CMMC False Claims Act Raises Compliance Stakes for DoD Firms

Cybersecurity compliance for Defense Industrial Base (DIB) organizations has never been purely technical, but the stakes have now escalated into a very real legal and financial risk. With the Department of Defense’s final CMMC rule taking effect on November 10, 2025, and the Department of Justice actively using the False Claims Act (FCA) to pursue cyber-related fraud, inaccurate cybersecurity claims are no longer “just paperwork issues.” They are potential FCA violations.

This blog explores how the CMMC framework and the False Claims Act intersect, why the risk profile for DoD contractors has changed, and what practical steps your organization should take to protect both contracts and reputation.

CMMC 2.0 and DFARS: Why Compliance Is Now a Gate to DoD Work

The final CMMC rule incorporates Cybersecurity Maturity Model Certification requirements directly into the Defense Federal Acquisition Regulation Supplement (DFARS). Beginning November 10, 2025, cybersecurity certification will be written into solicitations and contracts for most DoD work involving Federal Contract Information (FCI) or Controlled Unclassified Information (CUI), with implementation phased in over roughly three years.

Key points for DoD firms:

• CMMC is now tied to eligibility. For applicable contracts, CMMC status is a condition of award, extension, and in many cases renewal. If you do not meet the required level, you are not eligible to win or keep the work.
• Three levels, increasing depth of controls.
  • Level 1 focuses on basic safeguarding of FCI and requires annual self-assessments.
  • Level 2 aligns with NIST SP 800-171 for organizations handling CUI and often requires third party C3PAO assessments.
  • Level 3 aligns with NIST SP 800-172 and involves government-led assessments for the most sensitive programs.
• Phased rollout, full enforcement by 2028. Program offices have discretion during the early phases, but by November 10, 2028, CMMC clauses are expected across all applicable DoD contracts, with contractors required to hold the appropriate certification at time of award.

For many organizations, this transition is not just about passing a one-time assessment. It is about sustaining evidence-backed cybersecurity maturity under continuous scrutiny from both acquisition officials and enforcement authorities.

The False Claims Act: From Civil War Fraud to Cyber Compliance

The False Claims Act is a 19th-century law with very modern consequences. Originally enacted in 1863 to combat Civil War era fraud by defense suppliers, the FCA imposes liability on entities that knowingly submit false claims or false statements to the federal government. It is the government’s primary civil tool for fighting fraud and carries treble damages plus per-claim penalties.

Two features of the FCA are particularly relevant for CMMC:

• “Knowingly” is broad. It includes actual knowledge, deliberate ignorance, and reckless disregard for the truth. You do not have to intend to defraud the government to face risk under the FCA if your certifications are materially inaccurate.
• Whistleblowers share in recoveries. The FCA’s qui tam provisions allow insiders to file cases on behalf of the government and receive 15 to 30 percent of recovered damages. That creates a strong incentive for former employees, consultants, and partners to report perceived misrepresentations.

In October 2021, the Department of Justice launched the Civil Cyber-Fraud Initiative, explicitly stating that it would use the False Claims Act to pursue cybersecurity-related fraud by government contractors and grant recipients.

The initiative targets organizations that:

• Misrepresent their cybersecurity practices, controls, or compliance status
• Provide deficient cybersecurity products or services
• Fail to report incidents as required by their contracts

That enforcement lens is now directly aligned with CMMC and NIST SP 800-171 obligations.

How CMMC and the False Claims Act Intersect

CMMC changes the nature of cybersecurity representations from “we are working on it” to “we attest we have implemented this.” Those statements show up in several places:

• SPRS scores for NIST SP 800-171 implementation
• CMMC assessment results and certifications
• Annual affirmations of continuous compliance
• System Security Plans (SSPs) and Plans of Action & Milestones (POA&Ms)

Under the final rule, DoD contractors must post assessment results and affirmations to the Supplier Performance Risk System (SPRS), and contracting officers must verify that required information is present before making an award.

