Why failure to comply with state contract cyber security and privacy requirements is increasingly likely to result in State Attorneys General enforcement

State Attorneys General (AGs) are increasingly leveraging state false claims laws to enforce cyber security and privacy requirements in government contracts. This shift poses significant risks for state and local government contractors, as non-compliance can lead to penalties exceeding the contract’s value. Following the Department of Justice’s (DOJ) success with the False Claims Act and the Cyber Fraud Initiative, State AGs are recognising the potential for substantial revenue and public approval through these statutes. Traditionally used for Medicare and Medicaid violations, state false claims acts are now being applied to a broader range of contractual obligations, including cyber security. Recent DOJ settlements with contractors highlight the serious consequences of non-compliance. Contractors must be proactive in ensuring compliance with cyber security requirements to mitigate the risk of false claims litigation. This involves robust compliance policies, clear communication channels and thorough documentation of efforts to meet contractual obligations. This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.