If your business handles Department of Defense (DoD) work, DFARS compliance isn’t optional—it’s the price of staying in the game. The Defense Federal Acquisition Regulation Supplement sets the security standards contractors must meet to protect sensitive government information. Yet many small-to-mid-sized contractors stumble on the same predictable issues, often without realizing it until an audit or breach exposes the gap. The good news is that these mistakes are avoidable once you know where to look. Here are five of the most common DFARS missteps and how to correct them before they cost you a contract.
1. Misunderstanding CUI Handling Requirements
Controlled Unclassified Information (CUI) sits at the heart of DFARS cybersecurity requirements. Many contractors either fail to identify which data qualifies as CUI or underestimate how it must be stored, transmitted, and disposed of.
The fix starts with accurate data classification. Know exactly what CUI you receive, create, or process, then apply the right safeguards—encryption in transit and at rest, restricted access, and secure disposal. If you can’t point to where your CUI lives, you can’t protect it.
2. Failing to Implement Adequate Access Controls
Weak access controls remain one of the easiest gaps for attackers to exploit. Too many contractors grant broad permissions, skip multifactor authentication, or leave dormant accounts active long after an employee departs.
Apply the principle of least privilege: give each user only the access their role requires. Enforce phishing-resistant multifactor authentication across all accounts, including administrative ones—modern MFA is a powerful defense against identity-based attacks. Review access regularly and revoke it the moment someone changes roles or leaves.
3. Neglecting Incident Reporting Timelines
DFARS requires contractors to report cyber incidents to the DoD within a strict timeframe after discovery. This is a hard deadline, and missing it can put your contract and reputation at risk.
The problem? Many contractors have no documented incident response plan, so when something happens, they scramble. Build and test an incident response plan now. Define who does what, how you preserve forensic evidence, and how you submit a report through the DoD’s reporting portal. Practice the process before you need it—not during a live crisis.
4. Ignoring Supply Chain Security Obligations
Your security is only as strong as your weakest vendor. DFARS flow-down requirements mean your subcontractors and suppliers must also meet applicable security standards—and you’re accountable for confirming they do.
Attackers know this. They target less-secure partners to reach hardened primes downstream. Audit your subcontractors, validate software bills of materials, and use vendor assessment questionnaires to verify that everyone with privileged access actually meets the bar. A single unvetted supplier can compromise your entire compliance posture.
5. Not Maintaining Proper Documentation
If it isn’t documented, auditors assume it doesn’t exist. The System Security Plan (SSP) is the cornerstone document, yet contractors often treat it as a one-time formality rather than a living record.
Maintain your SSP, your Plan of Actions and Milestones (POA&M), and supporting policies and procedures as current, accurate documents. These prove how your controls actually function and show a clear roadmap for closing any gaps. Pair them with consistent records—access logs, training completion, and incident response tests—so you can demonstrate compliance on demand.
Take Your Compliance Posture Seriously
DFARS compliance isn’t a box to check once and forget. It’s an ongoing commitment that protects your clients, your data, and your eligibility for future work. The contractors who treat it as a strategic priority—rather than a last-minute scramble—are the ones who win and keep DoD business.
Start with an honest assessment of where you stand today. Map your CUI, review your access controls, test your incident response plan, vet your supply chain, and update your documentation. If any of these gaps sound familiar, now is the time to act—before an auditor or an attacker finds them first.