That creates two critical developments:

1. Your cyber posture is now a contract condition. If a contract requires a given CMMC level, your claim to meet that level is material to the government’s decision to award and pay. That is core FCA territory.
2. There will be two data sets to compare. Historically, the government relied heavily on self-attested scores. As C3PAO and government assessments scale up, agencies will be able to compare self-reported SPRS scores against independently validated results. Any large discrepancy can look like a false certification.

In practical terms, the “CMMC False Claims Act risk” centers on whether your claims about cyber compliance are accurate, documented, and consistent over time.

Real Enforcement Trends: What Recent Cases Reveal

The DOJ has already used the FCA to pursue contractors that overstated their cybersecurity posture or misrepresented NIST SP 800-171 implementation. Settlements in recent years have involved both large primes and mid-sized contractors, underscoring that enforcement applies across the entire defense supply chain.

Notable examples include a July 2022 settlement in which Aerojet Rocketdyne agreed to pay $9 million over allegations it misrepresented cybersecurity compliance, and an earlier case in March 2022 where Comprehensive Health Services paid $930,000 after allegedly falsely certifying it met contract cybersecurity requirements. The CHS matter was the first settlement under the DOJ’s Civil Cyber-Fraud Initiative, signaling an active enforcement stance from the start. More recently in March of 2025, MORSE Corp agreed to pay $4.6 million after the government alleged it overstated its NIST SP 800-171 compliance and submitted inaccurate SPRS scores. A third-party review showed its true score was far lower than reported, and the FCA case was initiated by a whistleblower who received $851,000 from the settlement.

Penalties and consequences can escalate quickly when cybersecurity claims are inaccurate:

• Civil penalties: Each false claim under the FCA can trigger a penalty ranging from roughly $10,000 to $30,000 per violation. With 110 required NIST SP 800-171 controls at Level 2, any inaccurate attestation can multiply quickly, meaning even a few misrepresented controls could expose an organization to significant cumulative fines.
• Treble damages: In addition to the per-claim penalties, the FCA mandates that violators pay three times the amount of damages caused by the false claim.
• Contract disqualification: Companies found non-compliant may be barred from bidding on new DoD contracts.
• Contract termination: Existing contracts may be terminated for non-compliance.
• Reputational damage: Public FCA actions can erode customer trust, weaken partner and supplier confidence, and create long-term brand harm that persists long after the financial penalties are resolved.

For DoD firms, that means the risk is no longer limited to failing an audit. It extends to treble damages, statutory penalties, and reputational harm if inaccurate cyber claims are exposed through an investigation or whistleblower action.

Where CMMC False Claims Act Risk Is Most Acute

Not every compliance slip rises to the level of an FCA violation, but some activities create obvious exposure. Risk tends to spike in these areas:

1. Overstated or “aspirational” SPRS Scores

If your NIST SP 800-171 score in SPRS reflects a future state rather than current implementation, you are in a high-risk zone. The DOJ has already signaled that inflated self-assessments are a focus, especially where independent assessments later reveal far lower maturity.

The same issue applies to CMMC self-assessments at Level 1 and Level 2. An optimistic interpretation of “implemented” without evidence can read as reckless disregard.

2. Executive Attestations Without Due Diligence

Under the current model, a senior executive is required to attest to the accuracy of cybersecurity submissions, including SPRS scores and annual affirmations. If that executive signs based on assumptions or informal assurances instead of structured evidence review, both the organization and the signer personally may face FCA exposure.

“I trusted the team” is not a defense if the underlying statements turn out to be materially false.

3. Weak System Scoping and Boundary Definitions

Many CMMC issues start with unclear scoping of what systems handle FCI or CUI. If your System Security Plan underestimates the environment or excludes key systems, your control implementation narrative will not match reality.

From an FCA perspective, this can look like misrepresentation of the systems under protection rather than an honest oversight.

4. Subcontractor Oversight Gaps

Prime contractors are responsible for ensuring that subcontractors processing FCI or CUI meet applicable CMMC levels. The final rule and associated guidance highlight subcontractor flow down and verification as a key responsibility for primes.

