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Cybersecurity False Claims Act Cases: The Next Frontier
A new wave of False Claims Act cases is crashing ashore. Based on the federal government's inclusion of toughened cybersecurity requirements for government contractors in the Federal Acquisition Regulations (FAR) and agency supplemental regulations, numerous False Claims Act (FCA) cases will undoubtedly be filed and litigated in coming years against prime contractors and their major subcontractors for allegedly failing to comply with their contractual cybersecurity obligations.
We have seen this play out before. For years, FCA plaintiffs' strategy was to go after government contractors for selling goods made in China to agencies in violation of the Trade Agreements Act. Then plaintiffs moved on to various violations of contract terms under the General Services Administration Schedule program, and later to misrepresentations under the Small Business Administration's procurement regulations. While those areas of alleged non-compliance are still active, the time has come for a host of new FCA cases based on presumed cybersecurity violations.
Initially, cybersecurity was an afterthought in government contracts (other than those for classified materials). Contractors and their suppliers were supposed to maintain adequate computer systems safe from hacking, but specific cybersecurity requirements were not spelled out in government contracts. Like the private sector, the federal government was content to muddle along, treating hacking like nothing more than an annoyance.
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