CMMC Compliance, False Claims, and the $4.6M Wake-Up Call for Contractors

In the defense contracting world, myths spread fast—especially when it comes to compliance. One of the most persistent? That the Cybersecurity Maturity Model Certification (CMMC) introduces a wave of expensive new requirements for contractors working with the Department of Defense (DoD).

It’s time to set the record straight.

In reality, the only true "new" cost introduced by CMMC is the third-party assessment. The underlying security requirements—specifically the 110 controls from NIST SP 800-171—have been around since 2017, codified under DFARS 252.204-7012. If you’ve been handling Controlled Unclassified Information (CUI), you’ve already been subject to these requirements for nearly a decade.

This Isn’t New—It’s Just Now Enforced

So why all the recent urgency?

The introduction of SPRS (Supplier Performance Risk System) scoring in 2020 wasn’t a shift in policy—it was an accountability mechanism. Contractors were required to self-score their implementation of NIST 800-171, but there was no formal enforcement behind those self-assessments. That’s where CMMC comes in. It formalizes verification, requiring contractors to prove—rather than promise—they’ve implemented required controls.

For contractors just now starting to build their cybersecurity programs, this means they’re not ahead of the game—they’re 3 to 6 years behind. And falling behind isn’t just a matter of delayed compliance. It's a potential legal liability.

When Non-Compliance Becomes Fraud

Under the False Claims Act, knowingly misrepresenting compliance with federal contract requirements can result in significant civil penalties—and may trigger criminal charges under related statutes in more severe cases.. This goes beyond submitting a proposal with inaccurate claims. Even verbal assurances, signed attestations, or unchecked boxes on a form can trigger liability if you assert you're compliant but aren't.

A stark example is the recent case involving MORSECORP Inc., a defense contractor that agreed to pay $4.6 million to resolve allegations that it falsely certified compliance with cybersecurity requirements while receiving contracts from the DoD. According to the Department of Justice, the company had committed to meeting the required NIST SP 800-171 controls but had not fully implemented them. A whistleblower brought the issue to light, and the consequences were steep.

This case underscores the reality that CMMC compliance isn’t just a best practice—it’s a legal obligation. Failure to meet it, while certifying that you have, can lead to False Claims Act violations, whistleblower actions, and permanent damage to your company’s reputation and eligibility to do business with the federal government.

What Contractors Should Do Now

The compliance landscape is shifting from trust to transparency. Here’s what you should be doing:

• Assess your current posture against NIST 800-171 Don’t assume past efforts are sufficient. Conduct a fresh, honest review of your compliance gaps.

• Treat your SPRS score as a living document Your score should reflect your actual implementation status—not a best-case future plan.

• Be careful what you claim Any statements of compliance in bids, emails, or meetings should be backed by real, audit-ready evidence.

• Choose partners wisely If you're working with a consultant, MSP, or CMMC Registered Provider Organization (RPO), ensure they understand the stakes—and can help you maintain long-term defensibility.

  
  

Final Thoughts

CMMC isn't about penalizing contractors—it’s about protecting sensitive defense information and leveling the playing field. The requirements aren’t new. What’s new is that you must now prove you’ve met them.

CMMC compliance isn't optional. It’s not a checkbox. And it’s definitely not a place for guesswork.

If you're not sure where your cybersecurity program stands—or how to close the gaps—Cape Endeavors is here to help.