No. 2: With SBInet, Boeing IDS takes flight

Border project shines spotlight on technology business

Boeing Co.

Top 100 revenue: $7.3 billion

150,000 Employees

2006 revenue: $61.5 billion

2006 net earnings: $2.2 billion

2005 revenue: $53.6 billion

2005 net earnings: $2.6 billion

"The successful completion of the first integrated mobile-sensor tower test is a significant program milestone." Jerry McElwee

Rick Steele

Boeing's new 787 Dreamliner passenger plane captured the mainstream media's attention in 2006 when it became the fastest-selling commercial airliner in history, with more than 500 orders.

Although Boeing's reputation for flashy, high-tech passenger aircraft is well-known, its role as a government contractor is not as well-publicized. But with its high-profile win of the Homeland Security Department's SBInet contract that's about to change.

Last fall, Boeing's Integrated Defense Systems division beat Lockheed Martin Corp., Ericsson Inc., Northrop Grumman Corp. and Raytheon Co. to win a six-year award for what is called Project 28 under SBInet, the DHS multiyear initiative to secure U.S. borders from would-be terrorists and illegal immigrants through advanced technology and increased manpower.

Announcing the award, DHS Secretary Michael Chertoff said the two-part task order was worth about $67 million. Estimates put the potential value of the SBInet program at $2 billion to $3.1 billion.

Despite a moderating defense market, Boeing's IDS division continues to do well, thanks partly to the SBInet program and other contracts, said Jim McNerney, Boeing's chairman, president and chief executive officer, in a statement to shareholders. As significant as the SBInet award was, 84 percent of IDS' revenue of $32.4 billion in 2006 came from the Defense Department, according to the company's annual report.

IDS revenues increased 18 percent during fourth-quarter fiscal 2006 to a record $9.7 billion on higher volume across all segments of the division, the report said.
This year, Boeing is No. 2 on the Top 100 with $7.3 billion in prime government services revenue.

Boeing's work on the DHS contract is already under way. The company recently successfully tested the first SBI tower, paving the way for the construction of some 1,800 towers along the southern and northern U.S. borders within the next three years.

"The successful completion of the first integrated mobile-sensor tower test is a significant program milestone," said Jerry McElwee, vice president of SBInet at Boeing. "We are on schedule to deploy [the towers beginning] on June 13, as originally promised." Boeing will construct the first towers along the Arizona/Mexico border, and future task orders will expand their reach, McElwee said.

Jim Albaugh, IDS president and chief executive officer at Boeing, said the successful tests show that the component is designed well and can be replicated for future deliveries.

Once operational, the 98-foot towers ? equipped with cameras, radar, wireless data access points, communications and computer equipment, and a tower security system ? will detect and identify entries into the U.S. as they occur. That will help Border Patrol agents respond quickly.

McElwee called the indefinite-delivery, indefinite-quantity contract an incentive to Boeing to not only meet the timetable but also perform better than expected. "Of course, as an IDIQ [contract], the government always has the option to take a different approach," he said. "There's no guarantee of future work."

Nevertheless, McElwee said, he believes winning the initial award and meeting its benchmarks on time should give Boeing an advantage for future SBInet work.

Some market analysts are skeptical, however. Suggesting the early SBInet performance is significant is "like saying Custer had a leg up because he got to the Little Big Horn first," said James Carafano, senior fellow at the Heritage Foundation. "It remains to be seen if being first out of the blocks is a big advantage or not."

Carafano said it is too early to say that the SBInet contract is a major win for Boeing because the border security program presents unique challenges. "This is a deeply politically charged issue," he said. "It's a work in progress" that is also affected by staffing, policy and other problems affecting DHS.

"What we expect out of a lead systems integrator and how they interact with the government, that's going to be evolving and changing," he said. "I do think there is a pot of gold at the end of the rainbow. I also think there are a lot of minefields between a company and that pot of gold."

Carafano added that if integrators such as Boeing can ultimately be successful implementing the SBInet program, "there is enormous business potential."

McElwee said the Boeing team is working with Customs and Border Patrol to plan the next steps in the SBInet program, but he declined to provide specifics. "As you might expect," he said, "we're leaving it to [DHS] to announce those [steps] rather than our joining in and getting ahead of them."

Profiles of the Top 20 companies in the 2007 Top 100


No. 1: Lockheed Martin's reinvention

No. 2: With SBInet, Boeing IDS takes flight

No. 3: Northrop Grumman rises to new challenges

No. 4: KBR gets down to business

No. 5: IPO catapults SAIC into a new era

No. 6: Raytheon strives for balance

No. 7: General Dynamics in full sprint

No. 8: Fluor's ready in a pinch

No. 9: L-3 leadership stays the course

No. 10 EDS, Hard-learned lesson

No. 11 CSC, Experience that counts

No. 12: Battelle seeks new frontiers

No. 13: Booz Allen, Quality over quantity

No. 14: Bechtel telecom makes a splash

No. 15: For BAE, persistence pays off

No. 16: ITT makes a push into new markets

No. 17: Dell, Talking about evolution

No. 18: Technology and service fuel IBM

No. 19: Verizon caps off a busy year with a big win

No. 20: United Technologies gains altitude

Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here
close
SEARCH
contracts DB

Trending

  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Read More

  • Is SBA MIA on contractor fraud? Nick Wakeman

    Editor Nick Wakeman explores the puzzle of why SBA has been so silent on the latest contractor fraud scandal when it has been so quick to act in other cases. Read More

Webcasts

  • How Do You Support the Project Lifecycle?

    How do best-in-class project-based companies create and actively mature successful organizations? They find the right mix of people, processes and tools that enable them to effectively manage the project lifecycle. REGISTER for this webinar to hear how properly managing the cycle of capture, bid, accounting, execution, IPM and analysis will allow you to better manage your programs to stay on scope, schedule and budget. Learn More!

  • Sequestration, LPTA and the Top 100

    Join Washington Technology’s Editor-in-Chief Nick Wakeman as he analyzes the annual Top 100 list and reveals critical insights into how market trends have impacted its composition. You'll learn what movements of individual companies means and how the market overall is being impacted by the current budget environment, how the Top 100 rankings reflect the major trends in the market today and how the biggest companies in the market are adapting to today’s competitive environment. Learn More!