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Cybersecurity Whistleblower Protections for Employees of Federal Contractors and Grantees
Wednesday, April 8, 2020

For information security professionals, identifying cybersecurity vulnerabilities is often part of the job.  That is no less the case when the job involves a contract or grant with the U.S. government.

Information security and data privacy requirements have become a priority at federal agencies.  These requirements extend to federal contractors because of their access to government data.  Often, cybersecurity professionals are the first to identify non-compliance with these requirements.  As high-profile data breaches have become more common, those who report violations of cybersecurity and data privacy requirements often experience retaliation and seek legal protection.

Reporting non-compliance or misconduct in the workplace can be necessary, but it can also be daunting.  It is important for cybersecurity whistleblowers to know their legal rights when disclosing such concerns to management or a federal agency.

In many cases, federal law protects cybersecurity whistleblowers who work for federal contractors or grantees.  This post provides an overview of those protections.

What cybersecurity requirements apply to federal contractors?

Federal contractors are subject to data privacy and information security requirements.

The Federal Information Security Management Act (“FISMA”) creates information security requirements for federal agencies to minimize risk to the U.S. government’s data.  FISMA also applies these requirements to state agencies administering federal programs and private business contracting with the federal government.  Federal acquisition regulations codify the cybersecurity and data privacy requirements applicable to federal contractors.  E.g., 48 C.F.R. §§ 252.204-7008, 7012 (providing for cybersecurity standards in contracts with the U.S. Department of Defense); 48 C.F.R. § 52.204-21 (outlining basic procedures for contractors to safeguard information processed, stored, or transmitted under a federal contract).  

Pursuant to the FISMA Implementation Project, the National Institute of Standards and Technology (“NIST”) produces security standards and guidelines to ensure compliance with FISMA.  Key principles of FISMA compliance include a systemic approach to the data that results in baseline controls, a risk assessment procedure to refine controls, and implementation of controls.  A security plan must document the controls.  Those managing the information must also assess the controls’ effectiveness.  NIST also focuses its standards on determining enterprise risk, information system authorization, and ongoing monitoring of security controls.

Essential standards established by NIST include FIPS 199, FIPS 200, and the NIST 800 series.  Core FISMA requirements include:

  • Federal contractors must keep an inventory of all of an organization’s information systems.

  • Contractors must identify the integration between information systems and other systems in the network.

  • Contractors must categorize information and information systems according to risk. This prioritizes security for the most sensitive information and systems.  See “Standards for Security Categorization of Federal Information and Information Systems” FIPS 199.

  • Contractors must have a current information security plan that covers controls, cybersecurity policies, and planned improvements.

  • Contractors must consider an organization’s particular needs and systems and then identify, implement, and document adequate information security controls. See NIST SP 800-53 (identifying suggested cybersecurity controls).

  • Contractors must assess information security risks. See NIST SP 800-30 (recommending that an organization assess risks at the organizational level, the business process level, and the information system level).

  • Contractors must conduct annual reviews to ensure that information security risks are minimal.

In addition to generally-applicable standards, individual contracts may create other cybersecurity or data privacy requirements for a government contractor.  Such requirements are prevalent when the contractor provides information security products or services for the government.

What protections exist for cybersecurity whistleblowers who work for federal contractors?

Federal law contains whistleblower protection provisions that may prohibit employers from retaliating against whistleblowers who report cybersecurity or data privacy concerns.  See Defense Contractor Whistleblower Protection Act, 10 U.S.C. § 2409; False Claims Act, 31 U.S.C. § 3730(h); NDAA Whistleblower Protection Law, 41 U.S.C. § 4712.  These laws protect a broad range of conduct.

Protected conduct under these laws includes:

  • Efforts to stop false claims to the government;

  • Lawful acts in furtherance of an action alleging false claims to the government; and

  • Disclosures of gross mismanagement, gross waste, abuse of authority, or a violation of law, rule, or regulation related to a federal contract or grant. Id.

