Common CMMC Mistakes: Not Reading Contracts For Cybersecurity Clauses

Top 15 Most Common CMMC Compliance Mistakes Series #3

This article is part of our expert-led series: The Top 15 Most Common CMMC Compliance Mistakes (and How to Solve Them). Throughout this series, we're dissecting the frequent errors, misunderstandings, and misconceptions organizations encounter on their path to CMMC certification, drawing insights from seasoned CCPs, CISOs, and CCAs.

Today’s focus:  A costly and often silent threat: not reading the fine print. Specifically, overlooking the cybersecurity and compliance clauses embedded in government contracts and DoD bids. These clauses aren’t filler, they can dictate your entire cybersecurity strategy. Misunderstanding or ignoring them could put your business at risk of non-compliance, contract termination, or even legal exposure.

What You’ll Learn

• Where cybersecurity clauses like DFARS appear in contracts
• What these clauses mean for your CMMC obligations
• Why just legal review isn’t always enough
• How to proactively track and manage clause requirements
  
  

The Fine Print Holds the Keys to Compliance

Many organizations assume contract language is just for procurement and legal teams. However, in the case of Department of Defense (DoD) contracts and other federal engagements, buried clauses can fundamentally shape your cybersecurity obligations. The most critical of these are DFARS clauses (Defense Federal Acquisition Regulation Supplement), which outline specific expectations around cyber hygiene, incident reporting, and NIST 800-171 adherence.

Too often, these clauses go unread or are misunderstood. These clauses are legally binding and can have severe penalties, and ignorance doesn’t protect you from enforcement.

DFARS Clauses: What They Are and Why They Matter

At the heart of most DoD contracts are cybersecurity-specific DFARS clauses such as:

• DFARS 252.204-7012: Requires implementation of NIST SP 800-171 controls and mandates reporting of cyber incidents.
  
  
• DFARS 252.204-7019: Requires contractors to maintain an up-to-date self-assessment in the Supplier Performance Risk System (SPRS).
  
  
• DFARS 252.204-7020: Allows DoD to audit compliance and access documentation on demand.
  
  

Each of these clauses connects directly to CMMC 2.0 compliance. For example, failing to meet DFARS 7012 control requirements could disqualify you from obtaining Level 2 certification.

The Most Common Types of Contracts with Cybersecurity Clauses

There are contracts where you can expect to find cybersecurity clauses, but they can also appear in unexpected places, with greater risk of being overlooked or misunderstood. Here’s a brief list of the most common types of contracts that often include specific cybersecurity requirements:

1. U.S. Department of Defense (DoD) Contracts
   
   Common Requirements: DFARS 252.204-7012, CMMC (NIST SP 800-171).
   Why: Protection of Controlled Unclassified Information (CUI) in the Defense Industrial Base (DIB).
   
   
2. Federal Civilian Agency Contracts (e.g., GSA, DHS, HHS)
   
   Common Requirements: FISMA, FedRAMP, NIST SP 800-53.
   Why: Must demonstrate adequate security posture for cloud services and IT systems.
   
   
3. State & Local Government Contracts
   
   Common Requirements: CIS Controls, State-specific frameworks (e.g., Texas DIR, California SIMM), StateRAMP.
   Why: Varies by jurisdiction, often includes requirements for ransomware protection, incident response, and risk assessments.
   
   
4. Healthcare Contracts (Private and Government)
   
   Common Requirements: HIPAA, HITECH, sometimes NIST SP 800-66 or ISO 27001.
   Why: To protect electronic Protected Health Information (ePHI) and demonstrate HIPAA Security Rule compliance.
   
   
5. Financial Services Vendor Contracts
   
   Common Requirements: GLBA, NYDFS Cybersecurity Regulation, SOC 2, ISO 27001, SEC.
   Why: Ensures vendors protect sensitive financial data and support regulatory audits.

Contracts Can Conflict, Making Full Compliance Impossible

Government contractors often juggle multiple agreements from different agencies or primes, each with their own cybersecurity requirements. These requirements may not always align and we've even witnessed examples where they directly conflict, making it impossible to be in compliance with both simultaneously.

For example, if a business had one contract requiring strict adherence to NIST CSF, and another with strict adherence to NIST 800-171, that business cannot satisfy compliance with both simultaneously.

Here are a few examples why:

• Risk Management Philosophy Conflicts: NIST SP 800-171 requires mandatory implementation of all 110 controls, while ISO 27001 allows flexibility based on a risk assessment, this can lead to incompatible control justifications.
  
  
• Documentation and Scoping Differences: NIST mandates detailed technical system security plans and strict system boundaries, whereas ISO allows broader, less technical scoping, leading to potential audit failures if merged.
  
  
• CUI-Specific Requirements: NIST enforces strict handling of Controlled Unclassified Information (CUI), including FIPS 140-2 encryption and data markings, requirements not addressed by ISO 27001, creating compliance gaps.

Contract Review: Cybersecurity Experts in Addition To Lawyers

While your legal counsel may understand contract language, they may not be equipped to interpret the full implications of DFARS or cybersecurity language. That’s why it’s critical to bring in a cybersecurity compliance expert who understands the nuance behind every clause.

An experienced expert can:

• Identify DFARS and FAR clauses that relate to cybersecurity
  
  
• Interpret technical expectations into plain business language
  
  
• Detect conflicts or redundancies across contracts
  
  
• Provide clarity on how to operationalize what the contract requires
  
  

Proactive Strategy: Mapping Clauses to Controls

We strongly recommend creating a clause tracking document or matrix. For every DoD-related contract, list the applicable cybersecurity clauses, their source, and the corresponding NIST or CMMC requirement. This allows your team to:

• Prioritize the most critical obligations
  
  
• Identify overlaps or potential conflicts
  
  
• Define your SSP, POA&M, and implementation plans with clear justifications

This process also improves your audit readiness by demonstrating to a C3PAO that your cybersecurity controls are not only in place but tied directly to enforceable contractual obligations.

In Summary: Understanding Cybersecurity Clauses Before Signing

Misreading, or failing to read, cybersecurity clauses in contracts is a high-risk mistake. Whether it’s DFARS 7012 requirements or conflicting obligations across primes, these clauses directly influence your compliance roadmap. Don’t leave interpretation to chance, partner with a cybersecurity expert who knows what to look for and how to act on it.

Key Takeaways

• DFARS clauses are enforceable and dictate cybersecurity expectations
• Conflicting contracts require careful clause prioritization
• Legal review isn’t enough—engage a cybersecurity expert
• Build a clause summary tracker to inform compliance and audit prep

Up Next In Our Top 15 Most Common CMMC Mistakes Series:

In our next article, we'll discuss the critical role of the System Security Plan (SSP) and the importance of thorough documentation in demonstrating compliance.