CMMC and the Small Contractor Problem

There is a structural reality about CMMC that is easier to see from outside the compliance industry than from inside it.

CMMC was introduced as a cybersecurity standard. It is described as a measure to protect the defense supply chain. The stated goal is to ensure that every contractor handling federal information meets a minimum security threshold.

But the effect, whether intended or not, is supply chain consolidation.

Large prime contractors have compliance departments. They have dedicated IT security staff. They have budgets for assessment and remediation. CMMC is a line item for them. It's a cost of doing business that gets absorbed into overhead and passed through to contract pricing.

Small subcontractors have none of this. They have an IT person who also does other things. They have a consultant they're paying hourly. They have a compliance requirement that costs more to implement properly than the margin on their subcontract.

The math doesn't work for a certain segment of the contractor base, and the assessors know it. When you talk to people who evaluate contractor readiness (not the consultants who sell readiness, but the ones who check it) they describe a bimodal distribution. Some contractors are genuinely ready. A larger group is not ready and doesn't know it.

The second group is disproportionately small businesses.

This isn't because small businesses are less competent. It's because the compliance framework assumes resources that scale with contract size, and subcontractor margins don't scale that way. A small sub with a modest contract and a large prime with a large contract face the same 15 practices. But the prime can distribute the cost across a portfolio. The sub absorbs it against a single thin margin.

The result is predictable. Small contractors rely on consultants who may not have verified their own compliance. They sign attestations based on documentation they can't independently verify. They operate in open systems because closed systems cost more to implement. And they assume that self-attestation without a third-party audit means the risk is low.

The risk is not low. It's deferred. And when the deferred risk materializes, the small contractor is the one who signed the federal document.

Whether this is structural or intentional is a question nobody in the industry will answer directly. The framework doesn't have to intend to eliminate small contractors from the supply chain. It just has to cost more than their margins can absorb. The effect is the same either way.