Judge lifts secrecy order for suit against Homeland Security Department

A federal judge lifted a sweeping secrecy order Tuesday after a Silicon Valley company entered into settlement talks in a legal dispute with the Department of Homeland Security over technology designed to detect a possible terrorist attack with biological agents.

Judge Allan H. Goodman of the U.S. Civilian Board of Contract Appeals had issued an unusual order late Monday that barred the news media and the public from the contract hearing, and prohibited lawyers or witnesses from talking about it.

Goodman withdrew the gag order Tuesday afternoon after the Los Angeles Times sought to challenge it. The trial was suspended while the two sides tried to resolve the dispute through arbitration.

“There’s no protective order in place because there’s nothing to protect,” Goodman said, noting that the details of the dispute between Homeland Security and NVS Technologies of Menlo Park had already been revealed to the public by The Times.


The contract dispute has its roots in the government’s troubled effort over the last 16 years to find a technology that can quickly and reliably detect deadly airborne germs or other pathogens, such as anthrax.

The chief focus of that effort, a nationwide system of sensors known as BioWatch that cost $1 billion to install and $80 million a year to run, remains slow, unreliable and prone to triggering false alarms.

Armed with a $23.4-million contract from Homeland Security, NVS Technologies appeared on track to develop a portable, $15,000 device that could help fix some of the problems with BioWatch. It won unusual praise from government scientists.

“NVS has done a tremendous job in fulfilling our requirements,” one Homeland Security scientist wrote in an internal report.


But the contract was canceled in 2014 by an acting division director at Homeland Security who was unpersuaded the technology would work.

NVS laid off all 35 employees and filed a lawsuit claiming that the government owed the company $286 million for lost sales and related costs. The company’s lawyer argued in a pretrial brief that NVS was victimized by a “campaign to harm its business.”

Homeland Security lawyers argued that the division chief wasn’t seeking to punish NVS, but simply decided to prioritize other research efforts. Homeland Security filed a counterclaim seeking $606,771 that it says it overpaid NVS.

The contracting board, formed 10 years ago in a consolidation of other agencies, hears disputes between government agencies and contractors. It usually operates with little attention but its rulings carry legal weight, and its proceedings, like other court hearings, are presumed to be open to the public.

In recent weeks, the two sides had sparred over the release of documents to The Times by a lawyer for NVS.

The opposing lawyers had agreed to an order to keep some material confidential, Goodman said, but it never took effect because neither had filed it with the court.

James S. DelSordo, attorney for NVS, said he gave the government notice that he would publicly release the material. But lawyers for the government filed a motion asking the judge for sanctions against the company.

Goodman said he put the secrecy order in place to “protect both parties,” but he did not explain why he thought the hearing needed to be closed.


Twitter: @jtanfani

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