For the Defense - Vol. 6, Issue 4 - 50

court concluded that the relator had failed
to demonstrate that the noncompliance was
" material. " 23
In fact, before President Biden was even
Therefore, it appears that the strict
materiality requirement of the FCA will continue
to present a significant hurdle for relators and/
or the DOJ in future cases based on alleged
noncompliance with cybersecurity regulations.
Similarly, as more and more technical regulations
surrounding cybersecurity are implemented by
the government, a party under investigation for
violating the FCA may be able to ground their
defense in the knowledge requirements of the
statutory framework. As noted above, FCA liability
requires proof that the alleged noncompliance was
" knowing, " meaning that the defendant actually
knew it was not in compliance with a particular
requirement; that it acted with deliberate
ignorance; or it acted with reckless disregard.24
Given that so many of the cybersecurity
requirements being implemented by the Biden
Administration are completely new, a FCA
defendant may be in a position to exploit various
interpretations of the regulations as well as the
lack of clear guidance on how a party can be in
compliance with the developing and changing
landscape of cybersecurity regulations.
Conclusion
The Biden Administration's ongoing efforts to
protect the Nation against cyberattacks signify
that compliance with cybersecurity requirements
will be more important now than ever before to
the government's decision to pay claims submitted
by federal contractors. Indeed, in announcing
the Civil Cyber-Fraud Initiative, Deputy Attorney
General Lisa Monaco proclaimed: " For too long,
companies have chosen silence under the mistaken
belief that it is less risky to hide a breach than to
bring it forward and to report it. Well that changes
today. " 25
Well before the launch of the new initiative, the
Department of Justice signaled that compliance
with cybersecurity standards is more material now
than ever to the government's decision to pay
federal contractors. At the Federal Bar Association
Qui Tam Conference in February 2021, Assistant
Attorney General Boynton said: " With the growing
threat of cyberattacks, federal agencies are relying
on robust cybersecurity protections to safeguard
our vital governmental data and information. To
the extent that the government pays for systems
or services that purport to comply with required
cybersecurity standards but fail to do so, it is not
difficult to imagine a situation where False Claims
Act liability may arise. " 26
50 For The Defense l Vol. 6, Issue 4
sworn into office, Deputy Assistant Attorney
General Michael Granston remarked that " [w]
here cybersecurity protections are a material
requirement of payment or participation
under a government program or contract, the
knowing failure to include such protections
could give rise to False Claims Act liability. " 27
Thus, given that President Biden's executive
order specifically directed federal agencies to
standardize and bolster the contract language for
cybersecurity requirements, federal contractors
who misrepresent their compliance with such
requirements are now more likely than before
to face FCA liability. Therefore, as the federal
government continues to overhaul its cybersecurity
standards across all industries, federal contractors
must develop more robust compliance measures
to ensure that all cybersecurity standards are met
or face potential exposure under the FCA for
instances of cybersecurity noncompliance.
NOTES:
1
PAN
2955C
C
90/78/39/30
R
22/58/92
HEXID
#153A5B
Cedric Nabe, Impact of COVID-19 on Cybersecurity, DELOITTE,
https://www2.deloitte.com/ch/en/pages/risk/articles/impact-covidcybersecurity.html
(last visited Oct. 7, 2021).
2
4
Proclamation No. 10,266, 86 Fed. Reg. 55,443 (Sept. 30, 2021).
3 Exec. Order No. 14,028, 86 Fed. Reg. 26,633 (May 17, 2021).
Press Release, Dep't of Just., Deputy Attorney General Lisa
O. Monaco Announces New Civil Cyber-Fraud Initiative (Oct. 6,
2021), https://www.justice.gov/opa/pr/deputy-attorney-generallisa-o-monaco-announces-new-civil-cyber-fraud-initiative.
5
31
U.S. §§ 3729-3733.
See Universal Health Servs., Inc. v. United States ex rel. Escobar,
136 S. Ct. 1989, 2001 (2016); see also Douglas W. Baruch et al.,
Cybersecurity Compliance and the False Claims Act, 23 J. Internet
L. 3 (2019) ( " [T]he manner in which a government contractor
secures its own information systems against cyber threats,
and the representations that a contractor makes about its
cybersecurity capabilities in order to obtain or retain a contract,
6
have the potential to give rise to FCA liability. " ).
7
Press Release, Dep't of Just., supra note 4.
See Connor Perrett, Major Cyberattacks Have Rocked the US,
and There Are 'A Lot of Different Ways that Ransomware Actors
Can Disrupt Everyone's Lives,' Experts Say, BusIness InsIder (June 12,
2021), https://www.businessinsider.com/cyberattacks-are-on-the8
rise-in-the-us-experts-say-2021-6.
9
Letter
from Anne Neuberger, Deputy Assistant to the
President and Deputy Nat'l Sec. Advisor for Cyber and Emerging
Tech., to Corporate Executives and Business Leaders (June 2,
2021), available at https://www.whitehouse.gov/wp-content/
uploads/2021/06/Memo-What-We-Urge-You-To-Do-To-ProtectAgainst-The-Threat-of-Ransomware.pdf.
10
Press
Release, The White House, FACT SHEET: Biden
Administration Announces Further Actions to Protect U.S. Critical
Infrastructure (July 28, 2021), https://www.whitehouse.gov/
briefing-room/statements-releases/2021/07/28/fact-sheet-bidenadministration-announces-further-actions-to-protect-u-s-criticalinfrastructure/.
11
Press
Release, The White House, FACT SHEET: Biden
Administration and Private Sector Leaders Announce Ambitious
Initiative to Bolster the Nation's Cybersecurity (Aug. 25, 2021),
https://www.whitehouse.gov/briefing-room/statementsreleases/2021/08/25/fact-sheet-biden-administration-and-privatesector-leaders-announce-ambitious-initiatives-to-bolster-thenations-cybersecurity/.

For the Defense - Vol. 6, Issue 4

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