What is a C3PAO? Accreditation, Process, Audits & More

Cybersecurity is a complex business, and there are numerous standards and frameworks meant to help businesses achieve some level of security and protection in a hostile world. Among those programs is CMMC, the Cybersecurity Maturity Model Certification. With a new final rule in the finishing stages, it’s critical to know the details if it’s important to your business.

CMMC is an initiative and a framework developed and maintained by the United States Department of Defense. The stated goal is to be a framework that applies to all DoD offices, all DoD prime contractors, and all DoD secondary and tertiary contractors; in short, the whole defense supply chain throughout the defense industrial base. It’s a shared responsibility framework.

CMMC is aimed at security, while maintaining appropriate access, specifically to federal contract information and controlled unclassified information. It’s a baseline framework for the bare minimum security necessary to be part of the DoD supply chain in a way that has any potential at all to handle sensitive information. Of course, anything classified at a higher level has other standards to adhere to as well.

Here at Ignyte, we’ve covered CMMC in detail before, and we’re always open to contact from anyone who has specific questions or needs assistance in understanding and implementing CMMC. The reason we can offer ourselves as experts with confidence is that we’ve achieved accreditation as a C3PAO. What, though, does that mean? Let’s talk about it and why it means you should trust us.

What is a C3PAO?

First, let’s start with the basics: what is a C3PAO? No, it’s not a golden robot from Star Wars.

A C3PAO is a [C]ertified [3]rd-[P]arty [A]ssesor [O]rganization. This is distinct from a non-certified 3PAO, but we’ll cover that another time.

In broad strokes, a certified third-party assessor or assessment organization is an organization with experience and knowledge of CMMC. They are one side of the coin of a full implementation of CMMC, the other being the RPO or Registered Provider Organization.

When an organization wants to become certified with CMMC, they need to do a lot of internal work. They need to evaluate their current security posture, identify the relevant security controls that apply to them according to the NIST guidelines, perform a gap analysis to identify what work needs to be done to apply those controls properly, and finally, when all is said and done, pass an audit.

That audit is conducted by a third party, someone who is an expert in CMMC but who has no ties or relationships with the organization seeking compliance certification. That third-party assessor is the C3PAO.

So, essentially, a C3PAO functions as the final exam proctor and gatekeeper for full CMMC certification and compliance.

What Does a C3PAO Do?

A C3PAO is effectively an external auditor that comes in and evaluates an organization’s security posture according to the rules outlined in CMMC. They look at each security control, assess if it’s relevant to the business, and if it is, examine if it’s properly implemented and documented according to relevant best practices.

C3PAOs hold high standards for the implementation of CMMC security controls. This is because they provide the final line of defense against sub-par security within the defense industrial base. With major compromises like the SolarWinds hack and the currently-ongoing telecom hacks, DoD security is being taken more seriously than ever before, and with good reason.

C3PAOs perform these audits, develop reports, and inform both the government and the organization seeking certification of the results. The organization either passes, which case they receive certification and can fulfill their DoD contracts, or they fail. If they fail, they can get back to work and figure out what needs to be done to pass, by using the report from the C3PAO as a list of faults to remedy.

Despite this description, a C3PAO is not necessarily a hostile party. Their goal isn’t to aggressively fail organizations seeking certification; it’s to ensure a secure standard of operation. As such, they are not generally opposed to ongoing partnerships where repeat auditing and guidance are part of the services that help a business achieve compliance.

In fact, most C3PAOs can also function as RPOs and provide all of the services necessary for an organization to achieve compliance. The only stumbling block for an organization is that you cannot use the same business as both RPO and C3PAO; once a business like Ignyte works with you as RPO, we can’t be the ones to perform your final audit for conflict of interest reasons.

How Do You Become a C3PAO?

For organizations looking to become C3PAOs, the process is lengthy and sometimes complicated. This isn’t a bad thing; it helps ensure a high standard of security within the defense industrial base. Nevertheless, it means you have to achieve high standards of security on your own before you can offer your services to others.

To give you an idea of the process, it goes a little something like this:

Step 1: Understand the requirements of becoming a C3PAO. C3PAOs have a lot of strict requirements to earn accreditation. This involves CMMC itself, as well as additional validation on top of the framework.

Step 2: Undergo a background evaluation. As part of the defense industrial base and as a crucial supervisor of DoD security, C3PAOs absolutely must be free from foreign interests. That means the business needs to be either entirely 100% US-citizen owned, or they have to pass a FOCI, the Foreign Ownership Control or Influence, background check. This check is mandatory for publicly traded or globally partnered organizations as well. The goal is to ensure that there are no foreign influences that can exert pressure to either approve or deny C3PAO audits when they shouldn’t be.

Step 3: Achieve CMMC. The C3PAO must be at least CMMC Level 3 certified, which means demonstrating a thorough understanding of all of the core principles and individual security controls of CMMC and passing an audit performed by another existing C3PAO. Some of the original batch of C3PAOs were certified by the government directly as seed C3PAOs to help accredit others down the line.

