DFARS Non-Compliance Leading to Contract Suspensions and Remediation Costs
Definition
Shipbuilding contractors and subcontractors fail to meet DFARS cybersecurity and CUI protection requirements, particularly in areas like System and Communications Protection, Audit and Accountability, and Access Control. This triggers DoD stop-work orders, suspending ongoing Navy contracts until gaps are fixed. Remediation involves extensive efforts including POA&M development and implementation, halting revenue from critical defense projects.
Key Findings
- Financial Impact: $250,000+ per incident in remediation costs
- Frequency: Recurring - common across multiple requirement families in DoD assessments
- Root Cause: Gaps in implementing NIST SP 800-171 controls and failure to enforce flow-down requirements to subcontractors handling CUI
Why This Matters
This pain point represents a significant opportunity for B2B solutions targeting Shipbuilding.
Affected Stakeholders
Prime Contractors, Subcontractors, Compliance Officers, Cybersecurity Managers
Deep Analysis (Premium)
Financial Impact
$250,000-$750,000 per stop-work incident; includes labor for POA&M remediation (4-8 weeks at $50K+ cost), lost contract revenue during suspension period (often $500K+ monthly for active NAVSEA contracts), potential contract termination if remediation timeline exceeds tolerance
Current Workarounds
Manual compliance tracking via Excel spreadsheets; POA&M documents created in Word and stored on shared drives; email chains for status updates; spreadsheet-based inventory of IT systems handling CUI; phone calls to verify remediation completion
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Methodology & Sources
Data collected via OSINT from regulatory filings, industry audits, and verified case studies.
Evidence Sources:
Related Business Risks
Cumulative Disruption from Multiple Change Orders
Unapproved or Underpriced Change Orders
Inaccurate Forward Pricing of Change Orders
Excessive Warranty Repair Costs from Post-Delivery Defects
Unsecured Warranty Liabilities Causing Cash Flow Bleeds
Lost Warranty Claims Due to Procedural Non-Compliance
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