North Carolina small shops and subcontractors handling Federal Contract Information (FCI) or Controlled Unclassified Information (CUI) for defense prime contractors must now achieve CMMC certification at the level specified for their work. Phase 1 enforcement began November 10, 2025, and prime contractors are already requiring compliance verification from their supply chains before sharing CUI or awarding subcontracts.
Key takeaway: According to Secureframe's analysis of CMMC subcontractor requirements, prime contractors are required to flow down CMMC requirements to all subcontractors that will process, store, or transmit FCI or CUI. Before awarding a subcontract or sharing sensitive information, primes must verify that the subcontractor has a current CMMC status at the appropriate level. With only 431 organizations achieving Level 2 certification out of approximately 80,000 that need it, readiness gaps remain critical.
For small manufacturing shops across North Carolina's Piedmont Triad, this is not a distant future requirement. Primes like Lockheed Martin have already contacted suppliers about compliance according to industry reporting. If your 10-50 person shop in High Point, Greensboro, or Winston-Salem machines parts for a defense prime, your CMMC status directly affects whether you keep that contract.
Small shop needing CMMC help? Preferred Data Corporation specializes in practical cybersecurity solutions for North Carolina small manufacturers and defense subcontractors. With 37+ years of expertise and BBB A+ accreditation, we make compliance achievable on small budgets. Call (336) 886-3282 or schedule a consultation.
Understanding Flowdown: What Applies to Your Shop
The Basic Rule
According to ISI Defense's subcontractor guide, CMMC requirements flow down from prime contractors to subcontractors based on the type of information handled:
- Handling FCI only: CMMC Level 1 required (17 practices, self-assessment)
- Handling CUI: CMMC Level 2 required (110 controls, C3PAO assessment for most)
- Not handling FCI or CUI: No CMMC requirement for that subcontract
How to Determine Your Level
Ask your prime contractor these questions:
- Does our work involve Federal Contract Information (FCI)?
- Does our work involve Controlled Unclassified Information (CUI)?
- What CMMC level is specified for our subcontract?
- When will CMMC be required for contract renewal?
- What is the timeline for our compliance verification?
Common NC scenario: A 20-person precision machining shop in the Piedmont Triad receives engineering drawings marked "CUI" from a prime contractor. Those drawings, and any data derived from them (inspection reports, tooling specifications, production notes), are CUI. This shop needs CMMC Level 2.
What Does NOT Trigger CMMC
- Commercially available product sales to defense contractors (no CUI involved)
- Services that never involve accessing FCI or CUI
- Subcontracts where all sensitive work stays with the prime
- Work where CUI can be de-identified before sharing
Unique Challenges Facing Small Shops
North Carolina's small defense subcontractors face distinct challenges that large prime contractors do not:
Limited IT Staff
Most 10-50 person shops in High Point, Thomasville, or Kernersville have zero full-time IT staff. The shop owner or a tech-savvy employee manages IT alongside other responsibilities. CMMC requires security expertise that generic IT skills do not provide.
Tight Budgets
According to CMMC.com's cost analysis, for some vendors, particularly smaller businesses, meeting all controls can take a significant portion of revenue. A $2M revenue shop facing $100,000-$200,000 in compliance costs must weigh the investment against their defense contract value.
Unclear Requirements from Primes
Many small subcontractors receive vague direction from their prime contractors: "You need to be CMMC compliant" without specific level, timeline, or scope clarification. This ambiguity makes planning and budgeting difficult.
Competing Priorities
Small shop owners manage production, quality, customers, employees, and finances simultaneously. Adding a 12-18 month compliance project to existing responsibilities feels overwhelming without dedicated resources.
Prioritized Action Plan for NC Small Shops
Here is a practical, prioritized approach for North Carolina small manufacturers (10-50 employees) who need to achieve CMMC compliance.
Immediate Actions (This Month)
1. Determine your actual requirement
- Contact your prime contractor's security office
- Get the specific CMMC level required for your work
- Identify which contracts require compliance and when
- Ask if the prime offers any supply chain support resources
2. Identify your CUI scope
- Where does CUI enter your organization? (email, file transfer, physical delivery)
- Where is CUI stored? (servers, workstations, filing cabinets, personal drives)
- Who handles CUI? (which employees, how many?)
