FedRAMP Modernization Act: IL4 and High Reciprocity Explained

I've watched defense contractors and cloud service providers navigate FedRAMP authorization for years. The process has been slow, expensive, and maddeningly inconsistent. Different agencies interpret the same controls differently. A FedRAMP High authorization that cost $2 million and took 18 months to obtain gets questioned by the next agency anyway.

The FedRAMP Modernization Act, which went into effect in 2024 and is now being actively implemented throughout 2025, promised to fix this. Automated Authority to Operate (ATO) processes. Reciprocity between FedRAMP High and DoD Impact Level 4 and 5. Faster timelines. Lower costs.

So what's actually changing? And more importantly—is it working?

Let me walk you through the practical implications of the FedRAMP Modernization Act, the new IL4 authorization pathway, and what this means if you're a cloud service provider or a defense contractor trying to deploy commercial tools on classified networks.

What the FedRAMP Modernization Act Actually Does

The FedRAMP Modernization Act of 2023 (signed into law December 2023, implementation rolling out through 2025) introduced three major changes:

1. Formal reciprocity requirements

Federal agencies are now required to accept FedRAMP authorizations from other agencies. Previously, reciprocity was encouraged but not mandatory. This meant Agency A could demand a re-authorization even if you already had FedRAMP High from Agency B.

The law codifies reciprocity. If you have a FedRAMP High authorization, agencies must accept it—unless they can document a specific, mission-critical reason not to.

2. Automated ATO processes

The law requires the Federal Risk and Authorization Management Program (FedRAMP) to implement continuous monitoring and automated ATO processes. The goal: reduce the time from authorization to deployment.

Previously, FedRAMP authorization could take 12-24 months. Under the Modernization Act, the target is 6 months for initial authorization and near-instant reciprocity for subsequent agencies.

3. Alignment with DoD Impact Levels

Here's the big one: the law establishes formal reciprocity between FedRAMP security levels and DoD Impact Levels (IL2, IL4, IL5, IL6).

This matters because defense contractors have been dealing with parallel authorization frameworks for years. If you wanted to deploy a cloud service in a DoD environment, you needed FedRAMP and a DoD Provisional Authorization (PA). Two separate processes. Two sets of auditors. Two sets of fees.

The Modernization Act aligns them:

• FedRAMP Moderate = DoD IL2
• FedRAMP High = DoD IL4
• DoD IL5 and IL6 remain separate (for now)

If you have FedRAMP High, you're now eligible to operate at IL4 with minimal additional assessment.

What Is Impact Level 4 (IL4)?

Let me clarify what IL4 actually means, because this is where vendors get it wrong.

DoD classifies data into six Impact Levels based on sensitivity and mission criticality:

• IL2: Public-facing information, unclassified data not subject to export controls
• IL4: Controlled Unclassified Information (CUI), including data subject to ITAR, export controls, or covered by NIST SP 800-171
• IL5: National Security Systems (NSS), mission-critical unclassified data, some classified workloads
• IL6: Classified information up to Secret

IL4 is where most defense contractors operate. If you're handling CUI—technical data, logistics planning, acquisition documents, personnel records—you're working at IL4.

Previously, IL4 required a DoD-specific Provisional Authorization (PA), which involved:

1. Implementing NIST SP 800-171 Rev 2 controls (110 security controls)
2. Third-party assessment by a CMMC C3PAO or DCMA-approved assessor
3. DoD authorization through DISA or the sponsoring agency
4. Annual re-assessments

The FedRAMP Modernization Act changes this. Now, if you have FedRAMP High, you satisfy the baseline security requirements for IL4. You still need DoD validation, but the authorization pathway is streamlined.

FedRAMP High and IL4: What's Actually Reciprocal?

Here's the part that confuses people: FedRAMP High does not automatically give you IL4 authorization.

What it gives you is reciprocity at the security control level.

