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With an increased focus on enforcing the False Claims Act (FCA) by the Department of Justice (DOJ), government contractors need to ensure their CMMC compliance will withstand heightened oversight. Penalties for false compliance claims are severe, so your company should work closely with a CMMC expert to avoid FCA violations.
The FCA and CMMC
Enacted with the mission of protecting the federal government from fraudulent suppliers, the FCA dates back to 1863. This statute imposes penalties on any person or entity that knowingly submits false or fraudulent claims for payment to the federal government, uses false records or statements related to such claims, conspires to defraud the government, or knowingly conceals or improperly avoids an obligation to pay money to the government. The federal government uses FCA as a key tool in fighting fraud and recovering funds from unscrupulous contractors.
The DOJ’s Civil Cyber-Fraud Initiative, launched in 2021, has ramped up enforcement of cybersecurity violations. Since CMMC has become mandatory and embedded in Department of Defense (DOD) contracts as of November 2025, any prime or subcontractor working in the Defense Industrial Base (DIB) is at a greater risk of receiving severe penalties when violating the FCA.
Violations of the FCA
One critical part of the FCA is that no actual harm or data breach is needed to establish liability— only a knowing false claim or certification. This means that any government contractor that claims they are CMMC compliant at any level and does not meet the requirements is in violation of FCA.
With CMMC requirements embedded into contracts via DFARS clauses, any inaccurate certifications, self-assessments, annual affirmations by senior executives, or misrepresentations of compliance will be treated as false claims. Common FCA violations include false SPRS scores and the failure to implement required security controls.
FCA Penalties
The DOJ has the power to impose substantial legal, financial, and reputational penalties on companies making false CMMC compliance claims. Penalties include:
- Civil monetary damages that can be up to three times the value of the false claims submitted plus statutory per-claim fines. For multi-year contracts, these fines can reach into the millions of dollars.
- Loss of compliance certificates and government contracts. FCA violations could result in mandatory CMMC certificate revocation, a loss of current contracts, and the suspension from participating on federal contracts for a long period, if not permanently.
- Legal impacts and reputational damage. Violations could result in significant legal costs, damage to your company’s image, additional liabilities in acquisitions, and even criminal prosecution in cases where illegal conduct is willful.
- Whistleblower incentives increase risk and financial damage. The FCA has a “qui tam” or whistleblower component, which gives a financial incentive to employees, subcontractors, or other partners to file a complaint of any wrongdoing and receive 15-30% of any fine. This feature could increase the financial damage of any judgment and make it more likely that any violations will be uncovered.
Real-Life FCA Violation Scenarios
In fiscal year 2025 alone, the DOJ’s Civil Cyber-Fraud Initiative imposed $52 million in fines on defendants. Some notable recent examples are described below.
- A small defense contractor paid a fine of $4.6 million after an investigation found that they submitted a false SPRS score, failed to implement required NIST SP 800-171 controls, lacked a proper System Security Plan (SSP), and used a non-compliant third-party email host. The whistleblower who informed the DOJ received an $851,000 payout.
- A successor company paid a fine of $8.4 million for the conduct of the previous owner across 29 DOD contracts/subcontracts. The contractor had used an internal development system lacking a required SSP as well as mandatory NIST/FAR controls.
- A healthcare company paid a massive fine of more than $11 million after falsely certifying their cybersecurity compliance. An audit found they had ignored findings, failed in vulnerability/patch management, and used weak password policies.
- A small subcontractor had to pay $420,000 for failing to safeguard technical drawings containing CUI that they supplied to their DOD prime contractors. This example demonstrates how regulators are overseeing companies of all sizes, including lower-tier supply chain subcontractors.
These recent cases demonstrate that the DOJ is actively targeting companies of all types and sizes and that their enforcement efforts are accelerating along with CMMC’s rollout. As a result, DIB contractors should be vigilant in treating every SPRS score, self-assessment, and annual affirmation by company leadership as a potential FCA violation.
Work with an Experienced CMMC Partner to Avoid FCA Issues
To avoid the real risk of violating FCA, government contractors need to work closely with a CMMC expert to get compliant and stay there. A trusted CMMC partner like Network Depot will help you implement the necessary CMMC compliance level and obtain CMMC certification. They will then assist you in maintaining compliance with yearly attestations and help you effectively monitor your subcontractors and partners as well.
By working with an experienced CMMC partner, your company will achieve compliance, avoid FCA penalties, and win and maintain DOD contracts.
