A recent United States Department of Justice (DOJ) announcement reinforces that enforcement of cybersecurity requirements under the False Claims Act (FCA) remains an ongoing risk. According to the press release, defense contractor MORSECORP Inc. (MORSE) agreed to pay US$4.6 million to resolve a FCA matter arising from a qui tam relator’s suit alleging that MORSE failed to comply with certain U.S. Department of Defense (DOD) cybersecurity requirements. This is the most recent settlement involving DOJ cybersecurity enforcement, a topic that Foley reported on previously.
The MORSE Settlement
Qui tam relator Kevin Berich, MORSE’s Head of Security, filed an FCA complaint against MORSE and its CEO in January 2023. MORSE is a software development company that had contracts and subcontracts with the U.S. Army and Air Force. Federal regulations dictate that DOD contracts like those entered into by MORSE require implementation of cybersecurity controls outlined in the National Institute of Standards and Technology Special Publication 800-171 (NIST SP 800-171). But Mr. Berich alleged that he witnessed MORSE continually fail to implement NIST SP 800-171 controls, including by failing to use multi-factor authentication, using non-compliant email and video call-hosting services, and using employee personal devices to access MORSE systems and transmit controlled unclassified information (CUI).
Under the FCA, a qui tam complaint is filed under seal, shared with DOJ, and not shared with the defendant so that DOJ can investigate the matter. After investigating for over two years, in March 2025, DOJ announced a settlement with MORSE and Mr. Berich for US$4.6 million. According to the announcement, MORSE admitted that it:
- Used a third-party vendor for email hosting without ensuring that vendor met the necessary security requirements.
- Failed to implement all NIST SP 800-171 controls or maintain a system security plan for its covered information systems.
- Submitted a self-assessed score of 104 to DOD for its NIST SP 800-171 implementation and continued to report that score even after an outside audit notified MORSE that it failed to implement 78 percent of the required security measures and had an actual score of -142.
Notably, the settlement does not indicate that there were any breaches or other compromises of CUI or other protected information; rather, the case appears to have been premised on the possibility that such breaches could occur as a result of MORSE’s sub-standard cybersecurity program.
The MORSE settlement demonstrates the risk of failing to prioritize cybersecurity controls, especially given that FCA qui tam suits can be filed by insiders such as the Head of Security that initiated the MORSE suit. The case also underscores DOJ’s ongoing focus on cybersecurity enforcement, which includes the 2021 Department of Justice Cyber-Fraud Initiative and appears to be continuing full-steam ahead in the current Trump administration.
권장 사항
이러한 위험을 고려할 때 방위 계약업체 및 기타 연방 기금 수령자(대학 포함)는 사이버 보안 규정 준수를 강화하고 FCA 위험을 줄이기 위해 다음 단계를 고려해야 합니다:
- Catalogue and monitor compliance with all government-imposed cybersecurity standards. A first step is to ensure your organization has a comprehensive list of all cybersecurity requirements and covered systems in your organization. These requirements may come not only from prime government contracts but also subcontracts, grants, or other federal programs. This includes not only ongoing knowledge of the organization’s contracts, but also continuously monitoring and assessing the organization’s cybersecurity program to identify and patch vulnerabilities and to assess compliance with those contractual cybersecurity standards. This assessment should also consider third-party relationships, such as vendors or service providers.
- Develop and maintain a robust and effective compliance program that addresses cybersecurity issues. In many companies, the compliance program and information security functions are not well integrated. An effective compliance program will address cybersecurity concerns and encourage employees to report such concerns. When concerns are identified, it is critical to escalate and investigate them promptly. As the MORSE settlement illustrates, it is critical to respond to employees’ concerns effectively.
- 사이버 보안 표준을 준수하지 않는 것이 확인된 경우 조직은 잠재적인 다음 단계를 평가해야 합니다. 여기에는 해당 사안을 정부에 공개하고 정부 조사관에게 협조할지 여부가 포함됩니다. 조직은 이와 관련하여 경험이 풍부한 변호사와 협력해야 합니다. 잠재적인 규정 위반을 조사하고 대응하기 위한 전략을 사전에 수립하면 프로세스에 규율을 확립하고 조직의 접근 방식을 간소화할 수 있습니다.
