By Troy Turner
BIRMINGHAM – Defense contractor LOGZONE Inc. of Huntsville has agreed to pay $507,144 to resolve its liability under the False Claims Act for knowingly failing to comply with cybersecurity requirements in contracts with the Department of the Navy, the U.S. Attorney’s Office northern district reported today.
LOGZONE in a 2021 contract agreed to provide logistical and inventory services for the Naval Oceanographic Command Property Management Program at Stennis Space Center, Mississippi.
The settlement resolves allegations under the False Claims Act that LOGZONE knowingly submitted false or fraudulent claims for payment on two Navy contracts for which LOGZONE had not complied with the contracts’ cybersecurity requirements.
LOGZONE describes itself as a Service Disabled-Veteran Owned Company founded in 2007 that provides “world-class logistics solutions, medical services, training services, facility support services and operations and maintenance to the Department of Defense and government civilian agencies.”
The contract involved services being provided under contract for the Naval Oceanographic Command Property Management Program at Stennis. That program provides logistical oversight, asset tracking, and facilities support.
Legal documents in the case state that “during the period of May 5, 2021, to March 8, 2025, LOGZONE had not fully implemented all cybersecurity controls… for its information systems that processed, stored, or transmitted covered defense information, including controls that, if not implemented, could (a) lead to significant exploitation of the system or exfiltration of covered defense information or (b) have a specific and confined effect on the security of the system and its data.”
During that period, LOGZONE submitted claims for reimbursement to the Navy despite knowing that it had failed to comply, U.S. attorneys said.
“Government contractors that obtain sensitive defense information in administering their contracts must follow required cybersecurity standards,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division in a press statement released today.
“The Justice Department will continue to investigate potential violations of these cybersecurity requirements in order to protect this critical information from external threats,” Shumate said.
The protection of sensitive defense information by government contractors is critical to national security, said U.S. Attorney Phillip W. Williams Jr. for the Northern District of Alabama.
“Adherence to the cybersecurity provisions of contracts with the federal government must be a priority for all contractors, and this enforcement action should serve as a reminder of that,” Williams said.
The settlement was reached after a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the Northern District of Alabama with assistance from the Department of the Navy Office of the General Counsel, NCIS, the Department of the Army Criminal Investigation Division, and the Defense Contract Management Agency’s Defense Industrial Base Cybersecurity Assessment Center.
“The claims resolved by the settlement are allegations only, and there has been no determination of liability,” the office said, adding that the matter was handled by Fraud Section Trial Attorney Graham D. Welch and Assistant U.S. Attorney Don Long for the Northern District of Alabama.
Troy Turner is the editor and senior consultant for AlaDefense.com. He can be reached at [email protected]. His bio can be found here.
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