- How does CUI leave? (deliverables, email, physical shipment)
3. Enable quick-win security measures
- Enable MFA on all email accounts immediately (free with Microsoft 365)
- Change all default and shared passwords
- Verify your antivirus/endpoint protection is current
- Confirm backups are running (and test a restore)
- Remove access for any former employees
Cost: $0-$500 | Time: 1-2 weeks
Month 1-2: Foundation
4. Get a gap assessment
- Hire a CMMC-knowledgeable managed IT provider or consultant
- Assess current security posture against NIST 800-171 controls
- Receive a prioritized remediation roadmap
- Understand your SPRS score (likely well below the required 110)
5. Start documentation
- Begin System Security Plan (SSP) documenting your environment
- Create a Plan of Action and Milestones (POA&M) for gaps
- Document your CUI boundary and data flows
- Start security policies (acceptable use, access control, incident response)
Cost: $5,000-$15,000 | Time: 4-8 weeks
Months 3-6: Core Remediation
6. Implement critical technical controls
- Deploy proper firewall with IDS/IPS
- Implement endpoint detection and response (EDR)
- Configure encrypted email and file sharing for CUI
- Establish proper backup systems with offsite copies
- Segment your network (CUI systems separated from general use)
- Implement access controls limiting CUI access to authorized personnel
7. Establish operational practices
- Begin security awareness training for all CUI-handling staff
- Implement vulnerability scanning (monthly at minimum)
- Establish patch management procedures
- Create incident response procedures
- Implement media protection and disposal procedures
Cost: $25,000-$75,000 | Time: 3-6 months
Months 6-9: Advanced Controls
8. Complete remaining technical controls
- Implement audit logging and monitoring
- Deploy configuration management procedures
- Establish system and communications protection measures
- Implement physical security improvements (badge access, cameras)
- Deploy mobile device management if CUI is accessed on phones/tablets
9. Prepare documentation for assessment
- Finalize SSP with all controls documented
- Update POA&M with remaining items
- Gather evidence artifacts for each control
- Conduct internal assessment against all 110 controls
Cost: $15,000-$50,000 | Time: 3-4 months
Need help implementing these controls? Preferred Data Corporation provides step-by-step cybersecurity implementation for NC small shops. We understand small manufacturer budgets. Call (336) 886-3282 or get started.
Months 9-14: Assessment and Certification
10. Schedule and complete C3PAO assessment
- Engage a C3PAO assessor (schedule well in advance; wait times are 3-6 months)
- Complete pre-assessment preparation
- Host the assessment (typically 3-5 days)
- Address any findings within the POA&M timeline (180 days maximum)
- Receive certification and submit to SPRS
Cost: $25,000-$75,000 for assessment | Time: 3-5 months including scheduling
Total Budget Estimate for NC Small Shops
| Category | 10-Person Shop | 25-Person Shop | 50-Person Shop |
|---|---|---|---|
| Gap Assessment | $5,000-$8,000 | $8,000-$15,000 | $10,000-$20,000 |
| Technical Controls | $25,000-$50,000 | $40,000-$80,000 | $60,000-$120,000 |
| Documentation | $5,000-$10,000 | $8,000-$15,000 | $10,000-$25,000 |
| Training | $2,000-$5,000 | $5,000-$10,000 | $8,000-$15,000 |
| C3PAO Assessment | $25,000-$40,000 | $30,000-$50,000 | $35,000-$75,000 |
| Ongoing (monthly) | $1,500-$3,000 | $2,500-$5,000 | $4,000-$8,000 |
| First-Year Total | $62,000-$113,000 | $91,000-$170,000 | $123,000-$255,000 |
Cost Reduction Strategies for Small Shops
Strategy 1: CUI Enclave
Limit CUI to the smallest possible environment. If only 5 of your 25 employees handle CUI, build an enclave for just those 5 workstations rather than certifying your entire shop. See our CMMC enclave guide for details.
Strategy 2: Cloud-Based Compliance
Use cloud solutions (Microsoft 365 GCC High, compliant file sharing) to inherit security controls from the cloud provider, reducing the controls you must implement on-premise.
Strategy 3: Managed Security Services
Rather than hiring a full-time security person ($80,000-$120,000 salary), partner with a managed IT provider who spreads security expertise across multiple clients at a fraction of the cost.
Strategy 4: Phased Investment
Spread costs across 12-18 months to align with budget cycles. Start with highest-priority controls (MFA, backup, endpoint protection) and phase in remaining controls systematically.
Strategy 5: Consider the ROI
Evaluate your defense contract revenue against compliance costs. If a $500,000 annual defense contract requires $100,000 in first-year compliance investment plus $30,000/year ongoing, that represents a 20% first-year cost that decreases to 6% in subsequent years. For many NC shops, the math works.
