Federal officials settled claims involving alleged cybersecurity failures on Navy contracts in Alabama.
The Alabama defense contractor LOGZONE Inc., based in Huntsville, has agreed to pay more than half a million dollars after federal officials said the company failed to meet cybersecurity rules tied to military contracts. LOGZONE Inc. will pay $507,144 to settle these claims under the False Claims Act. The U.S. Department of Justice (DOJ) announced the agreement on June 18, saying the company knowingly failed to follow requirements included in contracts with the Department of the Navy.
Federal officials said the case centers on two Navy contracts that required LOGZONE to protect sensitive government information using specific security measures. According to the DOJ, the company did not fully put those protections in place while continuing to seek payment under the contracts. The alleged failures took place in the four-year span from May 2021 through March 2025, and during that time, LOGZONE was expected to comply with security standards outlined in National Institute of Standards and Technology (NIST) guidebook, Special Publication 800-171. Those rules are designed to help companies protect sensitive information handled on behalf of the federal government.
Officials said some of the missing security measures could have left government systems open to hackers or otherwise allowed sensitive defense information to be taken without permission. The concerns came to light during a review conducted by the Defense Contract Management Agency, which checks whether contractors are meeting government requirements. That review produced a cybersecurity score of negative 170 for LOGZONE. The possible scoring range runs from negative 203 to 110, with higher scores showing stronger compliance. Government officials said the result placed the company near the lower end of the scale.
Assistant Attorney General Brett A. Shumate of the DOJ’s Civil Division said companies that handle defense information are expected to follow cybersecurity rules laid out in their contracts at all times. He said contractors that gain access to sensitive military information must protect it according to current federal standards. Shumate added that the department plans to keep investigating cases involving possible failures to meet those obligations in an effort to guard government information against outside threats.
Phillip W. Williams Jr., U.S. Attorney for the Northern District of Alabama, added that protecting sensitive defense data is tied directly to national security. He said businesses working with the federal government should treat cybersecurity requirements as a top responsibility and said the case serves as a reminder that those obligations are taken seriously. Navy Vice Admiral Stephen Tedford, who leads the Defense Contract Management Agency, also spoke about the settlement, stating that cybersecurity rules written into federal contracts play an important part in protecting sensitive information shared while carrying out government work.
Federal officials said the settlement comes as the government places greater attention on fraud and misconduct involving taxpayer dollars. Earlier this year, the administration announced the creation of the Task Force to Eliminate Fraud and the National Fraud Enforcement Division. Officials said those efforts are intended to combat fraud, waste and abuse across federal programs.
The DOJ said False Claims Act cases remain one of its main tools for pursuing entities or individuals accused of making false statements to the government or seeking payments they were not entitled to receive. Officials said such cases have recovered billions of dollars over the years and remain an important part of federal enforcement efforts. The settlement with LOGZONE does not include an admission of wrongdoing and the DOJ that the allegations resolved through the agreement remain allegations only and that no determination of liability has been made.
Sources:
Defense contractor settles cybersecurity False Claims Act allegations
Join the conversation!