CMMC Requirements for Subcontractors: What You Need to Know

EXECUTIVE BRIEF

With the CMMC contractual requirement rule (48 CFR) aiming to be finalized later this year, it is imperative for defense contractors to understand what will be required of them. Here is what you need to know:

• Subcontractors will need to become compliant with the CMMC maturity level that is listed in their prime contractor's request for proposals
• A CMMC Certificate of Status will be required to work on defense contracts, as it serves as the verification method for primes to protect their supply chain
• CMMC Level 2 (C3PAO) will be the most common certification, requiring contractors to implement all 110 NIST 800-171 controls and pass a third-party assessment by a Cyber AB-approved C3PAO
  

Dig deeper and continue learning below!

Unlike prime contractors, subcontractors do not work directly with the U.S. Department of Defense (DoD) but instead work for other contractors. However, this does not exempt them from Cybersecurity Maturity Model Certification (CMMC) requirements, particularly if they handle Federal Contract Information (FCI) or Controlled Unclassified Information (CUI). Subcontractors may face even more scrutiny and pressure to achieve compliance and retain their contract award position.

This guide is designed specifically for subcontractors, breaking down the essential aspects of the CMMC program—its levels, the specific requirements subcontractors must meet, the implementation timeline, and practical steps to ensure you’re well-prepared to meet cybersecurity standards.

An Overview of CMMC Levels

CMMC 2.0 simplifies the framework to three levels, aligning cybersecurity requirements with the sensitivity of the information involved. Here's how each level of CMMC applies to subcontractors.

CMMC Level 1: Rules for Handling FCI

CMMC Level 1 is foundational and applies to subcontractors handling FCI. It focuses on basic cyber hygiene through 17 practices drawn from Federal Acquisition Regulation (FAR) 52.204-21.

Who Needs It: Level 1 is for subcontractors without direct access to CUI.

Key Practices:

• Limit information system access to authorized users.
• Protect information during transmission using encryption.
• Maintain the physical security of devices used to process FCI.

Assessment Requirements: Level 1 requires annual self-assessment. This required CMMC level is relatively straightforward and cost-effective, suiting small subcontractors.

CMMC Level 2: Rules for Handling CUI

CMMC Level 2 covers contractors and subcontractors handling CUI—sensitive information that is unclassified and requires basic safeguarding due to contractual obligations.

Who Needs It: Level 2 is for subcontractors who are managing or contractually required to manage CUI, even if they aren’t actively handling it. Most subcontractors in the DIB fall here, even without realizing it. You’re required to attain Level 2 even if your contract only stipulates that you should be able to handle CUI, regardless of whether you’re doing so.

Key Requirements:

• Implement all 110 controls and 320 objectives specified in NIST SP 800-171 across 14 security domains, such as access control and incident response.
• CMMC level requirements include detailed documentation, a System Security Plan (SSP), and handling processes.

Assessment Options:

• CMMC Level 2 contracts are categorized as either ‘prioritized’ or ‘non-prioritized.’ Your contract should specify which path applies.
  • Non-prioritized: Allow annual self-assessments, will apply to less than 5% of Level 2 organizations
  • Prioritized: Most contracts require triennial assessments by a Certified Third-Party Assessment Organization (C3PAO)

CMMC Level 3: Rules for Advanced Persistent Threats

CMMC Level 3 applies to national-security-critical contracts that require protection against Advanced Persistent Threats (APTs). This level is relevant primarily to prime DoD contractors.

Key Requirements:

• This level implements Level 2 controls plus 24 additional security controls from NIST SP 800-172.
• It focuses on advanced cybersecurity practices like network segmentation and active incident recovery mechanisms.

Assessment: A DoD-led assessment is required through the Defense Industrial Base Cybersecurity Assessment Center (DIBCAC).

The Flow-Down Effect

CMMC security requirements apply to prime contractors and their entire supply chain. Prime contractors are responsible for ensuring their subcontractors comply through DFARS clauses (most commonly DFARS 252.204-7012). Compliance cannot be bypassed if CUI is involved anywhere in the chain. Primes may expect subcontractors to meet applicable CMMC levels as part of the contract.

How CMMC 2.0 Requirements Flow Down to Subcontractors

If you’re a subcontractor, you might already be subject to CMMC requirements without realizing it. Defense contracts often include boilerplate language that flows down compliance terms. Here's why this matters.

