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In a significant enforcement action targeting cybersecurity violations, the U.S. Department of Justice has reached settlements with two federal contractors accused of misrepresenting their compliance with mandatory security requirements.
The settlements, announced on July 31, 2025, highlight the DOJ’s increasing focus on cybersecurity enforcement under the False Claims Act and demonstrate varying approaches based on how companies respond to compliance issues.
Illumina Inc., a provider of genomic sequencing systems, agreed to pay $9.8 million to resolve allegations that it sold systems with cybersecurity vulnerabilities to federal agencies while falsely certifying compliance with required security standards. According to the DOJ, Illumina failed to implement sufficient security protections between February 2016 and September 2023, while misrepresenting that its software met cybersecurity standards established by both the International Organization for Standardization and National Institute of Standards and Technology (NIST).
The Illumina case originated from a qui tam lawsuit filed by a former employee in the U.S. District Court of Rhode Island. While the company denied the allegations, it agreed to the settlement, with $4.3 million designated as restitution. Analysis of the settlement reveals that the DOJ appears to have applied a penalty multiplier exceeding the typical 2x factor commonly used in False Claims Act cases, signaling a particularly stringent approach.
In a separate but related action, defense contractor Aero Turbine Inc. (ATI) and its controlling private equity investor, Gallant Capital Partners LLC, settled similar allegations for $1.75 million. The DOJ claimed ATI failed to implement required cybersecurity controls in its information systems containing controlled unclassified information between January 2018 and February 2020, violating its contract with the Department of the Air Force.
Unlike Illumina, ATI and Gallant voluntarily disclosed their compliance issues to the government. Their cooperative approach included submitting detailed written disclosures, identifying responsible individuals, sharing findings from internal investigations, and implementing remedial measures. The DOJ appeared to recognize this cooperation by applying a lower penalty multiplier of approximately 1.5x, rather than the standard 2x factor.
These enforcement actions come amid increasing government concern about cybersecurity vulnerabilities in federal contracting. As cyber threats continue to evolve and target sensitive government information, federal agencies have strengthened requirements for contractors handling government data. The cases demonstrate that the DOJ views the False Claims Act as a powerful enforcement mechanism for ensuring compliance with these critical standards.
For the broader government contracting community, these settlements send a clear message about the importance of maintaining robust cybersecurity practices. Companies that falsely certify compliance with federal cybersecurity standards face significant financial penalties and potential reputational damage. The defense and healthcare sectors, which frequently handle sensitive government information, should be particularly attentive to these enforcement trends.
The contrasting outcomes for Illumina versus ATI and Gallant highlight the potential benefits of voluntary disclosure when violations are discovered. The DOJ’s more lenient approach toward ATI and Gallant suggests that contractors who proactively report non-compliance may receive more favorable settlement terms.
Cybersecurity experts note that these cases reflect a broader trend of increasing regulatory scrutiny across industries. As digital systems become more integrated into critical infrastructure and government operations, ensuring their security has become a top enforcement priority.
For federal contractors, these settlements underscore the importance of implementing comprehensive cybersecurity programs that can effectively identify and address vulnerabilities. Companies must not only meet the technical requirements of applicable security standards but also maintain accurate documentation and make truthful representations about their compliance status.
As the regulatory landscape continues to evolve, government contractors should regularly review their cybersecurity systems, testing protocols, and compliance certification processes to mitigate the risk of False Claims Act liability.
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