS).
3. CMMC Level 3: Aimed at organizations that handle highly sensitive CUI. Requires both a Level 2 certificate and an additional 24 controls from NIST 800-172. To achieve compliance, you’ll need to pass an audit by the Defense Industrial Base Cybersecurity Assessment Center (DIBCAC).

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All three levels require annual affirmations to maintain compliance, while levels 2 and 3 require a full reassessment every three years to maintain certification.

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FedRAMP

FedRAMP is a risk management program that standardizes risk assessments, authorizations, and continuous monitoring practices for cloud services working with government agencies. Compliance isn’t legally mandatory for all organizations, but it's a hard requirement for cloud service providers (CSPs) serving federal agencies. CSPs must obtain FedRAMP authorization before they can offer services to the US federal government.

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FedRAMP’s voluntary nature also means that you won’t receive penalties for non-compliance. However, failing to align with the framework may drastically limit business opportunities in regulated markets, even causing you to lose out on existing federal contracts.

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The compliance process typically involves these steps:

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• Conduct an internal assessment
• Remediate identified gaps
• Undergo a third-party audit
• Obtain authorization
• Continuously monitor controls for efficiency

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Suggested read: Vanta has recently tested the FedRAMP 20x pilot, an updated version of the framework designed to streamline the compliance process and make it faster and more effective. Learn about exclusive findings from the program here.

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{{cta_withimage27="/cta-blocks"}} | CMMC checklist

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Which government compliance framework should you pursue?

The government sector framework you should pursue depends on the industry best practices and your current security posture. If you’re a cloud provider, you’ll need to comply with FedRAMP, which is built on NIST security controls. If you plan to collaborate with the Department of Defense, you’ll need to meet CMMC requirements, which formalize NIST 800-171 controls for defense contractors.

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The risks of non-compliance are high. Aside from financial penalties, non-compliance can lead to contract termination, loss of eligibility for future awards, and reputational damage.

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If you intend to pursue government contracts but are still maturing your security posture, start by aligning with NIST CSF and NIST 800-171. Both frameworks provide strong security baselines that public sector buyers expect.

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A major benefit of government compliance is that these standards are complementary and often share several controls. Once you achieve compliance with one of them, it'll be faster to meet the other.

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Challenges of government contracting compliance

Government compliance can be a complex and challenging process. Some of the most common roadblocks organizations encounter include:

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• Extensive compliance requirements: Due to the sensitive nature of the data they protect, government frameworks have complex requirements that can be difficult to meet. This is particularly true for smaller and resource-constrained organizations that may lack in-house expertise.
• Continuous monitoring: Government compliance is an ongoing effort, and one of the core requirements is establishing ongoing monitoring procedures, which can be time-consuming and pull your teams away from other essential tasks.
• Frequent risk assessments and internal audits: Maintaining compliance requires conducting frequent risk assessments and internal audits, which require both deep planning and resource investments.

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Documentation expectations: Thorough documentation is non-negotiable for government contracting compliance, but gathering the required evidence often involves sifting through disparate systems and siloed technologies, which puts significant pressure on your security and compliance teams.

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A common mistake organizations make when pursuing government compliance is improperly scoping the environment or services they are providing as part of the contracts, leading to issues and delays in compliance programs overall.”

Faisal Khan

GRC Solutions Expert, Vanta

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LinkedIn

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An effective way to approach this issue is to implement a top rated compliance automation solution, such as Vanta, that will enable real-time insights, centralize documentation, and ensure a consistent audit process.

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Pursue government contracting compliance with Vanta

Vanta is a leading agentic trust platform that helps organizations approach CMMC and other public sector compliance frameworks efficiently with step-by-step guidance and monitoring for implementation.

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Vanta’s public sector product supports government vendors and agencies in monitoring risk, automating security workflows, and demonstrating trustworthiness. It can help you speed up technology adoption as well as help you prepare for government contracts as a commercial vendor.

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If you’re looking for singular compliance options, Vanta offers a dedicated CMMC product with out-of-the-box support for all certification levels and various helpful features, including:

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• Automated evidence collection powered by 400+ integrations
• Centralized tracking and real-time monitoring for CMMC requirements
• Prescriptive guidance across controls, policies, and documents
• Pre-mapped controls aligned with NIST SP 800-171 and NIST SP 800-172
• Automated gap assessments

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Vanta also offers a standalone FedRAMP solution that streamlines compliance with actionable steps matching your impact level, a centralized dashboard for everything FedRAMP, and expert guidance each step of the way.

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If you’ve already achieved or decide to pursue compliance with multiple frameworks, Vanta can cross-map the overlapping controls to cut out redundancies and compress timelines.

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Schedule a custom demo to see how Vanta can streamline your compliance program in the public sector.

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A note from Vanta: Vanta is not a law firm, and this article does not constitute or contain legal advice or create an attorney-client relationship. When determining your obligations and compliance with respect to relevant laws and regulations, you should consult a licensed attorney. 

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{{cta_simple42="/cta-blocks"}} | Public sector