Innovation

Homeland Security Makes a Wish List


Unlike airplanes, buses and trains don't typically carry black boxes, the indestructible devices that record data while a vehicle is in motion. Visual Defence, a Canadian company working with the U.S. Department of Homeland Security, hopes to change that with its SecurEye system. The device consists of a camera and a small metal box that can store up to 250 hours of video, withstand C-4 explosions, and survive for eight minutes in a petroleum fire burning at 1,700F without losing a single frame of footage.

On Apr. 27 the device will become the first graduate of Secure. The DHS program is designed to help speed the development of national security products. It's structured similarly to private sector initiatives like Procter & Gamble's (PG) Connect + Develop website. The site lists products P&G hopes others will invent, in effect creating markets for products before they exist. It's a way of crowdsourcing innovation—and outsourcing research and development budgets. "The government thinks it needs to pay for everything" from prototype to production, says Tom Cellucci, DHS's first chief commercialization officer and the creator of Secure. Yet many businesses are willing to finance projects on their own if they believe there's a market for them, he says.

Secure is the acronym for System Efficacy through Commercialization, Utilization, Relevance, and Evaluation. The program publishes a wish list of products from agencies overseen by DHS, including the Transportation Security Administration. The original batch of eight, released in 2009, included the black box for mass transit as well as a portable water purification system, a way to protect fuel containers from explosions, and crisis-response software. About 100 companies submitted R&D proposals totaling $350 million. Secure, which has operated as a pilot program until now, will become an official part of DHS in late April, and plans to enroll between 35 and 83 new teams in the next year.

While it doesn't provide financing, Secure works with government agencies to estimate a market size for each requested product—in the case of the black box, Secure predicts sales of 1.5 million units—and provides guidance from government experts and potential buyers. "Companies pay quite a bit of money to tease out the voice of the customer," says James G. Conley, a professor at the Center for Research in Technology and Innovation at Northwestern University's Kellogg School of Management. "The government is trying to help people who think they have a solution."

In rare cases, Secure may pay for extensive lab and field tests. It helped arrange and paid tens of thousands of dollars for the SecurEye to be tested on bus and rail systems in three U.S. cities and in military labs, tests "we'd not been able to afford or conduct" otherwise, says Vicki Looney, general manager and vice-president of business development at Visual Defence's U.S. subsidiary. Secure can also help participants gain Safety Act designation, which limits the liability of companies whose products are used in anti-terrorism efforts and can assist in getting products added to a list of those approved for purchase by the DHS, which wields a $56 billion budget.

Cellucci says that by relying on the private sector, Secure could free up 15 to 20 percent of DHS's R&D budget for other uses. Dan Inbar, chairman of Homeland Security Research, says Secure will give the government "more security bang for the buck" and allow it to solicit more product ideas from startup companies, "which, needless to say, are the wellspring of innovative technologies." What remains to be seen is whether the products built on spec will be hits or flops. Secure is supposed to "lead to a solution of a particular government challenge," says Kellogg's Conley. "Let's see if that actually happens."

The bottom line: By relying more on the private sector to fund the development of security products, DHS could free up 15 to 20 percent of its R&D budget.

Olga_kharif1
Kharif is a reporter for Bloomberg News and Bloomberg Businessweek in Portland, Ore.

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