The Department of Defense’s Cybersecurity Maturity Model Certification (CMMC) program is no longer a future consideration; it is a contractual and regulatory requirement for government contractors doing business with DoD. As the rule is fully rolled out, many contractors are understandably concerned about the cost of compliance. However, recent clarification and industry guidance make one point clear: CMMC compliance costs are not meant to be absorbed entirely by contractors. They are recoverable under existing federal cost principles.
CMMC requires contractors to implement specific cybersecurity controls, undergo assessments, and maintain ongoing compliance to protect Federal Contract Information (FCI) and Controlled Unclassified Information (CUI). These steps often involve investments in system upgrades, third‑party assessments, consulting support, documentation, and internal resources.
Under FAR 31.201, costs are allowable when they are reasonable, allocable, and necessary for contract performance. Since CMMC compliance is mandated by the government as a condition of eligibility for DoD contracts, the associated costs clearly meet that standard. Compliance is no longer optional; it is required by regulation and, therefore, necessary to perform and maintain government contracts. For that reason, CMMC-related costs qualify as allowable indirect costs.
What does this mean in practice?
Contractors can include CMMC preparation and certification costs, such as cybersecurity upgrades, assessments, and compliance support, within their indirect cost pools. These costs are then allocated across government contracts through established indirect rates, rather than being charged to a single contract or absorbed as unreimbursed overhead. This approach aligns with how other mandatory compliance costs, such as accounting system requirements or quality standards, are routinely treated.
Importantly, the federal government expects to bear its fair share of these compliance expenses. The cost principles in FAR Part 31 exist to ensure that contractors are reimbursed for legitimate costs incurred in meeting government requirements. Cybersecurity is now recognized as a core element of contract performance and national security. As a result, the government has acknowledged that CMMC investments are part of the cost of doing business with DoD and are included in the contract itself.
To recover CMMC costs effectively, contractors must take a proactive approach. Costs should be properly tracked, supported, and consistently applied within the accounting system. Indirect rate structures should be reviewed to ensure CMMC expenses are allocated logically and compliantly. Contractors should also ensure these costs are reflected in pricing strategies for future proposals so recovery occurs over the life of multiple contracts, rather than creating short‑term financial strain.
Conclusion
For government contractors navigating the CMMC landscape, this clarity should provide some reassurance. Cybersecurity is now a shared responsibility and a shared cost between contractors and the federal government.
If you need help understanding your CMMC requirements, managing compliance, or obtaining certification, reach out to iQuasar to learn how they support government contractors at every stage of CMMC readiness and certification.
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