The homeland security opportunity
$6 billion goes to 'boots and suits,' not technology<@VM>Security solutions aim at prevention<@VM>N.Y. rep: Big cities need anti-terrorist funds
Holli Ploog of Unisys Corp. said there is "pent-up demand" for homeland security-related integration services from state and local government clients.
Henrik G. de Gyor
The billions of dollars the federal government has appropriated for state and local first responders is not expected to produce any major systems integration opportunities in the foreseeable future, according to analysts and company officials.
The Department of Homeland Security announced last month that it would provide $2.2 billion from the fiscal 2004 budget to first responders. With the addition of the new funds, first responders will get more than $6 billion from the fiscal 2003 budget and supplemental budget and the fiscal 2004 budget.
But for the most part, the grants will go to new equipment and more training to strengthen emergency response capabilities. Industry officials said they expect little of the funding to go toward system integration services in areas such as wireless interoperable communications, command and control, critical infrastructure protection, intelligence processing and analysis and integrated criminal justice.
Although a number of substantial opportunities have surfaced at the federal level over the past two years, state and local governments have been able to bankroll few major homeland security initiatives because of the state budget crisis and the slow pace at which federal funds have become available, analysts and industry officials said.
Although few expected an immediate upsurge in business, the continued lack of funding for integration projects comes as a blow to companies that shifted resources and assets to prepare for what they expected to be a robust state and local homeland security market following the terrorist attacks of Sept. 11, 2001.
What's more, integrators are baffled because their state and local clients are saying they have a real need for homeland security solutions.
Holli Ploog, vice president and general manager of public-sector programs with Unisys Corp., Blue Bell, Pa., said there is "pent-up demand" for integration services and solutions in several homeland security-related areas that have not been met yet at the state and local level.
"Expectations have been set high and have not been realized," she said.
Still, executives are optimistic some opportunities may begin to unfold in the next 12 to 18 months.
Kent Blossom, director of public-sector safety and security for IBM Corp., Armonk, N.Y., said the opportunity for state and local homeland security will soon cross a threshold from nontechnical work to technical work.
John Hillen, senior vice president for the public sector and head of the defense and intelligence practice with American Management Systems Inc., Fairfax, Va., agreed.
Now that the grant system is in place, some systems integration opportunities for state and local homeland security, even if they are initially rather small, will begin to emerge over the next six months, he said.
The area that seems most promising in the short term is wireless communications interoperability, said Bob Hickes, director for state and local homeland security with BearingPoint Inc., McLean, Va.
"It's clearly the hot-button issue," he said.
The few wireless communications interoperability projects under way are focused on voice interoperability, and involve single companies rather than technology consortiums, Blossom said.
This may change as the Homeland Security Department places new emphasis on wireless communications interoper- ability in the coming months, and more funds are allocated for complex projects that require contracting teams with various products and skills, as opposed to individual companies, he said.
One area in need of technology consulting is enterprise planning for homeland security, Hickes said. For state and local entities to effectively manage their emergency response, they must develop governance structures, map their assets and forge mutual aid agreements where necessary, he said.
When states submit their grant plans to the Homeland Security Department later this year, industry will have a better picture of the type of opportunities that will be available over the next two years, Hickes said. But he emphasized that the states will have to share the cost burden.
"Federal funds aren't going to pay for everything on every state's wish list," Hickes said.
Staff Writer William Welsh can be reached at wwelsh@
Although much of the anti-terrorist money and attention is going to outfit first responders, most systems integrators aren't ready to give up on the state and local homeland security market.
Following the Sept. 11, 2001, terrorist attacks, many companies began developing new technologies and solutions aimed at protecting U.S. states and cities, according to analysts and industry officials.
But over the past two years, federal, state and local government have focused on helping state and local government enhance their emergency response and communications capabilities. Companies say that solutions designed to prevent terrorists incidents -- in areas such as physical and cybersecurity, critical infrastructure protection, intelligence analysis and information sharing -- are still important government needs, though they have yet to see significant funding at the state and local level.
Critical infrastructure protection presents a real opportunity for systems integrators, said Bob Hickes, director of homeland security for state and local government with BearingPoint Inc., McLean, Va. "The networks are every bit as critical, if not more so," he said.
