Homeland security: Profiting from fear (page 3)

Multibillion-dollar security initiatives have given rise to a new industry seemingly overnight.

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The increased accuracy rates are one reason why Congress has passed a law to make facial biometrics part of the visa waiver program for foreign citizens. Almost 30 countries will likely start producing passports that have facial data stored in the documents, to meet U.S. requirements.

Future funding

That has been welcome news to many companies that wonder how long the government can continue funding costly homeland security projects, now that the shock of the Sept. 11 terrorist attacks is fading. They are particularly concerned that lawmakers are reluctant, this election year, to fund security programs under the weight of a crushing federal deficit and rising costs related to the conflict in Iraq. Rate your feelings of safety

Already, the federal government has not made expected progress in some key programs, including US-VISIT. The contract for the estimated $10 billion project was awarded to technology services firm Accenture in June, but it has not kept to schedule and, as a result, has not been fully funded by Congress.

"The pendulum has swung back to normalcy," Baroni said. "The further we get from the events of 9/11, the more complacent we become."

One company that says agencies are slow to take advantage of existing technologies is RAE Systems, which has proposed uses for the chemical, radiation and biological sensors that it makes, such as ensuring the integrity of cargo containers. The equipment has been used to guard political conventions and major sporting events, including the Super Bowl, but the company says the federal government has yet to see beyond those applications.

"The contracts are largely a myth," said Bob Durstenfeld, director of communications at RAE, pointing to delays in detection projects despite two laws that mandate the use of sensors on cargo containers for better port security. "They have no teeth, because there is no political will to implement them."

Business has been slowed further while the Department of Homeland Security tries to solve its many security and integration problems, under pressure from the Office of Management and Budget, which has said it will not award funds for new systems until the issues are resolved. Congress signed the appropriations bill for homeland security on time this year, but complying with the budget office's rules has held up related contracts and essentially left much of the money to be spent in the fourth quarter.

"More spending is going on this quarter than the same time last year," said Keith Bickel, CEO of FedLeads, a consulting firm that tracks federal contracts.

Federal agencies will spend nearly $260 billion on security technology contracts by 2010 if the nation remains in an "ongoing crisis" scenario of moderate, intermittent terrorist attacks, according to Homeland Security Research. FedLeads estimates that the Department of Homeland Security is spending more than $10 billion on information technology for antiterrorism infrastructure this year.

But as projects fall under more scrutiny, agencies are likely to award contracts to large companies that have track records from previous work with the government.

"So who gets squeezed? The other small businesses. Whether they can make it up on the subcontracting side is something we may never know," Bickel said. Large contractors this year are certain to get more than the 70 percent of funds they won in fiscal 2003, he added.

The Department of Homeland Security maintains that small businesses are doing well with the demand for security technologies. Nearly 40 percent of contract money went to small companies in the first seven months of 2003, the first year such projects were put up for bid, said Kevin Boshears, director of the department's Office of Small and Disadvantaged Business Utilization.

"The business community, and specifically the small-business community, has said that they want to be part of the process," Boshears said, adding that the department intends to match the overall government goal of 23 percent of contracts to go to small business in 2004 and 2005. "We have tried to put out the welcome mat and stress that, yes, we are open for business."

Regardless of who gets the contracts, others worry that process-laden bureaucracy will overtake the nation's sense of urgency toward terrorism.

"This is not business as usual," said Gilman Louie, a member of the nonpartisan Markle Foundation Task Force on National Security in the Information Age and the CEO of In-Q-Tel, a venture firm that funds technology for the CIA. "We are still not moving fast enough."

CNET News.com's Mike Yamamoto contributed to this report.

(continued from previous page)

The increased accuracy rates are one reason why Congress has passed a law to make facial biometrics part of the visa waiver program for foreign citizens. Almost 30 countries will likely start producing passports that have facial data stored in the documents, to meet U.S. requirements.

Future funding

That has been welcome news to many companies that wonder how long the government can continue funding costly homeland security projects, now that the shock of the Sept. 11 terrorist attacks is fading. They are particularly concerned that lawmakers are reluctant, this election year, to fund security programs under the weight of a crushing federal deficit and rising costs related to the conflict in Iraq. Rate your feelings of safety

Already, the federal government has not made expected progress in some key programs, including US-VISIT. The contract for the estimated $10 billion project was awarded to technology services firm Accenture in June, but it has not kept to schedule and, as a result, has not been fully funded by Congress.

"The pendulum has swung back to normalcy," Baroni said. "The further we get from the events of 9/11, the more complacent we become."

One company that says agencies are slow to take advantage of existing technologies is RAE Systems, which has proposed uses for the chemical, radiation and biological sensors that it makes, such as ensuring the integrity of cargo containers. The equipment has been used to guard political conventions and major sporting events, including the Super Bowl, but the company says the federal government has yet to see beyond those applications.

"The contracts are largely a myth," said Bob Durstenfeld, director of communications at RAE, pointing to delays in detection projects despite two laws that mandate the use of sensors on cargo containers for better port security. "They have no teeth, because there is no political will to implement them."

Business has been slowed further while the Department of Homeland Security tries to solve its many security and integration problems, under pressure from the Office of Management and Budget, which has said it will not award funds for new systems until the issues are resolved. Congress signed the appropriations bill for homeland security on time this year, but complying with the budget office's rules has held up related contracts and essentially left much of the money to be spent in the fourth quarter.

