Nothing is certain in life except death, taxes, and now, data breaches. Data breaches are almost an unavoidable cost of doing business in a globally connected world. As if being victimized by cybercriminals wasn’t enough, cybersecurity and data privacy increasingly have become the focus of private class action litigation and government enforcement actions.
But businesses that contract with the federal government face even more cyber-scrutiny, in the form of the False Claims Act (“the FCA”). As its name suggests, that Act has long outlawed knowingly making false claims when contracting with the federal government. Whistleblowers (called “relators”) may file suits under the FCA in the name of the federal government in exchange for a cut of the treble damages to which the government is entitled if a violation is found. Historically, the FCA was designed to stamp out corruption in government procurement, but today, the FCA has been given new life as a tool for enforcing cybersecurity standards against government contractors. Recent developments demonstrate how.
In one recent FCA case, a relator accused a defense contractor, Aerojet, of falsely stating that it was compliant with the various cybersecurity rules in the acquisition regulations of the National Aeronautics and Space Administration, 48 C.F.R. § 252.204–7012, and the Department of Defense, 48 C.F.R. § 1852.204-76. A federal judge refused to dismiss the suit in May 2019, see United States v. Aerojet Rocketdyne...
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