If a prime certifies overall compliance but does not have a defensible process to evaluate subcontractor posture, that gap can become central in an enforcement action after an incident or audit.

5. Static Documentation and “Shelfware” Controls

CMMC emphasizes not only the existence of policies and technical safeguards but also their operational effectiveness. Documentation that never reflects system changes, or controls that exist only on paper, can undermine your position if DOJ or a relator challenges the truth of your certifications.

Practical Steps DoD Firms Should Take Now

Given the growing alignment between CMMC and the False Claims Act, DoD contractors and subcontractors should treat cybersecurity attestations as legal declarations, not internal scorecards. Several practical actions can help reduce risk:

Revisit Your SPRS Score with a Critical Eye

Review your current NIST SP 800-171 score and underlying evidence. Confirm that every claimed control is fully implemented, not “in progress” or dependent on future projects. If your score needs to come down to reflect reality, adjust it. A lower but accurate score is far safer than an inflated one.

Strengthen Your System Security Plan and POA&M Discipline

Ensure your SSP provides a coherent, current description of the systems that handle FCI and CUI, along with clear mapping of controls to assets, users, and data flows. Your Plans of Action & Milestones should have realistic dates, accountable owners, and documented progress.

If a control is not fully implemented, own that fact in your documentation and scoring rather than “rounding up.”

Build a Formal Executive Attestation Process

Treat each executive sign-off as an internal mini-due-diligence exercise. That should include:

• A structured review checklist tied to specific controls and evidence
• A briefing from technical and compliance staff summarizing gaps and risks
• A documented approval trail that can be produced if the attestation is ever challenged

Executives should know exactly what they are certifying and what assumptions might weaken the organization’s position.

Tighten Subcontractor CMMC Governance

Create a repeatable process to:

• Identify which subcontractors process or store FCI or CUI
• Determine the CMMC level they must meet
• Collect and review their assessments or certifications
• Address gaps through contractual terms or remediation plans

Your ability to show a thoughtful, documented approach to subcontractor oversight will matter if a dispute or investigation arises.

Treat Third Party Assessments as Risk Reduction, Not Just a Requirement

Independent assessments can feel like a hurdle, but in the context of FCA risk they are also a potential shield. A credible third-party review that validates your scoring, evidence, and implementation can support a narrative of good faith, even if issues are later discovered.

Where feasible, consider performing readiness or mock assessments ahead of formal C3PAO reviews to identify discrepancies in a lower-pressure setting.

What This Means for Leadership Across the Business

The intersection of CMMC and the False Claims Act is not purely a CISO problem. It touches:

• CEOs and boards, who must understand that cyber attestations now carry enforcement and reputational risk comparable to financial certifications.
• CFOs, who need to plan for the cost of sustainable compliance and weigh that against the financial impact of a potential FCA action.
• General Counsel, who must embed CMMC-related representations into the organization’s overall risk management and disclosure strategy.
• Program and capture teams, who can no longer treat “compliant” as a checkbox in proposals without verifying the reality behind the claim.

The organizations that will weather this transition most effectively are those that align legal, finance, security, and operations around a shared understanding: every claim about cybersecurity maturity is a statement to the United States government and must be treated with that level of care.

How Compass Can Help You Navigate CMMC and FCA Risk

CMMC and the False Claims Act are converging in a way that raises the bar for DoD contractors, but it also creates an opportunity for organizations that can demonstrate accurate, evidence backed cybersecurity posture.

Compass works with defense-focused organizations to:

• Evaluate current NIST SP 800-171 and CMMC alignment with clear, defensible scoring
• Identify and prioritize remediation activities that have the greatest impact on both security and compliance
• Strengthen documentation, including SSPs, POA&Ms, and evidence libraries that support future assessments
• Prepare executives for their attestation responsibilities with practical, understandable briefings
• Clarify system boundaries and subcontractor obligations so your compliance story is consistent from end to end

If your organization needs support interpreting the CMMC False Claims Act risk landscape or validating your SPRS score and readiness, Compass is ready to assist. Contact us today to discuss your situation and explore how we can help you move forward with confidence.