"More spending is going on this quarter than the same time last year," said Keith Bickel, CEO of FedLeads, a consulting firm that tracks federal contracts.

Federal agencies will spend nearly $260 billion on security technology contracts by 2010 if the nation remains in an "ongoing crisis" scenario of moderate, intermittent terrorist attacks, according to Homeland Security Research. FedLeads estimates that the Department of Homeland Security is spending more than $10 billion on information technology for antiterrorism infrastructure this year.

But as projects fall under more scrutiny, agencies are likely to award contracts to large companies that have track records from previous work with the government.

"So who gets squeezed? The other small businesses. Whether they can make it up on the subcontracting side is something we may never know," Bickel said. Large contractors this year are certain to get more than the 70 percent of funds they won in fiscal 2003, he added.

The Department of Homeland Security maintains that small businesses are doing well with the demand for security technologies. Nearly 40 percent of contract money went to small companies in the first seven months of 2003, the first year such projects were put up for bid, said Kevin Boshears, director of the department's Office of Small and Disadvantaged Business Utilization.

"The business community, and specifically the small-business community, has said that they want to be part of the process," Boshears said, adding that the department intends to match the overall government goal of 23 percent of contracts to go to small business in 2004 and 2005. "We have tried to put out the welcome mat and stress that, yes, we are open for business."

Regardless of who gets the contracts, others worry that process-laden bureaucracy will overtake the nation's sense of urgency toward terrorism.

"This is not business as usual," said Gilman Louie, a member of the nonpartisan Markle Foundation Task Force on National Security in the Information Age and the CEO of In-Q-Tel, a venture firm that funds technology for the CIA. "We are still not moving fast enough."

CNET News.com's Mike Yamamoto contributed to this report.

(continued from previous page)

The increased accuracy rates are one reason why Congress has passed a law to make facial biometrics part of the visa waiver program for foreign citizens. Almost 30 countries will likely start producing passports that have facial data stored in the documents, to meet U.S. requirements.

Future funding

That has been welcome news to many companies that wonder how long the government can continue funding costly homeland security projects, now that the shock of the Sept. 11 terrorist attacks is fading. They are particularly concerned that lawmakers are reluctant, this election year, to fund security programs under the weight of a crushing federal deficit and rising costs related to the conflict in Iraq. Rate your feelings of safety

Already, the federal government has not made expected progress in some key programs, including US-VISIT. The contract for the estimated $10 billion project was awarded to technology services firm Accenture in June, but it has not kept to schedule and, as a result, has not been fully funded by Congress.

"The pendulum has swung back to normalcy," Baroni said. "The further we get from the events of 9/11, the more complacent we become."

One company that says agencies are slow to take advantage of existing technologies is RAE Systems, which has proposed uses for the chemical, radiation and biological sensors that it makes, such as ensuring the integrity of cargo containers. The equipment has been used to guard political conventions and major sporting events, including the Super Bowl, but the company says the federal government has yet to see beyond those applications.

"The contracts are largely a myth," said Bob Durstenfeld, director of communications at RAE, pointing to delays in detection projects despite two laws that mandate the use of sensors on cargo containers for better port security. "They have no teeth, because there is no political will to implement them."

Business has been slowed further while the Department of Homeland Security tries to solve its many security and integration problems, under pressure from the Office of Management and Budget, which has said it will not award funds for new systems until the issues are resolved. Congress signed the appropriations bill for homeland security on time this year, but complying with the budget office's rules has held up related contracts and essentially left much of the money to be spent in the fourth quarter.

"More spending is going on this quarter than the same time last year," said Keith Bickel, CEO of FedLeads, a consulting firm that tracks federal contracts.

Federal agencies will spend nearly $260 billion on security technology contracts by 2010 if the nation remains in an "ongoing crisis" scenario of moderate, intermittent terrorist attacks, according to Homeland Security Research. FedLeads estimates that the Department of Homeland Security is spending more than $10 billion on information technology for antiterrorism infrastructure this year.

But as projects fall under more scrutiny, agencies are likely to award contracts to large companies that have track records from previous work with the government.

"So who gets squeezed? The other small businesses. Whether they can make it up on the subcontracting side is something we may never know," Bickel said. Large contractors this year are certain to get more than the 70 percent of funds they won in fiscal 2003, he added.

The Department of Homeland Security maintains that small businesses are doing well with the demand for security technologies. Nearly 40 percent of contract money went to small companies in the first seven months of 2003, the first year such projects were put up for bid, said Kevin Boshears, director of the department's Office of Small and Disadvantaged Business Utilization.

"The business community, and specifically the small-business community, has said that they want to be part of the process," Boshears said, adding that the department intends to match the overall government goal of 23 percent of contracts to go to small business in 2004 and 2005. "We have tried to put out the welcome mat and stress that, yes, we are open for business."

Regardless of who gets the contracts, others worry that process-laden bureaucracy will overtake the nation's sense of urgency toward terrorism.

"This is not business as usual," said Gilman Louie, a member of the nonpartisan Markle Foundation Task Force on National Security in the Information Age and the CEO of In-Q-Tel, a venture firm that funds technology for the CIA. "We are still not moving fast enough."

CNET News.com's Mike Yamamoto contributed to this report.