CUI & CMMC Scoping: What Defense Contractors Need to Know

Mishandling CUI can result in contract termination, legal penalties, and national security risks.
By understanding and implementing CUI security best practices, your organization can maintain compliance, safeguard sensitive data, and stay competitive in government contracting.
CUI refers to sensitive but unclassified information that requires safeguarding under federal laws, regulations, and policies.
If your organization processes, stores, or transmits any of this data, you are legally required to implement cybersecurity measures to protect it.
Scoping is the process of identifying which assets in your business handle CUI and therefore require NIST SP 800-171 rev2 security controls.
Not every device, network, or system in your organization requires full compliance—only those that process, store, or transmit CUI.
Navigating CMMC compliance and CUI security can be complex, but Alluvionic simplifies the process by providing expert guidance and hands-on support.

If your organization is working with the Department of Defense (DoD), you must understand Controlled Unclassified Information (CUI) and the role of CMMC (Cybersecurity Maturity Model Certification) in protecting it. Mishandling CUI can result in contract termination, legal penalties, and national security risks.

This guide explains:

What CUI is and why it requires protection

How CMMC scoping helps identify which assets need security controls
Key compliance requirements for handling, storing, and transmitting CUI

By understanding and implementing CUI security best practices, your organization can maintain compliance, safeguard sensitive data, and stay competitive in government contracting.

Understanding Controlled Unclassified Information (CUI)

CUI refers to sensitive but unclassified information that requires safeguarding under federal laws, regulations, and policies. While it does not carry a classified designation, it is still essential to national security and operational integrity.

Definition of CUI

According to 32 CFR § 2002.4(h), CUI is:

“Information the Government creates or possesses, or that an entity creates or possesses for or on behalf of the Government, that a law, regulation, or Government-wide policy requires or permits an agency to handle using safeguarding or dissemination controls.”

In practical terms, CUI is any government-related information that requires protection but does not meet the criteria for classification as Confidential, Secret, or Top Secret.

Examples of CUI

CUI encompasses a wide range of sensitive information, including but not limited to:

Technical schematics for military equipment
Export-controlled research related to defense and aerospace industries
Intellectual property and proprietary information shared under a contract
Sensitive operational security data used by the DoD
Personal Identifiable Information (PII) related to government employees or military personnel

If your organization processes, stores, or transmits any of this data, you are legally required to implement cybersecurity measures to protect it.

Why is Protecting CUI Important?

1. National Security & Cyber Threats

CUI is a prime target for foreign adversaries, hackers, and corporate espionage. The unauthorized disclosure of CUI can:

Compromise military and defense capabilities
Undermine U.S. economic and technological advantages
Allow cybercriminals to infiltrate the defense supply chain

Recent cyberattacks have demonstrated that defense contractors—particularly small and mid-sized businesses—are frequently targeted because they often have weaker security postures than larger organizations.

Compliance with Federal Regulations

The DoD mandates cybersecurity compliance to ensure CUI remains secure. The key regulations include:

DFARS 252.204-7012 – Requires compliance with NIST SP 800-171 rev2
CMMC 2.0 – Mandates self-assessments or third-party certification based on the level of CUI exposure

Failing to comply with these requirements can result in:

Loss of existing contracts
Hefty fines and legal consequences
Ineligibility for future government contracts

Business Reputation & Competitive Advantage

A strong cybersecurity posture is not just a compliance checkbox—it is a competitive advantage. Contractors who can demonstrate compliance with CUI protection standards are more attractive to:

Prime contractors looking for reliable subcontractors
Government agencies awarding new contracts
Industry partners concerned with data security

By proactively implementing CMMC security controls, your company positions itself as a trusted, reliable partner in the federal contracting space.

CMMC Scoping: Identifying Assets That Handle CUI

What is Scoping?

Scoping is the process of identifying which assets in your business handle CUI and therefore require NIST SP 800-171 rev2 security controls.

Proper scoping allows organizations to:

Focus resources on protecting only relevant systems
Avoid unnecessary security investments in non-relevant assets
Streamline compliance efforts for CMMC certification

Not every device, network, or system in your organization requires full compliance—only those that process, store, or transmit CUI.

Areas of Expertise

CMMC Asset Categories: Where Does CUI Reside?

CMMC defines five categories of assets to determine which systems require protection.

CUI Assets (Must be Fully Protected)

Directly store, process, or transmit CUI
Must comply with all 110 NIST SP 800-171 rev2 security controls

Example: A secure server storing DoD technical schematics or a contract management system handling sensitive project details.

Security Protection Assets (SPA)

Systems that support and protect CUI assets but do not store CUI
Require security hardening but are not assessed for all 110 controls

Example: A firewall that filters malicious traffic or intrusion detection systems that monitor network activity.

Contractor Risk Managed Assets (CRMA)

Occasionally interact with CUI but are not dedicated CUI systems
Require risk-based security measures but not full compliance

Example: A laptop used by an engineer that occasionally accesses CUI-related projects.

Specialized Assets

Systems that may process CUI but cannot be fully secured
Includes Internet of Things (IoT) devices, Industrial Control Systems (ICS), and Government Furnished Equipment (GFE)

Example: A test lab machine that interacts with CUI but relies on legacy software that cannot be fully encrypted.

Out-of-Scope Assets (No Compliance Required)

Do not store, process, or transmit CUI
Excluded from CMMC compliance assessments

Example: A marketing computer used only for website management and social media.

Steps to Define CUI Scope in Your Organization

Identify Where CUI is Handled – Create an inventory of all systems, users, and data flows interacting with CUI.
Categorize Assets – Assign each system to one of the five categories above.
Apply Security Controls – Ensure CUI Assets meet NIST SP 800-171 rev2 security requirements.
Document Everything – Maintain records including: System Security Plan (SSP), Network and data flow diagrams, Access control policies
Conduct a Gap Analysis – Identify gaps before undergoing a CMMC assessment.

Best Practices for Securing CUI Under CMMC

To ensure compliance, organizations should adopt the following best practices:

Implement Role-Based Access Control (RBAC) – Restrict CUI access to only authorized personnel.
Use Strong Encryption – Encrypt CUI at rest and in transit using FIPS 140-2 validated cryptographic modules.
Require Multi-Factor Authentication (MFA) – Enforce MFA for all accounts accessing CUI.
Conduct Regular Security Training – Educate employees on CUI handling procedures and cybersecurity threats.
Perform Continuous Monitoring & Auditing – Implement security logging, vulnerability assessments, and incident response plans.

How Alluvionic Can Help

Navigating CMMC compliance and CUI security can be complex, but Alluvionic simplifies the process by providing expert guidance and hands-on support.

We help government contractors:

Conduct CUI scoping assessments
Implement NIST SP 800-171 rev2 security controls
Prepare for CMMC Level 2 certification
Develop System Security Plans (SSP) and compliance documentation
Prepare for C3PAO assessment

Protect Your DoD Contracts – Get Expert Support Today

Contact Alluvionic to ensure CMMC readiness and cybersecurity compliance.

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