Timeline: Phase 1 Enforcement Reality
According to Secureframe's enforcement timeline analysis, the phased rollout timeline is:
- Phase 1 (November 2025 - November 2026): Self-assessments required; C3PAO assessments discretionary but increasingly common
- Phase 2 (November 2026 - November 2027): C3PAO assessments mandatory for Level 2
- Phase 3 (November 2027 - November 2028): Level 3 requirements; extensions to option periods
- Phase 4 (November 2028+): Full implementation across all DoD contracts
Critical for NC subcontractors: Contract officers have the right to require CMMC ahead of the rollout schedule. If your prime includes CMMC in your next subcontract, you must comply regardless of the government's phase timeline.
What Primes Are Doing Now
North Carolina subcontractors should be aware that primes are not waiting for government enforcement:
According to industry reporting, Lockheed Martin sent an update to suppliers on June 30, 2025 reminding them that CUI-handling companies should already have NIST 800-171 requirements implemented in full, and their Supply Chain Cybersecurity team is reaching out to suppliers with unmet requirements.
What this means for your shop:
- Your prime may require compliance before the government mandates it
- Non-compliance may disqualify you from future contract awards
- Primes are tracking supplier SPRS scores and compliance progress
- Alternative suppliers who are compliant may replace non-compliant shops
Resources for NC Small Shops
- NC Military Business Center: ncmbc.us - state resources for defense contractors
- PTAC (Procurement Technical Assistance Center): Free counseling for government contractors
- Small Business Development Center (SBDC): Business planning support for compliance investments
- DoD CMMC Resources: business.defense.gov
- CyberAB Marketplace: Find C3PAO assessors and registered practitioners
Frequently Asked Questions
Does CMMC apply if I just machine parts from drawings the prime sends me?
If those drawings are marked as CUI or contain CUI markings, then yes, CMMC applies. Engineering drawings, specifications, and technical data from defense contracts frequently contain CUI. Even if you receive physical prints that you return after manufacturing, during the time you hold them you are storing CUI, which triggers CMMC requirements. Contact your prime for clarification on the specific markings and data types in your subcontract.
What if my prime contractor has not mentioned CMMC yet?
Do not wait for your prime to require it. Begin preparation now because implementation takes 12-18 months and assessor availability is limited. Starting early gives you leverage: when the requirement arrives, you will be ready while competitors scramble. Additionally, primes are increasingly selecting suppliers based on cybersecurity maturity, so early compliance is a competitive advantage for Piedmont Triad small shops.
Can a 10-person machine shop really achieve CMMC Level 2?
Yes, but it requires a focused approach. A 10-person shop can achieve Level 2 by limiting CUI scope (enclave approach), leveraging cloud services for many controls, partnering with a managed IT provider for security expertise, and budgeting $60,000-$115,000 over 12-18 months. Many of the 110 controls are policy and procedure-based rather than expensive technology requirements.
What happens if I cannot afford CMMC compliance?
If compliance costs exceed the value of your defense work, you have options: exit defense subcontracting, restructure operations to avoid CUI handling (commercial-only parts), negotiate with your prime for scope reduction, or explore SBA financing for compliance investments. Some primes are offering compliance support programs for critical supply chain partners. PDC can help you evaluate the economics.
Can I do my own CMMC Level 1 self-assessment?
Yes. Level 1 (17 practices for FCI only) allows annual self-assessment. You must honestly evaluate your implementation of all 17 practices, affirm compliance annually, and submit your score to SPRS. However, false claims carry significant legal liability including False Claims Act penalties. Many small shops find that even Level 1 benefits from professional guidance to ensure accuracy and avoid legal risk.
Get CMMC-Ready with PDC
Preferred Data Corporation has served North Carolina businesses for over 37 years from our High Point headquarters. Our BBB A+ rated team specializes in making CMMC achievable for small manufacturers and defense subcontractors across the Piedmont Triad.
Our small shop CMMC services include:
- Gap assessment tailored to small manufacturer environments
- Prioritized remediation roadmap aligned with your budget
- Cybersecurity control implementation
- Cloud solutions for compliance scope reduction
- Documentation and SSP development assistance
- Managed IT services for ongoing compliance maintenance
- Assessment preparation and evidence gathering
- On-site support within 200 miles of High Point
Do not lose your defense contracts. Call Preferred Data Corporation at (336) 886-3282 or request a CMMC readiness assessment. We will help your small shop achieve compliance without overwhelming your budget or your team.