Defense contractor Aero Turbine Inc., based in Stockton, and private equity firm Gallant Capital Partners LLC, of Los Angeles, have agreed to pay $1.75 million to settle allegations under the False Claims Act related to cybersecurity violations on a contract with the Department of the Air Force. The United States acknowledged that both companies took significant steps to cooperate with the government during the investigation.
“Government contractors must follow required cybersecurity standards to protect sensitive defense information,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “When defense contractors fail to comply with cybersecurity requirements, they can mitigate the consequences by making timely self-disclosures, cooperating with investigations, and taking prompt remedial measures.”
Acting U.S. Attorney Kimberly A. Sanchez stated: “Every defense contractor must provide adequate security to safeguard covered defense information. We commend Aero Turbine and Gallant for disclosing the issue and promptly cooperating to address it. We encourage others to follow their example of self-reporting to resolve violations.”
Director Kelly Mayo of DCIS emphasized: “Protecting the integrity of the Department of Defense (DoD) procurement processes is a top priority for the DoD Office of Inspector General’s Defense Criminal Investigative Service (DCIS). Failing to comply with DoD contract specifications and cybersecurity requirements puts DoD information and programs at risk of exploitation. DCIS will continue to collaborate with our law enforcement partners and the Department of Justice to investigate allegations of false claims on DoD contracts.”
Special Agent in Charge Caroline Galinis from AFOSI commented: “This case serves as a reminder that cybersecurity transcends mission sets. Ensuring companies adhere to robust cybersecurity safeguards is integral to maintaining the Air Force’s operational edge against adversaries. AFOSI’s Procurement Fraud team, alongside investigative partner agencies and the Department of Justice, played a critical role in protecting U.S. national security interests.”
The settlement addresses allegations that between January 2018 and February 2020, Aero Turbine did not implement certain required cybersecurity controls outlined in NIST Special Publication 800-171 for its Air Force contract, which could have left sensitive defense data vulnerable.
It was also alleged that from June through July 2019, Aero Turbine and Gallant allowed a software company based in Egypt access to files containing sensitive defense information despite lacking authorization under their Air Force contract.
After discovering these issues, both companies submitted written disclosures about their actions, cooperated fully with federal investigators, and took corrective measures.
The resolution involved collaboration among several federal agencies including attorneys from the Justice Department’s Civil Division Fraud Section; Assistant U.S. Attorney David Thiess from the Eastern District of California; DCIS; AFOSI; and legal staff from Air Force Materiel Command Law Office Procurement Fraud Division.
Officials clarified that these are only allegations at this stage; no determination has been made regarding liability.
