A Delaware-based defense and aerospace company, ILC Dover, has agreed to a $13 million settlement with U.S. government agencies over allegations of failing to meet cybersecurity obligations in its contracts. The settlement addresses claims made under the False Claims Act regarding contracts with the Department of the Army, Missile Defense Agency, and NASA, spanning from 2018 to 2024.
The U.S. government contends that ILC submitted false claims for payment while knowingly neglecting its cybersecurity requirements. Specific allegations include the use of a third-party service to store sensitive data in the cloud without adequate security measures and the failure to develop and update necessary security plans for its information systems.
Benjamin Wallace, U.S. Attorney for the District of Delaware, emphasized the importance of proactive cybersecurity measures, stating, “The best response to cyberattacks is to prevent them from happening in the first place.” He noted that the obligations ILC violated are designed to protect U.S. technological innovations from exploitation by malicious actors.
Ingersoll Rand, the parent company of ILC Dover, indicated that it became aware of these issues following its acquisition of ILC in June 2024. Sara Hasell, a spokesperson for Ingersoll Rand, stated that the company took immediate action to rectify the identified problems and achieved compliance with applicable cybersecurity requirements by October 2024. She added that the settlement was reached without an admission of liability, reaffirming their commitment to robust cybersecurity practices.
This settlement marks one of the larger resolutions since the Justice Department began leveraging the False Claims Act in 2022 to address cybersecurity deficiencies among contractors. The act, originally enacted during the Civil War, allows private citizens to report fraudulent activities and receive a portion of any settlement. In this case, the whistleblower, Philip Root, the former director of cybersecurity at ILC, will receive $2.35 million from the settlement.
As the regulatory landscape evolves, government contract attorneys suggest that upcoming changes could lead to increased scrutiny and potential penalties for more companies under the False Claims Act. Assistant Attorney General Brett Shumate highlighted the necessity for defense and aerospace contractors to adhere strictly to cybersecurity requirements in their federal contracts and subcontracts.
For further details, see the full report from CyberScoop.
