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Blog
The FAR CUI Rule and Its Impact on Government Contractors
Federal contracting is about to undergo a significant transformation with the proposed Federal Acquisition Regulation (FAR) Controlled Unclassified Information (CUI) Rule. Set to bring much-needed clarity to the complex world of information protection; this rule represents a critical evolution in how government contractors handle sensitive information across federal agencies, following a tighter regulation on DoD contractors handling CUI.
Before this rule, contractors working with multiple agencies faced a regulatory maze, with each agency applying different safeguarding and reporting standards.
This lack of uniformity created substantial compliance challenges, increased cybersecurity risks, and exposed contractors to potential legal vulnerabilities.
The proposed FAR CUI Rule aims to cut through this complexity by establishing a single, government-wide standard for identifying, safeguarding, and reporting CUI in federal procurements. It’s a response to a long-standing need for consistency in managing sensitive information across the federal landscape.
Key Highlights of the Proposed Rule
Standardized Safeguards Without Certification
Unlike the Cybersecurity Maturity Model Certification (CMMC) program, the FAR CUI Rule takes a unique approach. Instead of implementing a tiered framework, the rule relies on self-attestation to NIST 800-171 Revision 2. This approach introduces both opportunities and challenges for contractors.
The self-attestation model means that while contractors won’t need to undergo a formal certification process, they must demonstrate true adherence to cybersecurity standards. This puts a significant onus on companies to accurately assess and implement their security controls. The risk of false attestation looms large, potentially exposing contractors to significant legal and financial consequences.
Rapid Incident Reporting
One of the most striking provisions is the requirement for contractors to report suspected or confirmed CUI incidents, including what CUI was involved in, within eight hours of discovery. This reporting mandate underscores the government’s commitment to swift incident response and data protection. For many contractors, this will require a complete overhaul of existing incident response protocols.
Financial Implications
The Cybersecurity and Infrastructure Security Agency (CISA) estimates that the median cost of a cybersecurity incident ranges from $500,000 to $1.6 million, with potential maximum costs exceeding $1 billion. Conversely, they have mentioned that the average cost for complying with the FAR CUI rule is a fraction of that. The FAR CUI Rule aims to mitigate these risks by standardizing cybersecurity requirements across all federal contracts.
Intersecting with CMMC
While CMMC imposes a certification-based security model specifically for the defense supply chain, the FAR CUI Rule introduces uniform requirements applicable to all federal contractors.
Interestingly, prime contractors may still require subcontractors to obtain CMMC certification as an additional layer of assurance. This means that while the FAR CUI Rule doesn’t mandate certification, the market may naturally drive towards more stringent compliance measures.
Practical Considerations for Contractors
Conduct a Comprehensive Gap Analysis: Compare existing cybersecurity measures against NIST SP 800-171 Rev. 2 standards.
Update Incident Response Plans: Develop protocols that enable eight-hour incident reporting.
Review Subcontractor Agreements: Ensure contractual language reflects new CUI handling requirements.
Develop CUI Identification Protocols: Create clear procedures for identifying and managing Controlled Unclassified Information.
Public Comment and Final Rulemaking
With public comments due by March 17, 2025, contractors have an opportunity to shape the final regulation. Organizations should carefully evaluate how these proposed changes might impact their operations and consider providing feedback to the FAR Council.
The proposed FAR CUI Rule represents a significant step towards standardizing information protection in federal procurement. While it introduces new challenges, it also provides a clearer framework for contractors to manage sensitive information.
Successful navigation of these new requirements will demand proactive compliance strategies, robust cybersecurity measures, and a commitment to continuous improvement. Contractors who view this rule not as a burden but as an opportunity to enhance their security posture will be best positioned for success in an increasingly regulated procurement environment.