[Hi all, as usual, CSL will be closing for 3 weeks over Easter. The last day
prior to Easter will be this Friday, 11, April. CSL will reopen on Monday 5
May. John & Joanne.]
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April 6, 2003
http://www.nytimes.com/2003/04/06/business/yourmoney/06LOBB.html?th
Domestic Security: The Line Starts Here
By PHILIP SHENON
THE NEW YORK TIMES
WASHINGTON
ONLY three months in town, and Charles E. McQueary has found himself just
about the most popular man in wartime Washington. Powerful lobbyists and
corporate executives track down his new telephone number and call him
unannounced; strangers buttonhole him in the halls of Congress, hoping for a
few precious minutes of his time.
Dr. McQueary, a former executive of General Dynamics and Bell Laboratories,
is the newly confirmed undersecretary for science and technology in the
Department of Homeland Security. In that job, he will influence how the
giant new agency and the rest of the federal government spend tens of
billions of dollars on technology to defend American soil from terrorist
attacks.
A genial, Texas-born engineering Ph.D., Dr. McQueary is now the government's
chief contact with the scientists, technicians and entrepreneurs who are
searching for ways to help their companies profit from the public's
understandable fixation with keeping their families and communities safe
from terrorism - a threat that probably has grown as a result of the war
with Iraq.
Dr. McQueary got a taste of his newfound celebrity when, seconds after he
finished testifying at his Senate confirmation hearing last month, he was
approached in the hearing room by an entrepreneur who wanted to promote
data-mining software that might help in the government's hunt for
terrorists.
"I gave him an e-mail address," said Dr. McQueary, who has established a
special e-mail account for dealing with the sudden crush of lobbyists,
corporate executives and hand-to-mouth entrepreneurs who want to pitch their
domestic-security wares. ([log in to unmask]).
"Through my whole professional career, I always answered my own telephone,
but it's rapidly getting to the point where that's not feasible anymore,"
said Dr. McQueary, who says he is more excited than beleaguered by his
assignment. "I don't know if inundated is the right word, but we certainly
are hearing from a number of people with ideas. And some of them are very
good ideas."
The domestic-security industry may be new, a legacy of the Sept. 11, 2001,
terrorist attacks and the widespread fear among intelligence agencies that
Americans will be a central terrorist target for years to come.
But most components of the industry are well established; the largest
players include major military contractors, giant electronics makers and
private security companies looking for new markets for their expertise.

HOWEVER defined, the domestic-security market is huge - and growing. There
are as many different sales forecasts for the industry as there are research
groups doing the estimating. But all of the industry's multibillion-dollar
forecasts are bullish.
An industry-supported institute called the Homeland Security Research
Corporation, in San Jose, Calif., predicts that overall public and private
spending on domestic security will jump to $120 billion to $180 billion in
2008 from $65 billion this year.
Another trade group, the Government Electronics and Information Technology
Association of Arlington, Va., says its tabulation shows that federal
spending on domestic-security technology will reach $13 billion in the
current fiscal year and rise to $14.6 billion in the 2008 fiscal year, a
figure that does not include inflation.
Critics have said the Bush administration is devoting too little money to
the Department of Homeland Security, the new superdepartment that is
consolidating the work of 22 federal agencies. The White House is seeking an
overall budget for the department of about $38 billion next year, a 7
percent increase.
Lawmakers from both parties seem determined to spend billions more on
domestic security, especially given the renewed worries about terrorism
threats, and the administration seems likely to bow to their pressure.
Beyond Washington, state and local governments face similar huge demands to
increase security spending, as does private industry, which is confronted
with billions of dollars a year in new security costs, especially for
companies considered likely terrorist targets, like airlines, chemical
manufacturers and nuclear power generators.
"The money is just beginning to flow," said Bruce Aitken, a Washington
lawyer and lobbyist who is president of the Homeland Security Industries
Association, a trade group that has signed up more than 100 companies as
members since it was incorporated in July. They include the giant government
contractors Lockheed Martin, General Dynamics, Bechtel and Fluor
</redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/
nyt-com/html-companyprofile.asp&symb=FLR>.
"We think that the United States is extremely vulnerable to terrorist
attack," said Mr. Aitken, who is about to announce the establishment of a
political action committee to promote the industry's interests on the
campaign trail. "We've got a lot of weak links, and it's going to take a lot
of money to get that changed."
No military contractor is as closely associated with the war in Iraq as
Raytheon
</redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/
nyt-com/html-companyprofile.asp&symb=RTN>, which makes the Tomahawk and
Patriot missile systems; the war began last month when dozens of Tomahawks
slammed into targets in Baghdad. But the company, based in Lexington, Mass.,
is eager to be seen these days as the government contractor of choice when
it comes to dealing with enemies who might strike closer to home.

