Photo Essay Half a billion foreign visitors cross America's borders, land at her airports, and dock at her harbors each year. Imagine trying to weed out the criminals and terrorists while keeping track of everyone else as they vacation, conduct business, enroll in college -- and try to drop out of sight once they've overstayed their visa. That's the challenge Accenture LLP took on when it landed a federal contract on June 1 that could ultimately be worth $10 billion. The Bermuda technology consulting company, with U.S. headquarters in Reston, Va., will design a system for high-tech passports and visas, plus a database to keep track of when and where travelers cross the border.
Welcome to a high-tech Security Nation. The passport-and-visa system, which could take 10 years to perfect, is the first step in a massive push to identify and correct America's many vulnerabilities to terrorist attack. Nearly three years after September 11, the federal government is finally breaking out its checkbook. Despite a mushrooming federal deficit, the Bush Administration has booked a 10% hike in spending for the Department of Homeland Security in fiscal 2005, which starts in October. That will boost its budget to $40.2 billion. And while past funding increases went largely to personnel -- primarily airport screeners -- most of the new money will flow to anti-terrorism tools under development by the nation's technological wizards.
And that's just the start. Tally it all up and government and private-sector security spending will hit $130 billion to $180 billion a year by 2010, up from $65 billion in 2003, calculates consultant Homeland Security Research Corp. in San Jose, Calif. Wall Street is anticipating a flood of business: A 13-stock index of publicly traded homeland-security companies tracked by Memphis brokerage Morgan Keegan & Co. has already risen 20% since the start of the year, vs. a 1% gain for the Standard & Poor's 500-stock index.
PLENTY OF IDEAS
Little of the new gear will be in place for the crush of upcoming public events, from the Democratic and Republican National Conventions in Boston and New York to Inauguration Day in Washington. So on May 26, armed with intelligence intercepts indicating that al Qaeda seems to be planning another strike against the U.S., Attorney General John Ashcroft and FBI Director Robert S. Mueller III warned the public of the need for more vigilance and caution.
Such alerts could help drive spending even higher. Congress is weighing a series of bills to boost funding of airline and rail security and chemical-plant protection. State and local governments -- with much of this year's $4.4 billion in federal grants unspent, and $3.6 billion more in the pipeline for 2005 -- are hiking spending on everything from firemens' radios to bioterror planning for public-health clinics. And private industry, which owns 85% of U.S. infrastructure, is diverting more of its security budget, estimated at $20.4 billion in 2003, to systems that remotely monitor facilities.
Will the tech-intensive approach make us all that more secure? Most of the new systems adapt existing gizmos -- but the security applications require refinement, miniaturization, a lower price tag, and a lot more reliability. Experiments with expensive facial-recognition devices in several airports produced so many false positives -- identifying startled innocents as fugitives from justice -- that the technology is no longer considered useful. What's more, Congress and the DHS have shown an alarming tendency to chase after past threats while ignoring future risks, spending billions on air travel, for example, but nothing, until the Madrid attacks, on trains. That sort of piecemeal approach risks leaving huge gaps in coverage. "We are still in the infant stage of deciding what it is that we have to secure," says P.J. Crowley, a former National Security Council official.
Still, the need to protect against further attacks seems to be spawning plenty of ideas. Siemens Building Technologies Inc. is developing a video surveillance system that can pick up cars that inexplicably stop moving, pedestrians who appear where they shouldn't be, or suspicious bags left sitting too long, using artificial-intelligence programs that can spot anomalies better than bored humans can. The system is undergoing tests in tunnels, on bridges, and in a classified government site. An Englewood Cliffs (N.J.) unit of LG Electronics USA is in talks with several potential system developers about using its iris scanners -- which recognize unique patterns in the colored portion of an individual's eyes -- to identify travelers. A similar system is already in use in the Netherlands.
The Accenture contract, for a system dubbed U.S.-VISIT, is the biggest issued by the DHS to date. If the scheme works as planned, the government will know who's coming to visit even before they arrive and whether or when they leave. "The idea is to extend the borders of the U.S. in a virtual form," says Stephen J. Rohleder, CEO of Accenture's Government Group. The technology and consulting firm, which beat out rivals Lockheed Martin (LMT) and Computer Sciences (CSC), has already signed up subcontractors SRA International (SRX), Titan (TTN), Raytheon (RTN), AT&T (T), Dell (DELL), and Sprint (FON).
The new emphasis on technology is showing up everywhere. Take, for example, the portable command center, recently little more than a converted RV. Oshkosh Truck Corp. (OSK) in Oshkosh, Wis., anticipating a boom in sales, has added cameras that can see up to a mile away, extensive radio-dispatch and recording systems, and positive air-pressure controls to keep out hazardous materials. A fully loaded center can cost up to $1 million. Oshkosh expects to sell well over 100 vehicles this year, twice as many as in 2003. "We think [the business] is just getting rolling," says John W. Randjelovic, CEO of Oshkosh's emergency-vehicles unit.
Traditional defense contractors, too, are broadening their focus beyond fighter jets and bombers to go after the booming homeland-security market. Northrop Grumman Corp. (NOC) in Los Angeles is rolling out a $175 million biological-weapons detection system for all U.S. Post Offices. And in April, Northrop won a seven-year, $337 million contract to design and maintain a secure, high-speed data network to link the DHS with more than 600 other federal, state, and local agencies. Northrop figures these deals are just a start: "Homeland security is kind of a jump ball -- still very much in the formative stages, with the real activity further down the pike," says David W. Zolet, Northrop's vice-president for homeland security.
One of the biggest growth areas for tech companies has been in new identity cards. The DHS is seeking bids on a "registered-traveler" system that will let frequent fliers bypass lines by submitting to a thorough security check and carrying a smart card encoded with unforgeable biometric data. In addition, the DHS is looking for a system to identify truck drivers carrying hazardous materials and operators of vehicles and machinery at airports. One technique to make such documents more secure: 3M (MMM) in St. Paul, Minn., makes thin film laminates that show evidence of tampering when a counterfeit card is placed in a computerized reader.
Not all the companies trying to break into the protection biz are seeing green, however. Woburn (Mass.) startup SRU Biosystems Inc., finds the DHS' procurement guidelines confusing, its feedback nonexistent, and its project managers unreachable. "It's hard to know what their priorities are," says Brian Cunningham, SRU's founder and chief technology officer.
True, the DHS is still working to digest 22 agencies and 180,000 employees. But its latest moves show it's finally fostering new technology that can gradually make the U.S. more secure. Robo-monitors and electronic air-sniffers won't replace old-fashioned common sense and an alert eye in time for this summer's big events. But soon such gizmos will help. And for winners like Accenture, the advent of Security Nation means good times for years to come.
By Paul Magnusson and Mike McNamee in Washington, with Michael Arndt in Chicago, Adam Aston in New York, Christopher Palmeri in Los Angeles, and Olga Kharif in Portland, Ore.