San Diego Union-Tribune

December 10, 2001

Security spending affords opportunities for businesses
Tech firms vying for the attention of federal agencies

By Toby Eckert 

WASHINGTON -- Qualcomm, the San Diego-based wireless giant, recently was showing a new airline security system to lawmakers and their staffs when House Transportation Committee Chairman Don Young ambled through the presentation.

Young, an Alaska Republican, called the technology "quite interesting," a seemingly innocuous assessment were it not for the fact that he had just played a key role in negotiating an aviation security law that could bring new business to companies such as Qualcomm.

Young then headed down the hall of the Rayburn House Office Building to an informal trade show. A half-dozen companies were set up in a committee hearing room, displaying wares that included voice-stress analyzers, baggage scanners and secure doorways that read palm prints.

With the government embarking on a multibillion-dollar effort to boost defense and homeland security, companies coast to coast are vying for the attention of federal agencies in the market for everything from bomb-sniffing dogs to surveillance equipment that can see through walls. The local congressional office is often their first stop.

"Everybody wants to meet with Tom Ridge," the homeland security director, said Rep. Randy "Duke" Cunningham, R-Escondido, who organized the presentation by Qualcomm. "There are a lot of companies with technology out there."

Rep. Susan Davis, D-San Diego, said she is hoping to organize a "homeland security summit" for San Diego corporations next month.

"We've had calls from companies asking, 'How do we get in the loop?' " Davis said.

Lawmakers from Silicon Valley and the Los Angeles area are planning similar expos to link companies in their districts with federal officials who make buying decisions.

With its concentration of defense and technology companies and military bases, experts say the San Diego area and California in general are well poised to benefit from government and private-sector spending related to the Sept. 11 attacks and the ongoing war on terrorism.

Though it may not be the answer to the current recession, the increased spending could provide a needed boost to local economies, especially in the suffering high-tech sector.

"There are probably only a half-dozen states that are going to benefit from this," said Stephen S. Fuller, an expert on government procurement at George Mason University in Virginia. "I think California will do quite well."

San Diego companies already have landed lucrative contracts for protecting the mail from anthrax and developing other technology to combat bioterrorism. Congress also is poised to step up acquisition of two unmanned surveillance aircraft produced in the area, the Predator and Global Hawk, that have
been used in Afghanistan.

"Most of our companies that have relevant technologies already deal with the government and the Department of Defense," said Rep. Duncan Hunter, R-El Cajon, who chairs the House Armed
Services subcommittee on research and development.

Many smaller companies also "are coming to Washington with ideas," Hunter said.

Congress has appropriated $40 billion for the response to Sept. 11 and is debating whether to spend more. While spending on traditional defense systems will eat up much of that, the Defense Department and other agencies also are looking for the latest gizmos.

Michael Wynne, a top Pentagon procurement official, told business executives recently that the armed forces are "increasingly reliant on the capabilities of the business community . . . to provide the technology innovations necessary to meet and defeat the terrorist threat our nation now faces."

A 24-page request for proposals issued in late October by the Pentagon seeks an array of sophisticated equipment for locating terrorist targets, supporting "protracted operations in remote areas," and detecting and defusing chemical, biological and nuclear weapons.

Specific requests include "through-wall imagining" systems that can diagram rooms and detect people hiding in them, eavesdropping equipment able to identify obscure Arabic dialects and other languages, and databases that analyze individual and group behavior for clues to terrorist activity.

"If there has ever been a time when the government needs to expand and fortify its base of suppliers for both goods and services, this is the time," said Angela Styles, who heads the White House Office of Federal Procurement Policy.

The aviation security law signed recently by President Bush also could prove lucrative to tech companies. The measure directs the Transportation Department and the Federal Aviation Administration to explore new technology for protecting aircraft and passengers and establishes a program to test new security equipment at 20 airports.

The law also authorized $500 million for grants to airlines that want to install technology such as cockpit and cabin video monitors.

The Globalstar Communications System that Qualcomm demonstrated to lawmakers combines wireless technology and satellites to continuously feed video and other data from airplanes.

"Aviation security is a very important issue here on the Capitol Hill," said Qualcomm CEO and Chairman Irwin Jacobs. "One of the things this (presentation) accomplishes is to demonstrate this is not something that's futuristic. It's available."

The company is awaiting FAA certification of the system.

Arguably, one of the best-positioned California companies is InVision Technologies Inc., based in Newark. It is one of two companies currently certified by the FAA to make machines that scan checked luggage for explosives, and it currently dominates that tiny market.

The aviation security bill requires that all checked luggage be screened by the end of 2002, and orders for the expensive machines are expected to surge. The company's stock price has soared since Sept. 11, hitting $31.34 on Friday. 

With all of the jockeying for contracts and keen congressional interest in helping out local companies, some observers worry about a repeat of the well-publicized spending abuses that
characterized other defense buildups.

"If you pump more money into the system, you're going to get more waste," said Christopher Hellman, a research analyst at the private Center for Defense Information. "We don't want to see Sept. 11 used as an excuse for no-holds-barred procurement."

Hellman said the nation remains in crisis mode.

"Clearly, right now, to a certain extent the situation is if the Pentagon needs it, they're going t o get it," he said.