Let me break it down:

FedRAMP High is based on NIST SP 800-53 Rev 5, High Baseline. It includes 421 security controls covering confidentiality, integrity, and availability.

DoD IL4 is based on NIST SP 800-171 Rev 3 (the CUI Protection standard), which includes 110 controls specifically focused on protecting CUI.

There's significant overlap:

• Access control (AC)
• Audit and accountability (AU)
• Incident response (IR)
• System and communications protection (SC)
• System and information integrity (SI)

If you've implemented FedRAMP High controls, you've already addressed 90%+ of the IL4 requirements.

But here's what's not reciprocal:

1. Authorization Authority: FedRAMP High is authorized by GSA or an agency AO. IL4 requires DoD authorization (typically DISA or the service branch).

2. Boundary Definitions: FedRAMP authorizes a specific cloud service offering (CSO). DoD wants to see your boundary definitions for CUI enclaves, data segregation, and multi-tenant isolation.

3. Supply Chain Security: DoD has additional supply chain risk management (SCRM) requirements under DFARS 252.204-7012. Your FedRAMP package may not document these.

4. Continuous Monitoring: FedRAMP requires continuous monitoring, but DoD has specific reporting requirements through the DoD Cyber Crime Center (DC3) and DIBNET.

So if you're a cloud service provider with FedRAMP High, here's your path to IL4:

1. Map your FedRAMP High controls to NIST 800-171 Rev 3. Most will map directly. Identify any gaps.
2. Document your CUI handling procedures. How is CUI ingested, stored, processed, and destroyed? What's your data classification schema?
3. Prepare your IL4 boundary definition. This is a system diagram showing how CUI is segregated from other data.
4. Engage with DISA or your sponsoring DoD agency. Submit your FedRAMP authorization package plus the IL4 addendum.
5. Complete the DoD validation assessment. This is typically a 2-4 week assessment focused on DoD-specific requirements.
6. Obtain your Provisional Authorization (PA).

Timeline: 3-6 months from FedRAMP High to IL4 PA, versus 12-18 months if you were starting from scratch.

Cost: $50,000-$150,000 in additional assessment and documentation, versus $500,000-$1.5 million for a full IL4 authorization.

This is the reciprocity benefit. It's real, but it's not automatic.

What About IL5 and High Reciprocity?

Here's where the Modernization Act falls short: IL5 and FedRAMP High are not reciprocal.

IL5 is for National Security Systems (NSS). This includes mission-critical systems supporting intelligence, weapons systems, command and control, and logistics for deployed forces.

IL5 has additional requirements:

• FIPS 140-3 validated cryptography (not just FIPS 140-2 like FedRAMP High)
• Common Criteria EAL4+ validated components for certain security functions
• National Industrial Security Program (NISP) compliance for contractor personnel
• Enhanced continuous monitoring with real-time alerting to DoD SOCs
• Government-led assessments (you can't use a commercial C3PAO)

If you're supporting IL5 workloads, you need a separate DoD IL5 authorization. FedRAMP High helps—you're not starting from zero—but there's no fast path.

IL6 (classified up to Secret) is an entirely different beast and is outside the scope of FedRAMP entirely.

Automated ATO: Is It Actually Working?

The Modernization Act requires FedRAMP to implement automated ATO processes. The idea: continuous monitoring data should feed directly into authorization decisions, reducing the need for manual audits.

In theory: Cloud service providers upload security posture data (vulnerability scans, configuration baselines, access logs) to the FedRAMP Continuous Monitoring Platform. Agencies review the data and grant ATO with minimal manual review.

In practice: We're not there yet.

As of July 2025, FedRAMP has implemented the Open Security Controls Assessment Language (OSCAL) format for security documentation. This is a machine-readable format that allows automated ingestion and validation of security controls.

Some agencies—GSA, DoD, DHS—are using OSCAL-based automation to accelerate ATOs. Others are still using manual PDF-based review processes.

