Two rulebooks govern almost everything in defense contracting: the FAR, which applies to all federal work, and the DFARS, which the Department of Defense layers on top. Miss a clause in either and the consequences are real, termination, penalties, even debarment. The heaviest pressure right now is cybersecurity, where DFARS pulls in NIST SP 800-171 and CMMC. Here is what both rulebooks require and how to stay compliant without drowning in them.
Quick answer: The FAR is the governmentwide baseline; the DFARS adds DoD-specific rules, including the big cybersecurity clause, DFARS 252.204-7012. That clause requires you to safeguard covered defense information by implementing NIST SP 800-171's 110 controls across 14 families and to report cyber incidents within 72 hours. CMMC then verifies all of it through third-party assessment. You comply with both the FAR and the DFARS on a defense contract.
The FAR is the primary rulebook for federal procurement, governmentwide, covering competition, contract types, payment, ethics, the works. It is the same baseline whether you are selling software to the Air Force or janitorial services to Interior. The DFARS sits on top of it and adds what defense work specifically needs: national security provisions, supply-chain security, bans on certain adversarial-nation entities and telecom gear, and protection of sensitive information. Defense contractors satisfy both, which is why their compliance load is heavier than a civilian-only firm's.
This is not paperwork for its own sake. The FAR and DFARS clauses in your contract are legally binding terms, and violating them can mean termination, financial penalties, suspension or debarment, and in serious cases criminal prosecution. Compliance is also operational: you need accounting that separates direct and indirect costs, timekeeping that supports labor charges, and records you can hand an auditor, because the Defense Contract Audit Agency (DCAA) will check. For where all this sits in the bigger flow, see our guide to the government procurement cycle.
This is the part that has changed the most, and it is where most defense contractors feel the squeeze. The cornerstone is DFARS clause 252.204-7012, "Safeguarding Covered Defense Information and Cyber Incident Reporting." It requires adequate security on all covered defense information that lives in or moves through your systems, which includes CUI.
To meet it, you implement NIST SP 800-171: 110 security requirements organized into 14 control families, spanning access control, incident response, configuration management, media protection, and the rest. Two obligations sit alongside the controls. You report any cyber incident affecting covered defense information within 72 hours of discovery, and you run an annual self-assessment and post your score in the Supplier Performance Risk System (SPRS).
CMMC is the verification layer on top. Instead of trusting your self-assessment, it brings in third-party assessors to certify you before you can win CUI work. It has three levels: Level 1 (basic hygiene, Federal Contract Information only), Level 2 (full NIST SP 800-171, where most defense work lands), and Level 3 (advanced controls for the most sensitive programs). The practical effect is a barrier to entry, without the right level you cannot compete for contracts that require it, so knowing which opportunities your status qualifies you for matters.
Start with a gap assessment. Go through all 110 NIST SP 800-171 controls and mark each fully, partially, or not implemented; that map is the basis for your remediation plan and tells you where to spend first. Then build a System Security Plan that documents your architecture, how each control is implemented, and any compensating controls for what you cannot fully meet. The SSP is the master document an assessor reads, so it has to match reality. Underneath it, write real policies and procedures for access control, incident response, media protection, and personnel security, and train your people, because assessors interview staff and a control nobody operates is a control you fail.
Compliance does not stop at award. The FAR and DFARS run the contract too. Invoicing usually goes through Wide Area Workflow (WAWF), with proper backup and certified accuracy. Changes are governed by clauses like 52.243-1, "Changes, Fixed-Price," which lets the government direct certain changes within scope, so know how to request an equitable adjustment when one happens. And closeout matters: final invoices, required reports, returned property, since the government will not make final payment until everything is confirmed. Throughout, the DCAA may audit your accounting, costs, and pricing, so keep documentation that supports every charge and an indirect-rate structure that holds up. When findings come, acknowledge them, fix the root cause, and document it, defensiveness makes audits worse.
Three challenges trip up most firms. The first is sheer volume: the FAR alone runs to thousands of pages, and with the DFARS and agency supplements on top, working out what applies, standing up the systems, and keeping the documentation is a real burden, hardest on small businesses with thin admin staff. The second is change, because the rules update constantly and the cybersecurity requirements have moved fast, so you have to watch developments and adapt. The third is flow-down: FAR and DFARS requirements pass to your subcontractors, which makes the prime responsible for verifying its supply chain, and as CMMC matures you will need to confirm a subcontractor's certification level before you award. Build compliance in as infrastructure rather than scrambling when an audit forces it, and it becomes an edge, fewer findings, faster awards, stronger past performance.
The FAR is large, the DFARS larger, and both change underneath you. The official sources are worth bookmarking, the FAR lives at Acquisition.gov and the cybersecurity standards at NIST, and the Defense Acquisition University runs free courses. OryonIQ sits on top of all that: Ask Oryon answers FAR, DFARS, and clause questions in plain language and cites its sources, and the Insights module flags the regulatory and policy changes that affect your eligibility before they catch you out. When your RFP responses and proposals have to spell out your compliance posture, that is what gets it across to evaluators. Talk to our team about strengthening your program.
The FAR is the governmentwide baseline rulebook for federal procurement. The DFARS is the Department of Defense's supplement that adds defense-specific rules on top. FAR clauses begin with 52; DFARS clauses begin with 252, and you comply with both on a defense contract.
It is the DFARS clause that requires contractors to safeguard covered defense information by implementing NIST SP 800-171 and to report any cyber incident affecting that information within 72 hours of discovery.
110 security requirements, organized into 14 control families covering areas like access control, incident response, configuration management, and system integrity. Defense contractors handling CUI must implement all of them.
CMMC is the verification layer. DFARS requires you to implement NIST SP 800-171; CMMC requires third-party assessors to certify that you actually have, before you can win contracts involving CUI.
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