For manufacturers looking at defense contracting, the opportunity is real—but the compliance bar is getting higher. The biggest shift is that defense contracting is no longer just about being able to make the part, meet the spec, and register in the right databases. Increasingly, it is about proving that your company can protect sensitive information, document compliance, and qualify for the right contracting categories before an opportunity appears.
Here are five changes and action items manufacturers should understand:
1. CMMC is now moving into contracts
The Cybersecurity Maturity Model Certification, or CMMC, is one of the most important changes in the defense industrial base. The Department of Defense began phased implementation on November 10, 2025, with requirements rolling out over three years. Phase 1 focuses primarily on CMMC Level 1 and Level 2 self-assessments, with required affirmations submitted through the Supplier Performance Risk System, or SPRS.
For new defense contractors, this means cybersecurity readiness should start before the first bid. For existing contractors, it means cyber compliance may become a condition of keeping contracts, winning recompetes, or exercising option years.
2. Know whether you handle FCI or CUI
CMMC requirements depend heavily on the type of information a company handles. Federal Contract Information, or FCI, generally triggers lower-level requirements. Controlled Unclassified Information, or CUI, can require more serious controls and, in some cases, third-party assessment. Existing contractors should map where CUI lives across email, shared drives, ERP systems, vendors, and subcontractors.
3. SAM.gov registration and UEI are now basic readiness items
Companies seeking federal work need to be properly registered in SAM.gov. The old DUNS number has been replaced by the Unique Entity ID, which is now the identifier of record for federal award systems. For companies new to contracting, this is step one. For existing contractors, it is worth checking that entity data, points of contact, NAICS codes, representations, and certifications are current.
4. Socioeconomic certifications are more formalized
Small business certifications can help manufacturers compete for set-aside or subcontracting opportunities, but self-certification is becoming less reliable in some categories. For example, veteran-owned and service-disabled veteran-owned small business certification moved from the VA to the SBA as of January 1, 2023, creating a more centralized certification process. SBA rules have also eliminated self-certification for certain SDVOSB contracting credit.
5. Compliance is now a growth strategy
The practical takeaway: certification is not paperwork at the end of the process. It is part of business development. A manufacturer that wants to enter defense contracting should prepare its SAM registration, NAICS codes, cybersecurity posture, quality systems, and small business certifications early. A manufacturer already doing defense work should review CMMC readiness, subcontractor compliance, expiring certifications, and documentation before a contracting officer asks.
The companies best positioned to win will be the ones that can say not only, “We can make it,” but also, “We are ready, documented, secure, and eligible to perform.”
Why is this worth it?
With a million other things going on, what’s the market opportunity? In FY2024, the Department of Defense increased small-business contract awards by $4.9 billion, while large DoD prime contractors subcontracted an additional $56.8 billion to small businesses—showing that defense contracting is not just for major primes, but also for qualified suppliers ready to meet cybersecurity, registration, and certification requirements.
California’s national security economy touches nearly every industry in the state, with the largest impacts in manufacturing, including aerospace, pharmaceuticals, electronics, and vehicles. Earlier California Research Bureau analysis found national security activity generated 820,000 full-time jobs and already represents 5.7% of the state economy.
For Southern California manufacturers, defense readiness is not a niche concern. In FY2023, Southern California counties received roughly $29 billion in defense contracts, including $12.0 billion in Los Angeles County, $10.9 billion in San Diego County, $2.0 billion in Orange County, and nearly $1.0 billion in San Bernardino County. That spending moves through primes, subcontractors, machine shops, electronics firms, aerospace suppliers, logistics providers, and advanced manufacturers—meaning certification readiness can determine whether a company is eligible to compete.
