Since Level 3 is based on DFARS 252.204-7012 (which is a current requirement for DoD Contractors) shouldn't all DoD contractors need to be certified to at least Level 3?
Yes! It would be great to have all DoD Contractors certified at a level 3. As previously stated, if you are willing to get certified at a level 1 / 2, you may as well just get your Level 3 Certification.
But, it is up to the DoD contractors to comply. The CMMC is merely the latest attempt to urge contractors to make their practices compliant with the current demands of the DoD.