WITHIN days of the terror attacks in September 2001, Raytheon announced
Project Yankee, a companywide effort to determine how its military expertise
and products might be converted to use in domestic counterterrorism. In
June, the company took the next step, formally creating a new division based
in Falls Church, Va., outside Washington, to oversee its domestic-security
business.
Its first major product is now arriving on the market, a $250,000
command-and-control vehicle called the First Responder, which is a Chevy
Suburban sport utility vehicle packed with communications equipment and
antennas allowing emergency-response agencies to communicate with one
another even if they use different radio frequencies.
Raytheon officials say that in a major terrorist attack, the vehicle would
overcome some of the logistical problems that hampered the disaster scenes
in Lower Manhattan and the Pentagon on Sept. 11, 2001, when emergency
workers using different, incompatible communications equipment poured in to
help from cities and towns hundreds of miles away.
"The First Responder is just coming off the assembly line," said Dale Craig,
a retired Army communications specialist who joined Raytheon after 30 years
in the military; he is now directing the First Responder program. "This is a
product whose time is here."
The first of the vehicles is bound for the Los Angeles County Sheriff's
Department, and Raytheon said it was in negotiations with almost 300
potential buyers, including many police and fire departments around the
country.
Another military contractor, Northrop Grumman, is working with a small
high-technology company in Bedford, N.H., Imaging Automation, to promote
security systems that would allow the federal government to quickly
authenticate passports, visas and other documents presented at security
checkpoints.
The Imaging Automation system, which uses a small glass-top metal box on
which a document can be scanned in seconds for signs of forgery, has already
been sold to the governments of Hungary and Australia, to the British
airports authority and to Logan Airport in Boston, where it is used to
verify documents presented by potential employees.
Imaging Automation, which has 60 employees, is a private company and does
not release its financial results. But Bill Thalheimer, the chief executive,
said he expected sales to double this year over last, and to triple next
year from this year. "And that's all exclusive of what the federal
government might want to do," he said.
In an age of terrorist threats and fears, the opportunities of the market
reach beyond high technology, and companies that make basic home security
and alarm systems are also poised to benefit.
Anyone who visited a supermarket or hardware store in early February, when
the White House raised the color-coded terrorism alert and urged the public
to stock up on basic survival supplies, understands that American families
are willing to spend freely on their own protection.
After a year of corporate scandal and criminal charges against executives,
the employees of Tyco International
</redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/
nyt-com/html-companyprofile.asp&symb=TYC> were probably entitled to a little
good news, and they got it as a result of the February alert. Tyco is one of
the world's largest makers of duct tape, and demand was so strong for its
Nashua-brand tape that it switched the production line at its Kentucky plant
to making residential duct tape instead of the commercial variety.

WHILE much of the early business of the Department of Homeland Security
seems likely to go to large government contractors that have the track
record and lobbying muscle to make themselves quickly known to the new
agency, the department says it wants to serve as an incubator to innovative
small and midsize companies.
"We're going to find there are some real good ideas from small companies,"
said Dr. McQueary, who is expected to spend much of his first several months
at the department deciding on technology to help secure border checkpoints
to block the entry of terrorists and their weapons.
He said he was trying to set aside time each week to meet with small,
creative inventors who had domestic-security ideas that big contractors
might have overlooked. "I had an individual come by to see me the other day
with an idea for a secure manhole cover," Dr. McQueary said. "I was happy to
give him 15 minutes. It's a manhole cover that couldn't be easily lifted out
of its recess, and so terrorists couldn't easily get in and hide. Not a bad
idea."

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