These provisions have wide coverage.  They protect any employee of any private sector employer that is a contractor or grantee of the federal government.  In some cases, even the employer’s contractors and agents are protected.

An employer’s non-compliance with information security requirements could breach the employer’s contractual obligations to the federal government and violate federal law and regulation.  Thus, whistleblowers who report cybersecurity or data privacy concerns related to a federal contract or grant may be protected from employment retaliation.

What is the burden to establish unlawful retaliation for reporting cybersecurity concerns?

Exact requirements vary, but an employee typically establishes unlawful retaliation by proving that (1) the employee engaged in conduct that is protected by statute, and (2) the protected conduct to some degree caused a negative employment action.  See, e.g., 10 U.S.C. § 2409(c)(6) (incorporating burden of proof from 5 U.S.C. § 1221(e)); 41 U.S.C. § 4712(c)(6) (same); 31 U.S.C. § 3730(h)(1).  

Under some of the applicable protections, an employee need prove only that the protected conduct played any role whatsoever in the employer’s decision to take the challenged employment action.  See 10 U.S.C. § 2409; 41 U.S.C. § 4712.

What damages or remedies can a cybersecurity whistleblower recover for retaliation?

The relief available depends on which laws apply to the particular case.  Remedies may include an amount equal to double an employee’s lost wages, as well as reinstatement or front pay.  In some cases, a whistleblower may also recover uncapped compensatory damages for harms like emotional distress and reputational damage.  Additionally, a prevailing plaintiff can recover reasonable attorneys’ fees and costs.

Recently, a jury awarded a defense contractor whistleblower $1 million in compensatory damages.  The whistleblower proved that the employer more than likely retaliated by demoting him after he reported issues with tests related to a federal contract, according to the jury.  Specifically, the whistleblower alleged he reported and opposed management’s directive to misrepresent the completion status of testing procedures.

In a recent case under the False Claims Act, a whistleblower received more than $2.5 million for retaliation she suffered after internally reporting off-label promotion for a drug outside its FDA-approved use.  The False Claims Act protects employees from retaliation who blow the whistle on fraud against the government, including those who blow the whistle internally to a government contractor or grantee.

Do any court cases address whether cybersecurity whistleblowers are protected?

Yes.  Judges and juries have applied these laws to protect cybersecurity whistleblowers.

For example, in United States ex rel. Glenn v. Cisco Systems, Inc., defendant Cisco Systems settled for $8.6 million in what is likely the first successful cybersecurity case brought under the False Claims Act.  The plaintiff/relator James Glenn worked for Cisco and internally reported serious cybersecurity deficiencies in a video surveillance system, soon after which he was fired.  Cisco had sold the surveillance systems to various federal government entities, including the Department of Homeland Security, FEMA, the Secret Service, NASA, and all branches of the military.  After monitoring Cisco’s public pronouncements regarding the system and confirming the company had not solved the problems or reported vulnerabilities to customers, Glenn contacted the FBI.  Multiple states joined in the complaint and brought claims under state laws.

While the case did not proceed to litigation, Glenn received nearly $2 million of the settlement, and the federal government’s attention to the issue proves that cybersecurity and data privacy are of utmost importance.

Surely, as more of our lives and businesses move online, the government will place increased importance on contractors and grantees following data security and privacy requirements and disclosing known vulnerabilities.  Cybersecurity whistleblowers working for government contractors play an important part in revealing these vulnerabilities and keeping the federal government secure.  Still, these whistleblowers may experience retaliation after blowing the whistle internally at their place of work.

How can employees enforce these protections from retaliation?

Employees generally have the right to bring claims of unlawful retaliation for cybersecurity or data privacy whistleblowing in federal court.  However, some claims limit that right to whistleblowers who first exhaust all their administrative remedies.  For example, in some cases whistleblowers will first need to pursue relief from the Office of Inspector General of the relevant federal agency.  Additionally, cybersecurity whistleblower claims are subject to strict deadlines.  See, e.g., 31 U.S. Code § 3730; 10 U.S.C. § 2409; 41 U.S.C. § 4712.

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