What's actually working:

• Faster reciprocity: Agencies that have adopted OSCAL can now review a FedRAMP authorization package in 4-6 weeks instead of 4-6 months.
• Continuous monitoring dashboards: FedRAMP has implemented a centralized dashboard where agencies can view real-time security posture for authorized CSPs.
• Reduced documentation burden: OSCAL eliminates duplicate documentation. You write the control implementation once, and it's reusable across assessments.

What's still broken:

• Inconsistent agency adoption: Not all agencies have adopted OSCAL. Some are still requiring legacy formats.
• Manual assessment gates: Even with automated data ingestion, most agencies still require manual review of certain controls (e.g., incident response, contingency planning).
• Lack of standardized tooling: Different agencies are using different tools to ingest and validate OSCAL data. There's no single platform.

If you're a CSP pursuing FedRAMP authorization in 2025, you should be preparing OSCAL-formatted documentation. It's not mandatory yet, but it's the direction of travel.

CMMC 2.0 and FedRAMP: How Do They Connect?

I get this question constantly: Does FedRAMP High satisfy CMMC 2.0 Level 2?

Short answer: No, but it helps.

CMMC 2.0 Level 2 is the DoD's cybersecurity certification for defense contractors handling CUI. It's based on NIST SP 800-171 Rev 2 (and now Rev 3 as of late 2024).

FedRAMP High is based on NIST SP 800-53 Rev 5, which is a superset of 800-171.

If you have FedRAMP High, you've implemented more controls than CMMC Level 2 requires. But CMMC certification is organization-specific, not system-specific.

FedRAMP authorizes a cloud service. CMMC certifies your company's entire CUI handling process—including physical security, personnel security, and supply chain risk management.

How FedRAMP helps with CMMC:

1. Control overlap: If your cloud infrastructure is FedRAMP High authorized, you can inherit those controls in your CMMC assessment. This reduces the scope of what your C3PAO needs to assess.

2. Evidence reuse: Your FedRAMP System Security Plan (SSP) and continuous monitoring data can be reused in your CMMC assessment.

3. Vendor credibility: Having FedRAMP High demonstrates cybersecurity maturity. C3PAOs will view you as lower risk.

What FedRAMP doesn't cover for CMMC:

• Physical security: CMMC requires documented physical access controls for facilities where CUI is processed. FedRAMP doesn't assess your office security.
• Personnel security: CMMC requires background checks and security clearances for personnel with CUI access. FedRAMP doesn't certify your HR processes.
• Supply chain security: CMMC requires flow-down requirements to subcontractors. FedRAMP doesn't assess your supply chain.

Bottom line: If you're a defense contractor, you need both FedRAMP (for your cloud infrastructure) and CMMC (for your organization). They're complementary, not interchangeable.

What This Means for Cloud Service Providers

If you're a CSP trying to sell into the federal market, here's what's changed in 2025:

1. FedRAMP High is now the baseline for defense work.

If you want to support DoD customers at IL4, you need FedRAMP High. FedRAMP Moderate won't cut it anymore. The reciprocity pathway only works from FedRAMP High to IL4.

2. Plan for 9-12 months to full authorization.

Even with the Modernization Act, getting from zero to FedRAMP High still takes time:

• 3-4 months: Gap assessment and remediation
• 2-3 months: Third-party assessment (3PAO)
• 3-4 months: Agency authorization process
• 1-2 months: Continuous monitoring setup

Budget $500,000-$1.5 million for the full process (tools, assessors, consultants, staff time).

3. OSCAL is non-negotiable.

If you're starting a FedRAMP authorization in 2025, use OSCAL from day one. Hand-written SSPs are becoming obsolete. Agencies that have adopted automated ATO processes won't accept non-OSCAL documentation.

4. Continuous monitoring is a cost center.

FedRAMP authorization isn't a one-time event. You need ongoing vulnerability scanning, configuration management, incident response, and reporting. Budget $100,000-$300,000 annually for continuous monitoring tools and staff.

