EXECUTIVE BRIEF
Understanding how to properly mark and manage Controlled Unclassified Information (CUI) is essential for defense contractors operating within the Department of Defense (DoD) supply chain. This blog outlines key requirements, responsibilities, and best practices to ensure compliance with CUI regulations.
Dig deeper and continue reading below.
CUI is a critical component of national security and compliance for DoD subcontractors. Properly marking and handling CUI is not just a technical requirement—it's a legal and contractual obligation. Failing to comply can lead to penalties, loss of contracts, or even civil liability under laws like the False Claims Act.
CUI refers to sensitive but unclassified data that requires safeguarding under federal law, regulation, or government-wide policy. In the defense sector, this includes information such as:
CUI plays a pivotal role in protecting national interests and intellectual property, especially as threats to federal supply chains grow more sophisticated. DoD subcontractors who handle this data must understand their responsibilities to avoid compliance gaps.
CUI is categorized into two types:
Examples:
CUI Specified often involves stricter dissemination controls.
In addition to understanding the type of CUI you're handling, it is equally important to know its Organizational Index Grouping. This classification determines which compliance path is required under the CMMC framework. For example, any contractor handling CUI categorized under the Defense grouping will absolutely need a C3PAO assessment to achieve CMMC Level 2 certification. Contractors dealing with CUI in other groupings may qualify for CMMC Level 2 (Self) certification depending on the nature and sensitivity of the information. However, prime flowdown requirements may require a subcontractor to be able to handle CUI within the defense grouping, resulting in a Level 2 (C3PAO) certification requirement.
Organizational index groupings categorize CUI based on the nature of the information and the risks associated with its exposure. For example, the defense grouping includes technical information and operations security, while the export control grouping covers data regulated under frameworks like the Export Administration Regulations and the ITAR. These groupings are not just labels—they directly influence your compliance obligations under the CMMC framework. Contractors handling CUI within the defense grouping will require CMMC Level 2 certification through a third-party assessment conducted by a C3PAO. As a result, approximately 75–80% of the Defense Industrial Base (DIB) is expected to fall under this requirement.
CUI markings are required to clearly indicate the presence and category of protected information. These include:
Example:
CUI
Department of Defense
CTI
Contact: fso@company.com
Responsibility for CUI marking is shared across:
Everyone in the chain of custody must understand marking and safeguarding obligations. Lack of awareness is not a defense against noncompliance.
Failure to properly mark, handle, or safeguard CUI can result in serious consequences for defense contractors:
Every contractor in the DIB shares the responsibility to prevent these outcomes through vigilant compliance and proper data protection.
To securely email CUI:
Before any information is decontrolled, it must be formally reviewed to determine whether it no longer requires safeguarding. This process is critical to ensure sensitive data isn't prematurely released or mishandled. Only authorized individuals or agencies have the authority to perform decontrol actions. Even after decontrol, the information may still be sensitive and should not be considered public without further clearance. Always verify with your FSO or the contract’s controlling agency before treating information as unrestricted. For detailed guidance, refer to the National Archives and Records Administration’s decontrol guidance.
Several key frameworks define how CUI must be handled:
CUI categories and requirements are managed by NARA and the Information Security Oversight Office (ISOO). See the full ISOO CUI Registry.
ISI offers full-spectrum support for defense contractors needing to comply with CUI requirements:
Whether you're preparing for CMMC Level 2 or responding to new contractual clauses, ISI simplifies the compliance process while strengthening your security posture.
The ISOO CUI Registry categorizes types of CUI and outlines applicable safeguarding and dissemination rules. View it here.
Each document should have a banner marking, portion markings if required, and a CUI Designation Indicator.
Tools like classification labels in Google Workspace and Microsoft Purview can help apply markings and manage access.
FOUO was a legacy designation. CUI replaces it with standardized handling requirements across agencies.
Retention depends on contract and agency policies. CUI must be protected if it retains its designation and sensitivity.
Penalties include contract loss, False Claims Act liability, financial penalties, and reputational harm. In some cases, national security implications may apply.