For defense contractors, choosing an email and collaboration platform is more than an IT decision. It determines whether you can handle federal contract information (FCI) or controlled unclassified information (CUI) without putting your contracts at risk. 

Yet many organizations are still unsure which platforms can meet CMMC, DFARS, and ITAR requirements. The confusion has only grown since Office 365 Commercial lost its FedRAMP status, leaving contractors to figure out whether they need to migrate and what to migrate to.

In this article, we’ll walk through the most common options of Office 365 Commercial, Google Workspace, and Microsoft 365 GCC High. You’ll understand how each stacks up on compliance, cost, and ease of use, so you can make the right decision for your organization.

What government contractors are using today

A recent analysis of email usage in the defense ecosystem shows how fragmented the current landscape is. About 35% of contractors are still on Office 365 Commercial, 20% use Google Workspace, less than 1% are on GCC High, and the rest are split across personal or miscellaneous email services.

Compliance requirements for cloud platforms

Defense contractors working with FCI or CUI must meet several overlapping regulatory obligations. 

The Department of Defense requires organizations handling CUI to implement NIST SP 800-171 at CMMC Level 2 or CMMC Level 3. DFARS 252.204-7012 goes further, requiring any cloud service used to store or transmit defense information to be FedRAMP Moderate authorized or equivalent. ITAR and EAR introduce even stricter requirements, including US data residency and US person access controls for export-controlled data. And given that all ITAR is CUI, but not all CUI is ITAR, these requirements don’t get any easier to navigate. 

Cloud platforms are not interchangeable when it comes to compliance requirements. A productivity suite that works fine for a commercial business may be a dead end for a defense contractor. Let’s look at each of the major options.

Can you use Office 365 Commercial?

Office 365 Commercial is Microsoft’s flagship cloud productivity suite. It is designed for the broad business market and offers the familiar tools most employees already know: Outlook, Teams, Word, Excel, and SharePoint. Because of this, it has become the default for many organizations, including contractors.

The issue is that Office 365 Commercial is no longer FedRAMP compliant. That alone makes it impossible to use for DFARS compliance, and by extension CMMC. No matter what additional security you put in place, the environment itself is not recognized as adequate.

Costs for Office 365 Commercial generally fall in the $12 to $23 per user per month range. On paper, it looks affordable and convenient, but for contractors handling CUI, it’s a false economy. The risk of noncompliance outweighs any cost savings.

How does Google Workspace stack up?

Google Workspace is Google’s answer to Microsoft’s suite, built around Gmail, Google Drive, Docs, and Meet. It is popular with technology startups and organizations that value simplicity, lower costs, and collaborative features. In the defense sector, interest in Workspace has grown as contractors look for alternatives to Microsoft.

From a compliance perspective, Google has made significant progress. Workspace now carries a FedRAMP High authorization, which satisfies DFARS cloud requirements. It has also been evaluated by a certified third-party assessment organization and found capable of meeting NIST 800-171 and CMMC requirements, though with some gaps that must be addressed manually or with third-party tools. In addition, Workspace can inherit DoD IL4 controls when deployed with Google Assured Workloads, and ITAR requirements can be met if client-side encryption and key management are handled properly.

Pricing is a key advantage. Google Workspace Business Plus starts around $12 per user per month, with Enterprise Standard at $18. Enterprise Plus, which may be necessary for many contractors, is higher but still generally below the cost of GCC High.

The tradeoff is operational. Workspace can work for compliance, but it often requires additional steps, integrations, or manual oversight. Organizations must be prepared to manage those complexities to close compliance gaps.

What about Microsoft 365 GCC High?

Microsoft 365 GCC High is the environment Microsoft designed specifically for defense contractors and other organizations subject to ITAR and federal regulations. It includes the same core productivity tools as Commercial, but operates within a segregated US cloud infrastructure staffed only by screened US persons.

From a compliance standpoint, GCC High is the most straightforward option. It meets FedRAMP High and DoD IL5 requirements out of the box. It provides the native security and compliance tools needed for endpoint protection, continuous monitoring, and incident response. And because it was purpose-built for ITAR and DFARS, it removes the guesswork that comes with other platforms.

The main challenge is cost and complexity. GCC High licenses typically start around $40 per user per month and can climb to $50–$60 or more, depending on the package. Migration is also more involved, often requiring specialized partners.

Which solution is right for federal compliance needs?

If you are still on Office 365 Commercial, the answer is simple: you need to migrate. The platform no longer meets federal compliance requirements, and continuing to use it exposes your organization to significant risk.

The decision then comes down to Google Workspace versus GCC High. Workspace is more cost-effective and easier to adopt, and with proper configuration, it can meet CMMC and DFARS requirements. For contractors handling CUI but not ITAR data, this may be the most practical path.

GCC High, by contrast, is the gold standard. It is more expensive and complex, but it offers a level of assurance and native capability that Workspace cannot match. For organizations working with ITAR-controlled data or seeking the least risky compliance posture, GCC High is the right move.

Our recommendation

Our team of compliance experts and former federal auditors recommends that all contractors handling CUI begin planning a migration away from Office 365 Commercial immediately. For many, Google Workspace offers the best balance of cost, ease, and compliance. For others with ITAR or higher sensitivity requirements, GCC High is likely worth the investment.

Secureframe’s compliance automation platform integrates directly with Microsoft GCC High, Azure Government, Entra ID, AWS GovCloud, Google Workspace, and several other FedRAMP authorized vendors including NinjaOne and Crowdstrike as part of our 300+ integrations to simplify compliance with federal standards. We automate evidence collection, continuously monitor control performance, and give you full visibility into your compliance posture. Schedule a demo to learn how our Secureframe Federal solution can help you stay secure and compliant.