DFARS compliance: An essential guide for contractors

Protecting sensitive information is a top priority for organizations working with the U.S. Department of Defense (DoD). For robust cybersecurity, the Defense Federal Acquisition Regulation Supplement (DFARS) and NIST SP 800-171 provide clear compliance standards for these. In fact, if a contractor experiences a cyber incident, DFARS requires it to be reported to the Department of Defense within just 72 hours.

Non-compliance with these can result in financial penalties or even termination. Whether you’re a seasoned contractor or aspiring to enter the defense market, understanding these frameworks is essential for operational integrity and long-term success.

What are DFARS and NIST SP 800-171?

The protection of Controlled Unclassified Information (CUI) is of high concern to the Department of Defense of the United States (DoD). This data, which is often sensitive information that touches on privacy and security concerns, contains classified business interests, or is relevant to law enforcement investigations, is intended to be protected by the guidelines and requirements of the Defense Federal Acquisition Regulation Supplement (DFARS). This data security standard is also known as DFARS Cyber Clause 252.204-7012.

The DFARS is based on NIST Special Publication 800-171, a set of regulations issued by the National Institute of Standards and Technology and the Under Secretary for Defense Acquisition designed to ensure that those working with the Department of Defense have methods to meet requirements to protect sensitive information. This eliminated the patchwork of policies, procedures, and labels that had previously prevailed to protect and control CUI.

Who needs to comply with DFARS?

DFARS compliance is mandatory for all companies that generate DoD-related revenue to protect the sensitive data that resides within their supply chain from being compromised. However, companies that aspire to generate DoD-related revenue in the future must also be DFARS-compliant.

If a contractor fails to comply with cybersecurity controls, it must provide notice of the areas of noncompliance within 30 days of contract award. Failure to comply with the DFARS can result in the suspension of the contract, financial penalties, termination of the contract, or even debarment from working with the Department of Defense.

Evidence that matters under DFARS compliance

To provide evidence that an organization is in compliance with NIST 800-171, it must conduct a self-assessment for all 110 control points and develop a System Security Plan (SSP) that describes how the security requirements are met. Also, a Plan of Actions and Mitigations (POA&M) to show when controls are in place and security gaps are closed.

DFARS accordingly means conducting an assessment and compiling comprehensive compliance documents that are updated live and ready for submission at any time. The U.S. Department of Defense requires full compliance with all NIST SP 800-171 controls. Accordingly, companies should not worry about spending time and effort to fully remediate controls. The Plan of Action and Remediation (POA&M) and the System Security Plan (SSP) are both important documents companies can use to demonstrate that they have implemented the controls and assessed their organization.

Compliance with NIST 800-171 ultimately gives a company the upper hand among competitors. If a supplier fails to comply with the NIST cybersecurity controls described in DFARS clause 252.204-7012, it must notify the Department of Defense within 30 days of contract award of the areas where it cannot comply.

Options for simplifying DFARS compliance

Implementing security controls is the first step to compliance and can be quite an extensive undertaking, especially for organizations with scarce or limited resources. However, it is possible for a company to hire a third party to perform the DFARS assessment.

A cost-effective alternative is to use a digital solution that can perform the security assessment quickly and automate documents as they go through. DFARS compliance documents can be managed internally using checklists, which can be done digitally online, depending on the company and its knowledge of NIST language and technical capabilities. Here’s a pre-made DFARS compliance checklist from Lumiform that you can easily edit to suit your needs.

The DFARS compliance checklist as a tool

Using a DFARS compliance checklist is an efficient and time-saving way to regularly monitor the 110 checkpoints to consistently comply with contract requirements. The following 14 control families should be covered by a DFARS compliance checklist by completing appropriate checks:

1. Access control – Restrict system access to authorized individuals.
2. Awareness and training – Creating awareness of the security risk associated with user* activities. Conduct training on applicable policies, standards, and procedures; and Ensure that all users are adequately trained in the performance of their duties.
3. Audit and accountability – Create, protect, retain, and review system logs.
4. Conflict management – Creation of baseline configurations and deployment of robust change management processes.
5. Identification and authentication – Identification and authentication of information system users and devices.
6. Incident response – Developing procedures to prepare for, detect, analyze, mitigate, recover from, and respond to incidents.
7. Maintenance – Timely maintenance of organizational information systems.
8. Media safeguarding – Protection, cleaning, and destruction of media pertaining to CUI.
9. Personnel security – Screening individuals prior to authorizing their access to information systems and ensuring that such systems remain secure after individuals have been terminated or transferred.
10. Physical protection – Restricting physical access to facilities and protecting and monitoring the physical facility and supporting infrastructure for information systems.
11. Hazard assessment – Assessment of operational risk associated with processing, storage, and transmission from the CUI.
12. Security assessment – Assessing, monitoring, and correcting deficiencies and reducing or eliminating vulnerabilities in organizational information systems.
13. System and communications protection – Monitor, control, and protect data at system boundaries and apply architectural designs, software development techniques, and systems engineering principles that promote effective information security.
14. System and data integrity – Identify, report, and correct errors in information and information systems in a timely manner, protect the information system from malicious code at appropriate points, monitor information security warnings and advisories, and take appropriate action.

Best practices for DFARS compliance

You can make DFARS compliance smoother and more effective with these strategies:

Adopt a risk-based approach

With a risk-based approach to DFARS compliance, you can address the most critical vulnerabilities in your organization first. There’s a systematic way to do this–conduct a thorough risk assessment to identify and classify your assets (like sensitive data or networks) based on how important they are and how much they’re exposed to threats. For example, you might prioritize Controlled Unclassified Information (CUI) because it’s a common target for cyberattacks.

Maintain accurate, up-to-date documentation

You’ll need well-maintained documentation for DFARS compliance. The two most important documents here are the System Security Plan (SSP) and Plan of Actions and Mitigations (POA&M). Aside from these, you should also have:

• Audit logs
• Incident response plans
• Access control policies
• Data flow diagrams
• Vendor management documents

All of these documents give a clear, organized representation of your compliance, and they’re critical during audits as well as contract evaluations.

Integrate compliance into daily operations

You can make compliance a natural part of your regular workflows through small but impactful changes. Examples include:

• Requiring regular password updates
• Including cybersecurity training that covers NIST 800-171 during employee onboarding
• Enforcing multi-factor authentication for critical systems
• Adding a compliance checklist to your procurement process so third-party vendors meet DFARS requirements

Consider using compliance management tools to automate tasks like monitoring file access, flagging anomalies, or updating key documentation.

Prepare for external audits

External audits can be daunting, but you can prepare thoroughly for them. First, keep all your documentation—SSP, POA&M, and beyond—organized and easily accessible. Auditors want a clear trail, so you’d ideally have timestamp updates and change trackers. Be honest about what’s in progress and use your POA&M to show that you have a plan.

It’s also crucial to conduct internal mock audits to identify gaps and get your team comfortable with the process. This way, when the real audit comes, everyone knows their role.

A digital application for DFARS compliance

Testing compliance with DFARS standards with a checklist is essential for DoD contractors. Applying DFARS standards not only protects the organization from security breaches, but also ensures the integrity of its security measures.Conducting regular audits through a DFARS compliance self-assessment helps provide organizations with data they can use to improve their information systems.

A digital compliance software and app like Lumiform helps organizations perform this DFARS compliance assessment using checklists. The collecting, documenting, and evaluating of data and information is made easier with a DFARS compliance checklist by allowing the results to be recorded and prepared in a structured manner. Take advantage of Lumiform’s compliance software to improve your information systems:

• Conduct assessments and audits anytime, anywhere using any mobile device – online and offline.
• Use one of the numerous templates from Lumiform’s library for your DFARS compliance self-assessment and other reviews.
• Analyze the data collected and uncover areas for improvement and derive corrective actions.
• Keep track of reviews, audits, and corrective actions with the app and desktop software.
• Generate automatic reports on your assessments, audits, and reviews and share them with responsible parties and contractors.
• All data and reports are securely stored in the cloud.

Try Lumiform now with a 14-day free trial and and experience how it simplifies your compliance efforts!