Cyber Rules Are Tightening—Here’s What Small Contractors Need to Know Now
If you're a small business in federal contracting, heads up: cybersecurity and supply-chain rules are tightening fast. New executive orders, FAR/DFARS clauses, and NDAA provisions are raising the bar—and if you're not keeping up, you could find yourself shut out of major contracting opportunities in FY2025 and beyond. But here’s the good news: with the right prep, these mandates can actually give you a leg up.
Let’s break down what’s happening, what it means for your business, and how to stay competitive.
Federal agencies—especially DoD, VA, GSA, and DHS—are rolling out aggressive new cybersecurity and sourcing requirements. Executive Orders like EO 14028 and EO 14222, along with NDAA provisions for FY2024–25, are forcing contractors to:
Secure their software and IT systems (think: NIST SP 800-171, 800-172, and 800-218)
Prove where their parts and products come from (domestic sourcing is now a must)
Eliminate risky foreign components (like Chinese-made drones and telecom gear)
For small businesses, this means stepping up your compliance game—fast. If your company handles federal contract information (FCI) or controlled unclassified information (CUI), you’ll need to meet specific cybersecurity levels under CMMC 2.0. Level 1 requires 15 basic controls; Level 2, a whopping 110. And the DoD is already phasing these into new solicitations. Without certification in the Supplier Performance Risk System (SPRS), you could be ineligible before you even submit a bid.
So what? Why should small contractors care?
Because these aren’t optional “nice-to-haves”—they’re becoming deal-breakers. Miss a CMMC requirement? You could lose out on a multi-year contract. Use a banned foreign part? You’re looking at possible termination. Fail a cyber audit? That “high-risk” flag could follow you around for years.
But here’s the flip side: if you do meet the new standards, you become a much more attractive partner to primes and agencies alike. A CMMC-certified, cybersecurity-aware, sourcing-compliant small business can stand out from the pack. Especially in sensitive sectors like health IT, infrastructure, energy, and defense tech—where FY2025 budgets are pouring billions into secure systems and domestic sourcing.
If your small business is navigating this maze, here are some tactical moves to make right now:
Start with a cyber readiness check. Use free tools like CISA’s Cyber Hygiene scans or Project Spectrum’s gap assessments to see how your IT setup stacks up.
Map out what data you handle. If you touch FCI or CUI—even as a subcontractor—you’re in scope for FAR and DFARS clauses.
Get your paperwork in order. You’ll need policies, incident response plans, encryption, MFA, and evidence of controls for SPRS. Don’t wait until an RFP drops.
Check your supply chain. Know where your parts come from. Vet your vendors. Document your sourcing trail, especially for high-risk components like electronics and UAVs.
Use help where you can find it. The SBA has pumped millions into cybersecurity training grants. DoD’s Project Spectrum and C3PAOs can walk you through compliance. Tools like CyberVerify and i2ACT-800 simplify audits and reporting.
If you’re short on in-house IT staff (and who isn’t?), look into teaming with primes who have mature cyber systems. Or bring in a managed security service provider (MSSP) to monitor your environment affordably. Bottom line: doing nothing isn’t an option.
This all might sound like a compliance nightmare—but it’s also an opportunity. The federal government wants to work with secure, resilient, American-made suppliers. If you can prove you’re one of them, you’re not just compliant—you’re competitive.
With CMMC 2.0 taking full effect in 2025, and Buy American rules becoming stricter by the quarter, now is the time to invest in your cyber and sourcing game. Not only to protect your current work, but to put yourself in position for what’s coming: billions in cybersecurity, health tech, energy, and manufacturing contracts that will require everything outlined here—and more.
Want to turn compliance into a strategic edge? Start now, document everything, and lean on available support. Because soon, every agency will be asking the same questions—and only the prepared will have the right answers.
Want more help navigating CMMC and cybersecurity compliance? Check out "Unlocking the Mystery of CMMC 2.0: What Small Businesses MUST Know to Win DoD Contracts" for a deep dive into how to make your business audit-ready.
If you aren't a Squared Compass partner, what are you waiting for? From getting your business set up with specific government set aside programs at both the State and Federal level, to being empowered by a Fractional Capture team to win government contracts, to receiving tailored government contract opportunities Squared Compass delivers immense value which helps propel our partners to success. Schedule a chat with our team today.
