Understanding DFARS Compliance: What It Means for Your Business

In the current global climate where cybersecurity threats loom large, securing sensitive information is paramount, especially for companies that contract with the United States Department of Defense (DoD). DFARS, which stands for Defense Federal Acquisition Regulation Supplement, is a set of regulations that DoD contractors must follow to protect this information. Understanding what DFARS compliance entails is critical for any business involved in the defense supply chain.

What is DFARS Compliance?

DFARS mandates that private DoD contractors protect Controlled Unclassified Information (CUI). It is a set of controls aiming to ensure that CUI does not fall into the wrong hands. The requirements are specific and stringent, involving safeguarding measures for cyber defense, incident reporting, and ensuring that subcontractors also comply.

Why is DFARS Compliance Important?

The main objective of DFARS is to keep sensitive defense-related information out of the hands of potential adversaries. Non-compliance can lead to penalties, loss of contracts, and damage to your company’s reputation. On the flip side, being DFARS compliant can open the door to new government contracting opportunities.

Key Requirements of DFARS Compliance 

Adequate Security: Implementing protective measures to guard against unauthorized access to CUI.
Cyber Incident Reporting: Reporting to the DoD within 72 hours of discovering a cyber incident.
Subcontractor Compliance: Ensuring that all subcontractors also comply with DFARS.

Steps to Achieve DFARS Compliance

Identify CUI: Understand what information needs protection under DFARS.
Review Current Security Measures: Assess whether existing cybersecurity practices meet DFARS standards.
Develop an Incident Response Plan: Be prepared to detect, respond to, and recover from cybersecurity incidents.
Educate and Train Employees: Employees should be aware of their roles in maintaining compliance.
Conduct Regular Audits: Regular audits ensure ongoing compliance and identify potential security gaps.

Challenges in Achieving Compliance

Complexity of Regulations: DFARS can be complex, making it difficult for businesses to know if they’re fully compliant.
Constantly Evolving Threats: As cyber threats evolve, so must security measures.
Supply Chain Compliance: Ensuring all tiers of the supply chain are compliant is a significant task.

Benefits of DFARS Compliance

Enhanced Security: Robust cybersecurity practices protect your business from data breaches.
Competitive Advantage: Compliance positions your business as a trustworthy DoD contractor.
Market Expansion: Compliant companies can expand their market by qualifying for more contracts.

Frequently Asked Questions

Is DFARS compliance mandatory for all DoD contractors?

Yes, if you are a DoD contractor or subcontractor handling CUI, DFARS compliance is mandatory.

What is considered Controlled Unclassified Information (CUI)?

CUI is information that requires safeguarding or dissemination controls pursuant to and consistent with laws, regulations, and government-wide policies. This can include technical drawings, blueprints, and other sensitive data not classified as National Security Information.

How often should we conduct security audits for DFARS compliance?

It’s best to conduct security audits annually. However, you should also perform audits whenever there are significant changes to either the DFARS regulations or your IT environment.

What are the penalties for non-compliance with DFARS?

Non-compliance can result in the loss of contracts, financial penalties, and damage to your company’s reputation. In severe cases, it can also lead to legal action.

Can small businesses afford to be DFARS compliant?

Yes, while the process can be resource-intensive, there are scalable solutions and federal assistance programs to help small businesses comply.

How do I report a cyber incident under DFARS?

You should report cyber incidents through the DoD’s Cyber Incident Reporting portal within 72 hours of discovery.

Does DFARS compliance align with other cybersecurity frameworks?

DFARS is closely aligned with NIST SP 800-171, which is a set of standards for protecting CUI on non-federal systems.


Compliance with DFARS is not a one-time event but an ongoing process. With cyber threats continuously evolving, maintaining DFARS compliance means staying vigilant and responsive to the changing security landscape. By doing so, your business will not only protect sensitive information but also position itself as a strong, reliable partner in the defense industry.

Remember, while the road to compliance might seem daunting, the journey is a strategic investment in your company's future and national security. Whether you are starting from scratch or optimizing existing protocols, understanding and achieving DFARS compliance is a crucial step toward success in the defense sector.

For businesses embarking on this journey, the mantra should be: secure, comply, and thrive. By securing your data, complying with regulations, and embracing the process, your business is set to thrive in the competitive world of defense contracting.

Backed by an award-winning cyber security and IT management team, On Call Compliance Solutions is the #1 source for CMMC, NIST SP 800-171 Compliance, DFARS and ITAR consulting. Give us a call now to schedule a free phone call with one of our compliance experts to see how we can help.

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