On July 31, 2025, the Fraud Section of the U.S. Department of Justice’s Commercial Litigation Branch (Fraud Section) announced new settlement agreements with government contractors to resolve their respective False Claim Act (FCA) liabilities arising out of cyber fraud allegations. These settlements mark the Fraud Section’s fifth and sixth cyber fraud settlements of 2025, indicating a continued focus on leveraging the FCA’s civil tools to ensure government contractors comply with cybersecurity controls.

Recent DOJ False Claims Act Settlements for Cybersecurity Violations

• Aero Turbine and Gallant Capital Partners – In coordination with the U.S. Attorney’s Office for the Eastern District of California, DOJ announced a settlement with defense contractor Aero Turbine Inc. (ATI) and private equity firm Gallant Capital Partners LLC to resolve FCA liability for alleged cybersecurity violations. Gallant owned a controlling stake in ATI during the alleged violations period. There has been no determination of liability under the settlement.

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The allegations: Between January 2018 and February 2020, ATI allegedly failed to implement certain NIST SP 800-171 controls during its performance of a contract with the U.S. Air Force. By way of background, defense contractors must safeguard controlled unclassified information (CUI) according to the cybersecurity standards set forth in DFARS 252.204-7012, including NIST SP 800-171. Instead, ATI had allegedly assumed that its...

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