EXECUTIVE BRIEF
The latest government shutdown occurred on October 1, 2025, and is currently ongoing. A lapse in appropriations both directly and indirectly impacts contractors operating within the Defense Industrial Base in a variety of ways. Here’s what contractors need to know:
- New contracts cannot be awarded without congressionally approved funding
- The shutdown will impact DCSA operations including FCL approvals, background investigations, continuous vetting, and cybersecurity visits and assessments
- While the CMMC framework is unaffected, the ecosystem could be impacted due to the DCSA’s inability to conduct Tier 3 investigations, required for CCPs, CCA’s, and other C3PAO staff members
Dig deeper and continue reading below!
What to Know about Government Shutdowns
Lapse in appropriations, commonly known as government shutdowns, occur when Congress is unable to pass annual appropriation bills or temporary funding measures (Continuing Resolutions). During this time, all government activity requiring new funding is stopped unless those activities have been given an “Excepted” status. This includes new contracts, agency salaries, and other costs associated with operational activities and events.
There have been ten government shutdowns in our nation’s history, beginning with the first in 1981. Historically, shutdowns have lasted an average of nine days. However, since 2013, the average duration has nearly doubled to around 18 days, with the longest lasting 34 days.
The current government shutdown, which began on October 1, 2025, has now surpassed 16 days in duration, already making it the third longest in U.S. history.
How Does this Shutdown Impact Defense Contractors
The most immediate and significant impact is that contractors will be unable to initiate or receive payments for contracts starting after October 1, 2025, and new contract awards may also face delays. Beyond this, the shutdown has a range of direct and indirect effects on defense contractors that could disrupt operations and planning.
Defense Counterintelligence and Security Agency (DCSA) Impacts
In the absence of funding, the following DCSA activities could be halted or severely impacted:
- Processing National Industrial Security Programs (NISP) facility clearances
- Cybersecurity visits and assessments
- Conducting previously scheduled facility visits and security reviews
- New Industry Background Investigations and Interim determinations, including Tier 3 background investigations
Activities the DCSA plans to continue in the absence of funding:
- Agency Support Helpline, System Liaison
- Development of and support to the National Background Investigation Services
- Customer Engagement Team (CET)
- Background investigations and continuous vetting tasks that were previously underway
CMMC Impact
The CMMC framework itself is not directly affected by the government shutdown, and its phased rollout remains scheduled to begin on November 10, 2025. However, because new contracts cannot be issued during a shutdown, the implementation of CMMC requirements through new contract awards would be temporarily paused. If the shutdown extends beyond the rollout date, the implementation of new contract requirements may be affected until the shutdown is resolved.
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That said, the impact on DCSA operations has a significant impact on the CMMC ecosystem due to key roles requiring Tier 3 investigations conducted by the DCSA. Here’s who needs these investigations:
- CMMC Certified Professionals (CCP)
- CMMC Certifies Assessors (CCA)
- All other employees of a C3PAO working on Level 2 assessments
- Cyber AB staff
In order to scale CMMC Level 2 (C3PAO) assessments, more assessors and C3PAO staff are needed. The path to becoming a CCA begins with achieving the CCP certification.
If Tier 3 investigations are paused or significantly delayed during the shutdown, the Certified CMMC Assessor (CCA) pipeline will effectively stall. With an assessment bottleneck already a concern, a prolonged shutdown could accelerate the buildup of that backlog—just as Phase 2 of the rollout begins, when Level 2 (C3PAO) assessments become the standard requirement.
ISI Insight: Check out our CMMC Bottleneck Coming page for more insights and analysis.
What Contractors Can Do Now
- Submit any background investigations or fingerprints as soon as possible, even if processing will not begin until funding is restored
- DCSA allows submission of investigations and fingerprint packages during a funding lapse
- Schedule your C3PAO assessment as soon as your scope and remediation timeline are determined
- Reach out to expert partners for support in expediting your FCL, PCL, and CMMC readiness timelines
While a quick resolution is what everyone is hoping for, it is important to understand how a prolonged impasse could impact your business. If you want to explore how ISI can support your business, schedule your complimentary call with a trusted advisor here.
