The Impact of DFARS Regulations on Businesses and DoD Companies

How Does DFARS Impact the Bottom Line for Defense Contractors?

The U.S. military is not new to cyberattacks. However, the constant attempts of a cyberattack on defense contractors have become a cause of concern for the U.S. Department of Defense. Although defense contractors are an integral part of the defense industrial base and possess critical information like the designs of military equipment or vehicles, they lack sophisticated cyber defense mechanisms. Thus the need for a DFARS consultant who can help such contractors put a matured cybersecurity infrastructure has become apparent.

There are many instances when cyberattackers have targeted U.S. defense contractors and stolen critical data. In 2020, during the Iran crisis, the U.S. DIB openly expressed their concern that Iranian APT syndicates could infiltrate small and mid-sized DoD contractors. Moreover, in the same year, a prime DoD contractor, Visser Precision Manufacturing, became the target of a ransomware attack. 

The recent cyberattacks on the U.S. DoD reveal a clear pattern of attack. Hackers and cybercriminals are not going after the primary contractors. Instead, they are targeting smaller contractors. 

The Defense Federal Acquisition Regulation Supplement, or DFARS, has made it mandatory for DoD contractors to attain a certain level of cybersecurity maturity. Besides this, DFARS compliance has become an essential criterion for acquiring defense contracts. DoD contractors without CMMC or DFARS compliance certificates may not stand a chance to even bid for DoD contractors, or those who are working for DoD may lose their contract. 

However, owing to the lack of resources and skill sets, many DoD contractors find it challenging to keep up with the compliance requirements. 

DFARS Regulations

The DFARS regulations are outlined according to the NIST Special Publication 800-171. The regulations require that contractors possessing Controlled Unclassified Information should implement the NIST data security recommendations to ensure data protection.  

Even if a business is not directly associated with the DoD supply chain but works for government agencies, it must fulfill the DFARS regulations recommendations.

Challenges faced by SMBs when complying with DFARS Regulations

If a DoD contractor experiences a data breach, the Department of Defense will not penalize them instantly. However, the contractor may have to undergo a DFARS audit. If the audit reveals any discrepancies in the cyber defense, the contractor may have to face several consequences. 

  • The contractor might have to put a halt to their contractual work until they resolve the DFARS issues.
  • The contractor might lose their government agreement.
  • The contractor might face penalties for contract breaches.
  • The Department of Defense may bar the contractor from working on government contracts.

It’s apparent that DFARS violations of any kind can jeopardize the DoD contractor’s business. 

For any organization working under the DoD, complying with DFARS is essential. However, DFARS compliance is not a core function of any business. Besides this, most DoD contractors are small businesses either short of funds or lacking dedicated IT support. For them, hiring a full-time IT personnel or Chief Information Security Officer might be expensive. Moreover, besides the cost of hiring IT personnel, the contractor will have to invest in installing new IT infrastructure, systems and tools, and employee training. 

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