Get Ready: 32 CFR CUI Requirements Are Coming to Federal Contracts | My ISO Consultants
- My ISO Jay
- Aug 18
- 3 min read
Get Ready: 32 CFR CUI Requirements Are Coming to Federal Contracts
The landscape of federal contracting is about to shift significantly. Between October 2025 and February 2026, the Department of Defense (DoD) will begin enforcing Controlled Unclassified Information (CUI) requirements under 32 CFR Part 2002 and the newly finalized 48 CFR rule. If your organization handles CUI or plans to bid on federal contracts, now is the time to act. In this article we will look at "32 CFR CUI Requirements Are Coming to Federal Contracts"
What Is CUI and Why Does It Matter?
Controlled Unclassified Information (CUI) refers to sensitive information that is not classified but still requires safeguarding or dissemination controls as defined by law, regulation, or government-wide policy. Examples include:
Export-controlled data
Critical infrastructure information
Proprietary business data shared with the government
The CUI Program, established under Executive Order 13556, aims to standardize how this information is marked, handled, and protected across all federal agencies and contractors.
The Regulatory Framework: 32 CFR and 48 CFR
32 CFR Part 2002 outlines the overarching policy for handling CUI across the executive branch.
32 CFR Part 170 and 48 CFR Parts 204, 212, 217, and 252 implement the Cybersecurity Maturity Model Certification (CMMC) program, which validates contractor compliance with NIST SP 800-171 security controls.
Together, these rules ensure that contractors protect CUI in both federal and non-federal systems, with enforcement mechanisms now being embedded directly into contract language
When Will This Hit Contracts?
The final 48 CFR rule was submitted for regulatory review in July 2025. Based on the review timeline, CUI and CMMC requirements are expected to appear in contracts as early as October 2025, with full enforcement likely by February 2026
This aligns with the start of the federal fiscal year and marks the beginning of a phased rollout of CMMC Level 2 certification requirements for contractors handling CUI.
What Contractors Need to Do Now
If your organization handles CUI or plans to bid on DoD or other federal contracts, here’s what you should prioritize:
1. Understand Your CUI Exposure
Review current and upcoming contracts for CUI clauses.
Identify systems and processes that handle CUI.
2. Implement NIST SP 800-171 Controls
These 110 controls are the foundation of CMMC Level 2.
Documentation, such as a System Security Plan (SSP) and Plan of Action & Milestones (POA&M), is essential.
3. Prepare for CMMC Certification
Certification assessments by C3PAOs (third-party assessors) are already underway.
Most organizations need 6–12 months to prepare for and pass an assessment
4. Train Your Workforce
The FAR CUI rule requires documented training for all employees handling CUI.
5. Update Incident Response Plans
Contractors must report CUI incidents within 8 hours of discovery.
What’s New in the FAR CUI Rule?
The FAR CUI rule introduces several key updates:
Standard Form (SF-XXX): Agencies will use this to identify CUI in contracts.
New FAR Clauses: Including FAR 52.204-XX and 52.204-YY, which mandate safeguarding, training, and incident reporting.
Clarified Definitions: Including distinctions between CUI, Covered Federal Information, and contractor proprietary data.
The Impact on Organizations
The shift from voluntary to mandatory compliance will have significant operational and financial implications for contractors:
1. Increased Compliance Burden
Organizations must now prove their cybersecurity maturity through formal assessments. This includes implementing technical controls, maintaining documentation, and undergoing audits
2. Contract Eligibility Risks
Non-compliance can result in disqualification from federal contracts, especially those involving CUI. Contractors must be certified at the appropriate CMMC level to even be considered for award
3. Financial and Legal Penalties
Failure to comply may lead to:
Contract termination
Fines and penalties
Liability under the False Claims Act if organizations misrepresent their compliance status
4. Impact on Subcontractors
Prime contractors are responsible for ensuring their subcontractors also comply. This “flowdown” requirement means even small businesses must meet the same standards or risk exclusion from the supply chain
5. Operational Disruption
Organizations will need to invest in:
Cybersecurity infrastructure
Employee training
Continuous monitoring and incident response capabilities
This may require reallocating budgets, hiring new staff, or partnering with managed service providers.
Final Thoughts
The era of voluntary compliance is ending. With the 32 CFR and 48 CFR rules becoming enforceable in contracts, CUI protection is now a contractual obligation. Contractors who fail to comply risk losing eligibility for federal work—and potentially face liability for mishandling sensitive information.
At My ISO Consultants, we’re here to help you navigate this transition. Whether you need a gap assessment, compliance roadmap, or training solutions, our team is ready to support your journey toward CUI and CMMC readiness.
Need help getting started?
Contact us today to schedule a compliance consultation.
