Insights

Earlier this month, the Department of Justice (DOJ) announced that Swiss Automation Inc., an Illinois-based precision machining company, agreed to pay $421,234 to resolve allegations that it violated the False Claims Act (FCA) by inadequately protecting technical drawings for parts delivered to Department of Defense (DoD) prime contractors.  This settlement reflects DOJ's persistent emphasis on cybersecurity compliance across all levels of the defense industrial base, reaching beyond prime contractors to encompass subcontractors and smaller suppliers.  The settlement is also a reminder to all contractors not to overlook the often confusing relationship between Controlled Unclassified Information (CUI) and export-controlled information.

On September 30, 2025, the Department of Justice (DOJ) announced that Georgia Tech Research Corporation (GTRC) agreed to pay $875,000 to settle allegations that it violated the False Claims Act (FCA) and federal common law by failing to meet cybersecurity requirements under certain Air Force and Defense Advanced Research Projects Agency (DARPA) contracts.  The settlement adds to the growing list of recoveries under DOJ’s Civil Cyber-Fraud Initiative and is yet another example of DOJ’s ongoing enforcement focus on cybersecurity obligations for federal contractors handling sensitive government information.  The settlement also provides insight into how government contractors may challenge FCA liability when faced with allegations of cybersecurity noncompliance.

On September 10, 2025, the Department of Defense (DoD) published a final rule (CMMC Clause Rule) that will apply its much-anticipated Cybersecurity Maturity Model Certification program (CMMC) to DoD contractors and subcontractors. Under the CMMC Clause Rule, starting on November 10, 2025, DoD can include CMMC requirements—potentially including third-party cybersecurity assessments—in contracts that require the handling of Controlled Unclassified Information (CUI) or Federal Contract Information (FCI).

On July 31, 2025, the Department of Justice (DOJ) announced that Illumina, Inc. will pay $9.8 million to resolve allegations that it violated the False Claims Act (FCA) by selling genomic sequencing systems with software containing cybersecurity vulnerabilities to federal agencies. This is the first FCA settlement involving claims that a medical manufacturer failed to incorporate adequate product cybersecurity into its software design and development.The allegations were first made in United States ex rel. Lenore v. Illumina Inc., No. 1:23-cv-00372 (D.R.I.), a qui tam action filed by Illumina’s former Director for Platform Management, On-Market Portfolio in September 2023. The relator alleged that, between February 2016 and September 2023, Illumina knowingly sold genomic sequencing systems to government agencies without adequate security programs or quality systems to identify and address software vulnerabilities. The complaint further alleged that Illumina failed to properly resource personnel and processes responsible for product security, did not remediate design features introducing cybersecurity risks, and misrepresented the software’s adherence to required cybersecurity standards.According to the government, Illumina’s actions included:

On March 26, 2025, the Department of Justice (DOJ) announced that defense contractor MORSECORP Inc. (MORSE) will pay $4.6 million to settle allegations that MORSE violated the False Claims Act (FCA) by failing to comply with cybersecurity requirements and subsequently submitting false or fraudulent claims for payment in its contracts with the Departments of the Army and Air Force. This is the first FCA settlement that is based on a defense contractor’s failure to reevaluate and promptly update its self-assessment score in the Supplier Performance Risk System (SPRS) after a third-party assessment resulted in a lower score.

On March 12, 2025, the Government of Canada announced plans to launch the Canadian Program for Cyber Security Certification (CPCSC). CPCSC is a cybersecurity compliance verification program that aims to protect sensitive unclassified government information handled by Canadian government contractors and subcontractors within Canada’s defense sector. Canada will roll out CPCSC to contractors in four phases, with the first phase launching this month.

Amidst a flurry of executive cost-cutting, the Department of Defense’s (DoD) Cybersecurity Maturity Model Certification program—often known just as “CMMC”— appears to be defying the odds and only picking up steam. Marking the first CMMC developments under the new administration, the DoD has published guidance that previews what to expect once CMMC is finalized. These developments suggest that the current administration intends to pick up where it left off, having first introduced the CMMC program during President Trump’s first term.

On October 22, 2024, the Department of Justice (DOJ) announced that Pennsylvania State University (Penn State) will pay $1.25 million to resolve allegations that it violated the False Claims Act (FCA) by failing to comply with contractually mandated cybersecurity requirements by the Department of Defense (DoD) and National Aeronautics and Space Administration (NASA).  The announcement marks the most recent settlement under DOJ’s Civil Cyber-Fraud Initiative although, unlike prior settlements, there is no allegation of a cybersecurity incident or breach that was related to or caused by the contractor’s alleged noncompliance.

On October 11, 2024, the Department of Defense (DoD) released a final rule (the “Final Program Rule”) formalizing the requirements, assessment processes, and related governance for its Cyber Maturity Model Certification Program (CMMC).[1] 

On June 17, 2024, the Department of Justice (DOJ) announced a $11.3 million False Claims Act (FCA) settlement that touches on two key enforcement priorities:  the DOJ’s Civil Cyber-Fraud Initiative and pandemic-related fraud.  This settlement, the largest under the Civil Cyber-Fraud Initiative to date, resolved allegations that Guidehouse Inc. (Guidehouse) and its subcontractor, Nan McKay and Associates (Nan McKay), violated the FCA because they failed to conduct pre‑production cybersecurity testing on New York State’s Emergency Rental Assistance Program (ERAP) technology product before public launch, and that Guidehouse used an unapproved third-party data cloud software program to store personally identifiable information (PII).

On May 1, 2024, the Department of Justice (DOJ) announced that Insight Global LLC (Insight), an international staffing and services company, will pay $2.7 million to resolve allegations that it violated the False Claims Act (FCA) by failing to implement adequate cybersecurity measures to protect personal health information (PHI) and personally identifiable information (PII) under its contracts with the Pennsylvania Department of Health (PADOH) to provide staffing for COVID-19 contact tracing services.  Although contracts with state agencies generally fall outside the FCA’s ambit, PADOH paid Insight using funds received from the federal Centers for Disease Control and Prevention (CDC)—bringing the contract within the FCA’s scope.