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COTS and CMMC: Does your business really need to be compliant?

In our last post, we broke down the differences between Federal Contract Information (FCI) and Controlled Unclassified Information (CUI), and how each drives your Cybersecurity Maturity Model Certification (CMMC) level. Today, we’re tackling a related, but often misunderstood topic: how COTS (Commercial Off-The-Shelf) products fit into the compliance equation.


The COTS Exemption: What It Really Means



Means any item of supply (including construction material) that is …

  1. A commercial product (as defined in paragraph (1) of the definition of “commercial product” in this section);

  2. Sold in substantial quantities in the commercial marketplace; and

  3. Offered to the Government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace; and


So, what is COTS and what Isn’t?


The COTS definition is simple, but that simplicity leads to confusion.


To better understand and advise our clients on how COTS can impact compliance, CompleteMSP has conferred with the Defense Contract Management Agency (DCMA), National Cyber Security Operations Center (CSOC/NCSOC), and contracting officers. While each organization’s individual responses varied slightly in the wording, they all agree on some key points.

  • COTS, by definition, is a “commercial product”. “Commercial product” is also defined in Subpart 2.1 linked above. Please note in Subpart 2.1 “commercial product” and “commercial service” are distinct definitions. All parties agree that COTS does not include service, such as rental, installation, or mechanical service.

  • COTS also has as a key component in section 3 above “without modification”. We have confirmed things as simple as changing a label, painting an item, or even using a unique part number for government purchases, removes the COTS designation.


These two points exclude the vast majority of items sold, rented, or serviced by DOD contractors.

 

The Risk of Misclassification

Assuming your work is COTS when it’s not, can lead to:

  • Missed compliance obligations

  • Audit failures

  • Legal exposure under the False Claims Act


Best Practices Moving Forward

  1. Review Every Contract: Don’t assume COTS status, verify it is properly documented.

  2. Map Your Data: Know where FCI and CUI enter your systems. Even if an item is COTS, related FCI or CUI still have the protection requirements.

  3. Segment Your Systems: Use enclaves or logical separation to isolate sensitive data.

  4. Train Your Team: Ensure everyone understands what qualifies as COTS, FCI, or CUI.

  5. Document Everything: From contract reviews to system boundaries, your audit trail matters.

 

Final Thoughts

COTS may offer a narrow exemption from CMMC, but it doesn’t eliminate your responsibility to protect sensitive data. If your systems touch FCI or CUI, even indirectly, you’re in scope. With CMMC enforcement beginning November 10, 2025, now is the time to get it right.


 📞 Contact us today:

- Phone: 256-684-8083

 

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