A number of systems integrators are actively marketing homeland security solutions to existing customers, and they continue to develop alliances and partnerships focused on the opportunity.
For example, American Management Systems Inc. of Fairfax, Va., announced Nov. 7 that it will enter into a strategic alliance with Austin, Texas-based Infoglide Software Inc. aimed at helping intelligence and law enforcement agencies compile and analyze intelligence to support counter terrorism efforts.
Under a two-year agreement, the companies will combine consulting services from AMS with software from Infoglide that provides targeting, risk assessment and remote search capabilities to federal, state and local intelligence and law enforcement agencies.
AMS plans to focus heavily on growing its state and local homeland security business in the areas of critical infrastructure protection and intelligence processing and analysis, said John Hillen, a senior vice president with AMS' public sector and head of the company's defense and intelligence practice. The company's alliance with Infoglide will strengthen its ability to compete for intelligence work, he said.
Accenture Ltd., Hamilton, Bermuda, BearingPoint and Unisys Corp., Blue Bell, Pa., also remain committed to the homeland security business.
Unisys is focusing on opportunities surrounding network and physical security and intelligence and justice information sharing, said Holli Ploog, vice president and general manager of Unisys Public Sector programs.
Once the needs of first responders for equipment and training are met, she expects to see increased federal attention devoted to information sharing.
"First responders have been the priority [up to now], but there are a lot of inadequacies of sharing information both from an operational and an intelligence side," she said.
For now, Unisys will enter into partnerships or alliances on a project-by-project basis, she said. The partnerships are likely to focus on specific technologies or biometrics related to physical or cybersecurity, she said.
Accenture is focusing on improved information sharing and better emergency response, said Peter Soh, a company spokesman. One way the company proposes doing this is by building consolidated call centers that can link state and local government agencies through a central access point, he said.
The company is leveraging its call center experience, including a 311 nonemergency call center for the New York City Department of Information Technology and Telecommunication, and a call center for the Florida Department of Business and Professional Regulation.
BearingPoint is focused on helping state and local public safety agencies shore up their command and control structure as well as justice information sharing, Hickes said.
Since first responders are organized at the county level, it may be necessary to integrate them into a unified regional or statewide command structure in order to further improve emergency response, he said. Technology can help create the interjurisdictional structures or organizations that are an essential part of emergency response, he said.
"They have to do that; otherwise, there is not order, but chaos," Hickes said.
Staff Writer William Welsh can be reached at email@example.com.
A leading Democratic member of Congress has charged that the administration's latest round of grants to protect U.S. urban areas is insufficient to guard those most threatened by terrorist attacks.
Rep. Carolyn Maloney of New York leveled the verbal attack on the administration's latest announcement of first-responder grants at Department of Homeland Secretary Tom Ridge. Maloney is chairwoman of the House Democratic Task Force on Homeland Security.
"Shortchanging American cities at the top of the terrorists' lists is no way to fight a war on terrorism here at home," Maloney said. "The administration has time and again turned its back on the communities most at risk. The administration is willing to hand out grants to places Al Qaeda couldn't find on a map, even if they were trying."
The Department of Homeland Security is providing an additional $725 million in grants to urban areas to enhance their overall security and preparedness level to prevent, respond and recover from acts of terrorism.
Under the latest initiative, DHS will provide $675 million through the fiscal 2004 budget in the form of grants through the states to 45 urban areas to enhance their security. The department also will provide $50 million through the states for 30 urban areas to secure mass transit.
As evidence that the administration is forcing high-profile, big-target cities to fend for themselves, Maloney said the following are cuts in this year's security funding:
- 60 percent from New York City, from $150 million in 2003 million to $47 million in 2004;
- 52 percent from the Washington, D.C., region, from $60.6 million in 2003 million to $29.3 million in 2004;
- 17 percent from Chicago, from $40.9 million in 2003 million to $47 million in $34.1 in 2004;
- 10 percent from Los Angeles, from $31.3 million in 2003 million to $28.2 million in 2004.
The urban areas are chosen based on a formula that accounts factors such as critical infrastructure, population density and credible threat intelligence information, according to DHS. Furthermore, funding allocations among the cities, contiguous counties and mutual aid partners will be based on an urban area assessment and strategic plan.