DFARS Mandates:

• Prime contractors must flow down DFARS clauses like 7012 (NIST SP 800-171 compliance), 7019 (NIST assessment), and 7021 (CMMC certification level requirements).
• Subcontractors are required to support primes’ compliance and cybersecurity efforts.

Verification by Primes:

• Prime contractors will require subcontractors to achieve a CMMC Certificate of Status appropriate for the sensitive information they handle or are contractually obligated to protect.
• Being prepared and certified early offers a competitive advantage, ensuring you’re a trusted partner within the supply chain.

The Timeline for the Rollout of CMMC 2.0

Three phases are planned for the rollout of CMMC 2.0. Currently, the following milestones apply:

Mid-to-late 2025: Anticipated effective date of the CMMC Title 48 final rule, marking the beginning of Phase 1. 

Late 2025: CMMC requirements expected to start appearing in new DoD contracts. 

2028: The target date for full implementation, including all DoD contracts and CMMC requirements.

The DoD strongly encourages contractors and subcontractors to adopt CMMC practices now to avoid disrupting eligibility when the requirements formally apply. Learn more about important milestones in the CMMC timeline here.

CMMC Challenges Unique to Subcontractors

Small and mid-sized subcontractors face specific hurdles when trying to achieve CMMC compliance.

• Limited IT Resources: Many smaller subcontractors lack formal IT departments or cybersecurity expertise.
• CUI Handling: Uncertainty about the classification or handling of CUI often causes delays in implementation.
• Budgetary Constraints: Compliance can seem costly, particularly for Level 2 certification.
• Time Pressures: Tight timelines for achieving compliance once requested by a prime contractor.

Fortunately, solutions like partnering with experts such as ISI are available to help lighten the load.

How Small to Mid-Sized Subcontractors Can Prepare for Assessment

Preparation is critical to passing a CMMC assessment. Follow these steps to set your subcontracting business up for success.

• Conduct a NIST 800-171 Self-Assessment: Identify gaps between your current practices and compliance requirements using tools like the Supplier Performance Risk System (SPRS).
• Review Results & Plan Remediation: Prioritize areas requiring investment (e.g., access controls, encrypted data storage).
• Document Your SSP and POA&M: Your SSP outlines your cybersecurity policies and operational processes. If gaps remain, a Plan of Action and Milestones (POA&M) provides a roadmap for addressing these.
• Determine External Support Needs: Seek guidance from Registered Provider Organizations (RPOs) or managed IT services like ISI to ensure compliance.
• Begin Mock Assessments: Conduct dry-run audits to build confidence in your cybersecurity setup before scheduling an official audit.
• Train Your Team: Ensure all employees, from IT to admin, are familiar with compliance policies and cybersecurity best practices.

Why Subcontractors Partner with ISI

For subcontractors navigating the complexities of CMMC compliance, working with an experienced partner like ISI can make all the difference. Why choose ISI?

• Expertise: As a CMMC Level 2 certified company that has completed an additional 180+ NIST assessments, we provide contractors with a proven track towards CMMC compliance.
• Tailored Solutions: For NIST 800-171 gap analysis or CMMC assessments, ISI customizes tools and guidance for your business needs.
• Simplification: ISI translates complex compliance requirements into actionable steps, helping you avoid costly delays.

Take the weight of compliance off your shoulders. Schedule a discovery call today with one of ISI’s trusted advisors.

FAQs About CMMC Requirements for Subcontractors

Who Is Required to Be CMMC Compliant?

Any subcontractor or contractor working in the DIB and handling FCI or CUI must achieve CMMC compliance at the required level outlined in their contracts.

Who Needs CMMC 2.0 Level 3?

CMMC Level 3 primarily applies to prime contractors and a select few subcontractors dealing with sensitive national security information. However, a prerequisite to Level 3 compliance is achieving a Level 2 certification. 

When Will All Defense Contractors Be Required to Pass a CMMC Audit?

By the end of 2025, CMMC will begin appearing in DoD solicitations as part of a phased rollout. Full implementation is scheduled by 2028, though primes may request compliance earlier. As of right now, primes cannot flow down certification requirements, but they can flow down perfect score requirements and ask if your audit has been scheduled to ensure their supply chain can continue working on contracts when the rule is finalized.

How Do Prime Contractors Verify Subcontractor CMMC Compliance?

For Level 1, subcontractors must submit self-assessment scores to SPRS or provide proof of CMMC certification. For Level 2, prime contractors will require a Level 2 (C3PAO) Certificate of Status as a prerequisite for subcontractors to work on their contracts.