Security experts emphasize that the “war on terror” is a different sort of conflict than wars past. Nevertheless, at least one commonality links the current struggle to previous wars: an army of private contractors has emerged to supply both governments and private companies with the products and services needed to make fighting more efficient. According to Homeland Security Research Corporation, a consulting firm, the U.S. market for homeland security products and services was $23.8 billion in 2006, and barring any future attacks, that figure is expected to increase roughly 50 percent by 2011 (PDF). Fueled by voracious government and private sector demand, this booming business features a bevy of cutting-edge products designed to perform new functions.
The array of homeland security technologies is as varied as the perceived threats to national security. Industry experts and market analysts generally agree that the following sectors will likely see an influx of technologies in the coming years. They are listed in order of spending projections (PDF) from the Civitas Group, a security consulting firm.
- Domestic and Foreign Intelligence: Though much of the intelligence community’s technological needs are classified, experts anticipate a growing demand for data-mining software and improved devices for intercepting communications signals. With information fed in from such sources as overseas operatives and local police, tools that can compare and analyze multiple information streams are also sought.
- Law Enforcement and Counterterrorism: Among the 9/11 Commission recommendations seized upon by the 110th Congress is the need for improved, interoperable communications systems for law enforcement officers and first responders. With the advent of fusion centers at the state and local level and the Office of the Director of National Intelligence at the federal level, communication across agency lines has become increasingly important.
- Border and Physical Security: Renewed focus on border security and infrastructure protection has fueled a growing demand for physical security. This includes a combination of barriers, patrols, and surveillance. Computer networks that integrate these various elements promise to improve security and lower costs.
- Biological, Radiological, and Chemical Agent Prevention: Though originally focused only on acts of terrorism, this area of research has expanded in recent years to include natural hazards, such as bird flu. Demand is greatest for detection devices, which would provide early warning of a chemical, biological, or radiological hazard, as well as vaccines that would be deployed in response to an attack or outbreak. Products that can lock down radioactive particles to facilitate clean-up are also sought after.
- Emergency Preparedness and Response: In addition to such technologies as communications systems or vaccine stockpiles, emergency response professionals have identified a need for improved command and control systems that provide greater situational awareness in the immediate aftermath of a terrorist attack or natural disaster.
- Aviation Security: Aviation security underwent a thorough review in the wake of the 9/11 attacks, but the Civitas Group suggests the initial wave of spending has subsided and will resume when a new generation of technologies are ready for implementation. Though passenger and baggage screening remain high priorities, other areas of development include biometric identification systems for the long-delayed “trusted traveler” program and anti-missile technologies.
- Port Security: Land- and water-based physical security remains a prime concern for ports, and systems that can integrate these efforts are highly sought. Cargo screening and container tracking are also priorities. Testifying before Congress in 2006, CFR’s Stephen Flynn described a pilot program in Hong Kong under which cargo is screened as it’s loaded onto ships. Data captured during the screening process is digitally stored and can be reviewed by officials in the destination port while the cargo is en route.
During the initial rush of post-9/11 security spending, small firms already specializing in homeland security technologies enjoyed considerable gains. As the market for such technologies has grown, many large companies with a history of government contracting joined the field. Today, those are the companies vying for the large government contracts, though many smaller niche firms continue to attract government contracts. The field of companies consists of some three-hundred firms, large and small, according to a directory maintained by HSToday, an industry magazine. In fiscal year 2006, 33 percent of DHS contract dollars went to small contractors through direct contract (USAToday). In addition, DHS’s procurement office says about 40 percent of the contracts with large companies are subcontracted out to smaller firms. Much of the spending stays in and around the Washington, D.C. area; according to census data (PDF) for fiscal year 2005, 39 percent of DHS contracts were awarded to firms in the capital or its two neighboring states.
In 2006, when DHS awarded a $2.5 billion contract for border surveillance, Boeing beat out a list of familiar competitors for the Defense Department contract, including Lockheed Martin, Raytheon, Northrop Grumman, and the wireless company Ericsson. Delays in implementing Boeing’s plan—due to difficulties making widely dispersed sensors communicate—have garnered congressional criticism. Other large DHS contracts include a deal with Accenture to provide biometric identification for the US-VISIT program worth up to $10 billion, and a $750 million contract with Unisys for building and operating the DHS and TSA computer networks.
Both the private and public sectors are expected to invest heavily in new homeland security technologies in the coming years. Homeland Security Research Corporation predicts (PDF) private sector demand for homeland security products and services will increase 50 percent over the next five years, with total spending over that span reaching $28.5 billion. Federal, state, and local government spending over the same period is estimated at $123 billion, with DHS agencies fueling more than half that demand. The international homeland security market is estimated at nearly $25 billion annually.
As the largest consumer of homeland security products, DHS plays a considerable role in defining the market. To date, however, this has occurred largely in fits and starts. “When DHS began, procurement was a mess and a lot of it was done under duress,” says David Silverberg, editor of HSToday. As a result, a 2006 congressional inquiry (PDF) seized upon widespread waste and a high number of no-bid contracts; in 2005 alone, 55 percent of DHS contract dollars were awarded without competition. A 2007 GAO report (PDF) noted DHS procurement processes still lacked sufficient oversight and recommended external reviews of acquisitions.
DHS has since attempted to change the way it procures new technologies; rather than specifying the requirements for each new product, DHS now specifies the functions new products should perform. This so-called performance-based contracting allows more room for new ideas and creative solutions, but it can create problems when contractors don’t deliver. “We don’t know how to gauge contractors’ performance at the end of the day,” says Nick Schwellenbach of the Project on Government Oversight, an independent government watchdog group.
DHS has a science and technology directorate tasked with overseeing research and implementation. The DHS strategy (PDF) for this outlines several steps to develop improved expertise in the field, both in government laboratories and in universities. In addition, the Homeland Security Advanced Research Projects Agency (HSARPA) solicits private-sector bids for specific technology needs on its website.
DHS has made some efforts to ensure coordination among federal, state, and local government technology purchases. For instance, when the department hired Northrop Grumman to help improve its first responder communications systems, it required the company to also help refine federal standards (PDF) for communications and interoperability. These standards can help state and local governments ensure interoperability in their own communications systems. However, coordination between state and federal offices still leaves something to be desired: A 2006 survey (PDF) of state homeland security directors found states feel left out of the loop when it comes to federal policy decisions.
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