Step 4: Pass ISO 17020. ISO 17020 is a conformity assessment that certifies the organization as an inspection body, capable of performing audits. It’s one case where the United States federal government didn’t choose to reinvent the wheel with their own standard and simply uses the internationally-recognized ISO standard instead.

Step 5: Register. All organizations seeking to be C3PAOs need to register with the CMMC-AB marketplace. Once registered, you can gain an official listing that identifies you as a part of the CMMC process and will identify what stage of the process you’re on, including seeking accreditation or fully accredited.

Step 6: Obtain insurance. All C3PAOs need to obtain adequate liability, error and omission, and security breach insurance policies, that protect both you and your clients throughout the process.

Step 7: Achieve accreditation and pay dues. Accreditation is issued by the CMMC Accreditation Body and, when issued, will require fees to be paid. These fees are mandatory to maintain status as a C3PAO, and are used for maintaining the administration and activity of the CMMC program.

Once fully accredited, you will also have to have a program of continuous monitoring and improvement in place to keep abreast of new changes in the cybersecurity environment, as well as changes to policies and to CMMC itself. After all, you can’t have the auditors behind on the standards.

How Much Does Accreditation Cost?

In addition to all of the costs of becoming CMMC certified, a C3PAO needs to pay some initial and some recurring fees to be accredited.

These costs include:

• Application fee: $1,000
• Activation fee: $2,000 upon acceptance
• Annual maintenance fee: $2,000
• Fees per audit performed: $300 for ML1, $750 for ML3

Being an RPO on the side also has a $5,000 annual fee.

Additionally, the individuals within your organization who perform the assessments and audits also need to be registered themselves, which involves $200 application fees, $275-$450 exam fees, and up to $500 in annual maintenance fees.

Do You Need a C3PAO?

Do you want to be CMMC certified? If you’re working with a DoD contract or as part of the DoD supply chain, by the start of 2025, your contract will include a DFARS 7021 clause, which requires CMMC certification.

If you need CMMC for existing contracts, or if you want to achieve CMMC to win future contracts, you will need to hire a C3PAO. You cannot achieve CMMC compliance without passing the audit, and you cannot pass the audit without retaining the services of a C3PAO to perform that audit.

What Does Hiring a C3PAO Cost?

Costs will vary. A lot of it depends on the level of certification you’re pursuing, as well as the size of your organization and the C3PAO you’ve chosen to do the audit for you. At the low end, a level 1 CMMC audit for a relatively small business is likely to cost between $3,000 and $5,000. At higher levels, for larger organizations, averages of $50,000 to $90,000 are not unusual. For level 3 audits for extremely large businesses, those numbers can double.

If you want to get an estimate for how much your own CMMC audit would cost, feel free to contact us. We can help evaluate what kinds of costs you’d be looking at, and offer our services if you’re interested.

How to Pick a Good C3PAO

If you’re an organization seeking CMMC certification, you need to pick a C3PAO to do your final audit, but the question is, how do you pick a good one? Other than just picking Ignyte, that is.

First of all, any C3PAO is going to have what it takes to perform your audit. The bare minimum standards we all have to go through to become a C3PAO guarantee at least a minimum level of competence and knowledge. Beyond that, it comes down to factors like how much you trust them, how well you communicate with them, and what the timeline is for completion. Picking the “best” C3PAO might not be the best idea if they’re already backlogged out for a year.

Ask how many assessments they have completed to date. The more experience the C3PAO has, the faster they’ll be able to process your audit because they know what they’re doing. That’s not to say that an inexperienced C3PAO will be bad; they may just take longer to be thorough.

Ask how familiar they are with your industry. Some C3PAOs are specialists in certain industries, while others are more generalized. If your business operates in a specialized industry, particularly finance, healthcare, biotech, or similar, it may be beneficial to work with a C3PAO who knows that industry well rather than one with more generic experience.

Ask what the timeline is for an audit. Some of the biggest and best C3PAOs are booked solid, while others have no less authority but shorter timelines due to lower name recognition. This is especially important if your organization needs to be certified on a certain timeline.

Ask how much they’ll charge for your audit. There’s no shame in fishing for price quotes from several C3PAOs; we all understand that this is a big decision to make, and our goal isn’t to pressure you into signing with us before looking around.

Ask about their support if you fail. Some C3PAOs generate a report, give it to your management, and leave until you need another audit. Others are willing to help work with leadership to explain what went wrong and how to fix it to better prepare you for success. While ideally, you should have a good RPO that does this for you, a C3PAO can help as well.

Even if you don’t want to hire us as your C3PAO, we can help in other ways. For example, we developed the Ignyte Platform as a tool to help any organization maintain centralized documentation and collaborate within and without of the organization itself. If you’d like a demo, let us know!