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Contracts/Awards


DOJ’S NEW CIVIL CYBER-FRAUD INITIATIVE TO HOLD CONTRACTORS ACCOUNTABLE FOR
CYBERSECURITY

Jason Miller@jmillerWFED
October 6, 2021 6:19 pm
6 min read
      

The Justice Department is bringing the power of the False Claims Act to the
growing challenge of cybersecurity.



Government contractors now will face possible penalties for not doing enough to
secure networks and systems that hold federal data.

DoJ today announced the launch of the Civil Cyber-Fraud Initiative, which will
be led by the Civil Division’s Commercial Litigation Branch, Fraud Section, to
pursue cybersecurity related fraud by government contractors and grant
recipients through the False Claims Act and through the Qui Tam, or
whistleblower, provision of the law.

Deputy Attorney General Lisa Monaco
(AP Photo/Alex Brandon)

“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,” said Deputy Attorney General Lisa Monaco today at the 6th
annual Aspen Institute’s Cyber Summit. “We are announcing today that we will use
our civil enforcement tools to pursue companies, those who are government
contractors who receive federal funds, when they fail to follow required
cybersecurity standards — because we know that puts all of us at risk. This is a
tool that we have to ensure that taxpayer dollars are used appropriately and
guard the public fisc and public trust.”

The new task force’s goal is to hold accountable companies or individuals that
put federal agency information or systems at risk “by knowingly providing
deficient cybersecurity products or services, knowingly misrepresenting their
cybersecurity practices or protocols, or knowingly violating obligations to
monitor and report cybersecurity incidents and breaches.”

Monaco said there is too much risk for the government to absorb if contractors
fail to follow required cybersecurity standards.

“We will extract very hefty fines,” she said. “We will protect whistleblowers
who bring those violations and those failures forward.”

Monaco said this new initiative is a direct result of the department’s ongoing
comprehensive cyber review, which Monaco kicked off in May.



Justice said the benefits of the new cyber fraud initiative include:

 * Building broad resiliency against cybersecurity intrusions across the
   government, the public sector and key industry partners.
 * Holding contractors and grantees to their commitments to protect government
   information and infrastructure.
 * Supporting government experts’ efforts to timely identify, create and
   publicize patches for vulnerabilities in commonly-used information technology
   products and services.
 * Ensuring that companies that follow the rules and invest in meeting
   cybersecurity requirements are not at a competitive disadvantage.
 * Reimbursing the government and the taxpayers for the losses incurred when
   companies fail to satisfy their cybersecurity obligations.
 * Improving overall cybersecurity practices that will benefit the government,
   private users and the American public.

Justice officials signaled this move earlier this year. Acting Assistant
Attorney General Brian Boynton told the Federal Bar Association Qui Tam
Conference in February that cybersecurity was one of six key priorities for the
civil division when it comes to the False Claims Act.

“With the growing threat of cyberattacks, federal agencies are relying heavily
on robust cybersecurity protections to safeguard our vital governmental data and
information,” he said. “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.”


TWO CYBER CASES FROM 2019

This application of the False Claims Act isn’t necessarily new. But Justice
plans to put more of a focus on it going forward.

Attorneys from Carlton Fields highlighted in January 2020 two cases that show
just how Justice may apply the FCA to cybersecurity related problems for
contractors.

        Read more: Contracts/Awards

“Last summer [2019], two significant whistleblower cases sent ripples through
the False Claims Act (FCA) community by demonstrating the specter of FCA
liability resulting from the failure to comply with cybersecurity requirements
in government contracts. In May, the U.S. District Court for the Eastern
District of California refused to dismiss a case alleging that Aerojet
Rocketdyne Holdings Inc. falsely asserted its compliance with the Department of
Defense’s cybersecurity standards. Then, in late July, the government announced
that Cisco Systems Inc. agreed to pay $8.6 million to settle a whistleblower
suit alleging that the company fell short of federal cybersecurity standards by
selling video surveillance products with known vulnerabilities that hackers
could exploit. These cases show that cybersecurity-based FCA claims may be the
new frontier and that such claims may prove difficult to defeat depending on the
facts in any given case,” the attorneys wrote.

In fiscal 2020, Justice recovered more than $2.2 billion under the False Claims
Act, with most of that coming from the health care industry.



Expanding the use of the False Claims Act to cybersecurity is another message
agencies are sending to contractors about their expectations to secure federal
systems and data.

This effort builds on the National Institute of Standards and Technology SP
800-171 to protect controlled unclassified information, the Defense Department’s
Cybersecurity Maturity Model Certification (CMMC) initiative and the work the
Federal Acquisition Regulations Council and now the Federal Acquisition Security
Council are taking to add more policies and requirements to contracts.


CRYPTOCURRENCY TEAM ANNOUNCED

The Civil Cyber-Fraud Initiative was one of three recent initiatives DoJ
launched to address the ever-growing threat of cybersecurity.

In August, DoJ announced the creation of a cyber fellows program, a three-year
effort to provide selected attorneys experience combating emerging national
security and criminal cyber threats, while rotating through multiple department
components that protect the nation from cyber threats — including the Criminal
Division, the National Security Division and the U.S. Attorneys’ Offices.

She also announced today a new National Cryptocurrency Enforcement Team, which
“will combine the expertise of the Department of Justice Criminal Division’s
Money Laundering and Asset Recovery Section (MLARS), Computer Crime and
Intellectual Property Section (CCIPS) and other sections in the division, with
experts detailed from U.S. Attorneys’ Offices. The team will also assist in
tracing and recovery of assets lost to fraud and extortion, including
cryptocurrency payments to ransomware groups,” the agency stated in a release.

        Sign up for our daily newsletters so you never miss a beat on all things
federal

Monaco said at the Aspen Institute event that as the technology and banking
industry advances, so too must Justice to ensure confidence in the platforms and
systems.

“We want to strengthen our capacity to dismantle the financial ecosystem that
enables these criminal actors to flourish and to profit from what they are
doing. We will do that by drawing on our cyber experts, cyber prosecutors and
our money laundering experts. We need to centralize and build on the expertise
we already have,” she said. “Stepping back, when you think about it, we have
been enforcing the securities laws for decades. We police fraud on the market
with insider trading cases or market manipulation investigations. The point is
to protect consumers and make sure we all can have confidence in the markets we
are engaging in. The same has got to be true as the technology advances so we
need to evolve with it.”

Jason Miller

Jason Miller is executive editor of Federal News Network and directs news
coverage on the people, policy and programs of the federal government. 

Follow @jmillerWFED

Sign up for breaking news.



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Related Topics
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Department Lisa Monaco National Cryptocurrency Enforcement Team Technology


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