5. IL4 is a market differentiator—for now.

As of mid-2025, very few commercial CSPs have IL4 authorization. AWS has it. Microsoft Azure Government has it. A handful of specialized defense cloud providers have it. Most SaaS vendors don't.

If you can achieve IL4, you unlock a massive market: defense contractors, intelligence agencies, and federal law enforcement. But the window is closing. By 2026-2027, IL4 will be table stakes for defense work.

What This Means for Defense Contractors

If you're a defense contractor trying to deploy commercial tools (SaaS, PaaS, IaaS) in your CUI environment, here's what's changed:

1. You can use FedRAMP High services at IL4.

Previously, most commercial SaaS tools were FedRAMP Moderate at best. You couldn't use them for CUI. Now, if a vendor has FedRAMP High and has completed the IL4 validation, you can deploy it in your CUI environment.

This opens up tools like:

• Advanced analytics platforms (Palantir Foundry, Databricks)
• AI/ML services (AWS SageMaker, Azure AI, Google Vertex AI)
• Collaboration tools (Microsoft 365 GCC High, Slack Enterprise Grid)
• DevSecOps platforms (GitLab Ultimate, GitHub Enterprise)

2. Check the FedRAMP Marketplace for IL4 services.

The FedRAMP Marketplace now lists which services have IL4 validation. Look for the "DoD IL4 PA" designation. If a service only has FedRAMP High but not IL4 validation, you'll need to sponsor their IL4 authorization (expensive and time-consuming).

3. Flow-down requirements still apply.

Just because a CSP has FedRAMP High doesn't mean you're compliant. You still need to:

• Document the service in your System Security Plan (SSP)
• Validate that CUI is segregated from non-CUI data
• Implement role-based access controls (RBAC)
• Monitor for unauthorized access or data exfiltration
• Report security incidents to DoD within 72 hours (per DFARS 252.204-7012)

4. CMMC flows down to your CSPs.

Under CMMC 2.0, if you're using a cloud service to process, store, or transmit CUI, that CSP must be CMMC Level 2 certified (or have FedRAMP High + IL4).

This means you need to verify your CSP's authorization status before you deploy. Don't assume that "FedRAMP Moderate" is good enough. It's not.

The Bureaucratic Reality

Let me be blunt: the FedRAMP Modernization Act is a step forward, but it's not the silver bullet vendors hoped for.

What's improved:

• Reciprocity is now mandatory, not optional
• FedRAMP High to IL4 is a real pathway (3-6 months instead of 12-18)
• OSCAL automation is reducing documentation burden
• Continuous monitoring is becoming standardized

What's still a mess:

• Agency adoption is inconsistent
• IL5 and IL6 remain separate authorization pathways
• CMMC and FedRAMP are complementary, not integrated
• Costs are still high ($500K-$1.5M for initial FedRAMP authorization)
• Timelines are still long (9-12 months minimum)

If you're a CSP or defense contractor navigating this landscape, the playbook is:

1. Start with FedRAMP High. It's the baseline for federal and defense work.
2. Plan for IL4 if you're supporting DoD. The reciprocity pathway is real, but you still need DoD validation.
3. Use OSCAL from day one. Automated ATO is coming. Be ready.
4. Budget for continuous compliance. This is an annual expense, not a one-time cost.
5. Engage experts early. FedRAMP and IL4 authorizations are complex. DIY attempts usually fail.

The FedRAMP Modernization Act is making compliance faster and cheaper—marginally. But if you're waiting for a world where authorization is instant and free, you'll be waiting a long time.

The countdown is on. Get authorized or get left behind.

Amyn Porbanderwala is Director of Innovation at Navaide, where he works on Navy ERP systems (BSO 60) and defense AI implementations. He's a Marine Corps veteran with 8 years of service as a Cyber Network Operator and specializes in FedRAMP, CMMC, and defense compliance frameworks.

Need help with FedRAMP or IL4 authorization? Get in touch.