Union Tribune

February 26, 2003

Davis pitches high-tech sector for wartime contracts
Governor seeks to boost state's dismal economy

By DANA WILKIE and TOBY ECKERT
COPLEY NEWS SERVICE

WASHINGTON When Gov. Gray Davis introduced California technology executives to Homeland Security Secretary Tom Ridge yesterday, the governor was on something of a sales mission.

His product: the high-tech wares created by hundreds of California companies.

His prospective client: a federal government that thanks to President Bush will have many extra billions of dollars to spend on technologies for war and homeland security.

This coming fiscal year, Bush is proposing to spend $59 billion on computers, network equipment and other information technology to make the country safer from terrorists and wartime attacks. By 2007, that amount would grow to nearly $73 billion, if Congress agrees.

There is little doubt that California's concentration of high-tech companies and 11 research universities will benefit from the money. But it's debatable how much it will help a state whose economic downturn was fueled partly by a high-tech industry slump.

"Certainly (new federal money) is not going to solve the problem," said Jean Ross, executive director of the California Budget Project, an independent budget analyst. "But hopefully, a lot of small steps add up to something larger."

Though Davis was reluctant to predict a boon for California's economy, that was clearly in his thoughts. The Democratic governor, who is struggling with a record state budget gap of $26 billion to $35 billion, said homeland security measures and the potential for war with Iraq make California "a natural fit" for the types of contracts the Bush administration hopes to hand out.

"All I know is that it's good news for California's technology companies," Davis told reporters after introducing Ridge to the heads of 21 California companies that sell security products and services. "There will almost certainly be more work and more challenges for them, which will mean more jobs.

"It's impossible to say at this point how much money or how many jobs. But I know that we opened the door today."

While technology expos and government-business summits have been common since the government started ramping up its homeland security spending after the Sept. 11, 2001, terrorist attacks, Davis said he was the first governor to lead such a delegation directly to Ridge's door.

Ridge spokesman Brian Roehrkasse called it "the most comprehensive group of people who have been brought in to see the secretary" to date.

Davis' delegation included seven San Diego-area companies ranging from major defense contractors, such as Science Applications International Corp., to smaller companies, such as Bonita-based Technology Advocate Group Inc., which aims to sell products to make federal computers more secure.

The executives said the meetings helped them understand what types of hardware and software the government needs, and how to navigate the complex process for getting federal contracts.

"We're 2,500 miles away," said Joseph Panetta, president of BIOCOM, a San Diego-based trade association for biotech companies. "We don't have a direct pipeline to what's happening here. That's why a trip like this is so valuable to us."

The $59 billion Bush wants to spend on new technologies represents a $6.5 billion increase, or 12.3 percent, over last year's request. The new federal money could go to companies that make everything from vaccines to anthrax detectors, from software that protects military computers to cameras that monitor bridges and tunnels.

Davis clearly hopes that if there is a war with Iraq, California companies will take a leadership role the way they did in previous conflicts.

"California played a unique role in providing the hardware to help win the Cold War and World War II," he said. "We believe we're uniquely situated to help win the war against terrorism."

Companies in Silicon Valley which was hit hardest by the high-tech industry slump typically make less money from government contracts than firms in Southern California. Industry officials hope this will change.

"It's going to be very welcome here in the Silicon Valley," said Carol Henten, Western regional vice president for the Information Technology Association of America, whose members include San Diego's SAIC and Gateway. "We're hoping for a fairly significant boost."