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Science
Homeland Security and National Defense
Waging War Against Terrorism in the 21st Century
The terrorist attack of September 11, 2001, wrought a profound change in the American psyche—for the first time in modern recollection, Americans felt vulnerable on their own soil. Moreover, the terrorists did not use the weaponry of conventional warfare, such as armies, ships, or submarines. Instead, they relied on stealth—moving in fluid, constantly shifting cells and turning people into human bombs. America was up against an entirely new enemy. With this realization came a powerful political push to fight terrorism and protect the American homeland.
 A new mission was suddenly catapulted to the top of the national agenda. President George W. Bush declared that "homeland security" would be the focus of his administration. He created the Office of Homeland Security (OHS), placing former Pennsylvania governor Tom Ridge at the helm. Although it does not yet have a defined organizational and budgetary framework, there is a push by the administration to convert this office into an agency with cabinet-level status. In any event, over the next decade, expenditures on homeland security will surely constitute a larger and larger share of federal, state and local budgets. Terrorism is a threat that is not simply going away—and an entire industry is arising to provide products and services to protect the country from it.
The defense industry is poised to benefit dramatically as funds are channeled into homeland defense, as well as the war against terrorism abroad—whether that takes place in Iraq, Afghanistan or elsewhere. The initiative to actively prevent foreign entities from threatening the American homeland will involve more traditional military operations outside the U.S. Operation "Enduring Freedom," directed against the Taliban regime and the Al Qaeda network in Afghanistan, is an example of this.
"The U.S. defense industry is the best in the world," comments Gen. Lawrence P. Farrell, Jr., President and CEO of the National Defense Industrial Association (NDIA), a leading trade group in the defense industry. "Not only does it produce the world's most advanced weapons, it provides virtually the entire range of high-quality goods and services needed by our armed forces."
Wall Street analysts are also bullish on the defense industry. Christopher Mecray, senior analyst in aerospace and defense research at Deutsche Bank in New York, says his outlook for the sector is "quite positive," and that "the fundamentals in defense are strong." He predicts significant increases in defense spending over the next several years, and notes "Congress is writing virtually a blank check for defense expenditures." He adds that defense contractors are taking a proactive role in homeland security; all of the major firms have set up departments in this field.
"They're attempting to corral all of the technologies in their organizations that might apply," says Mecray. "Then they are going to the government and offering solutions, as was requested. They're doing everything they can to position themselves for this new industry."
He views the defense industry as one of the few sectors of the economy with a bright future over the next two to three years: "It's a good defensive posture against a weak economy—to reduce exposure to economic fluctuations—and proactively, you're investing in a growing sector."
Michael Scardaville, policy analyst for homeland defense at the Heritage Foundation, a conservative think tank in Washington, D.C., notes that President Bush requested $37.7 billion a year for homeland security in February this year to fund the new agency. This is in contrast to the roughly $20 billion that was broadly spent on homeland security the prior year, he points out.
Firms in other sectors of the economy are jumping into the new homeland security market as well—among them: pharmaceutical companies, offering innovative antidotes for bioterrorism and chemical warfare; information technology (IT) companies, addressing needs for heightened network security and safeguarding key databases; chemical manufacturers creating cargo containers on ships that are impervious to bombs; and telecommunications companies, devising wireless solutions that may be utilized by emergency personnel in the field, such as police, fire, and rescue workers. Because homeland security is so multi-faceted, it is eliciting ideas from many different market sectors. These emerging business lines are poised for growth.
John Rogers, an analyst in aerospace, engineering and construction companies at D.A. Davidson & Co. in Portland, Oregon, predicts 10% -plus growth per year in terms of total new business for homeland security. "A lot of the money will be put into nontraditional defense spending, such as systems management and screening devices at airports, as opposed to missiles and bombs," he comments.
Key consideration for the defense industry is the rapid and accelerating evolution of technology. In particular, all service platforms now have the capability to seamlessly exchange all kinds of real-time information. Combining this with the evolution of precision-guided munitions with new capabilities (e.g., earth penetrators) and the rapid development of UAV technology allows commanders to bring instantaneous, highly accurate, overwhelming firepower to bear on any target—day or night, in any weather. Industries involved in this transformation are clearly going to benefit from the demand for these capabilities as the technology is further refined.
Increased budget projections for research and development and for procurement exceed 10% per annum through FY 2007—a dramatic turnaround from the late 1980s and '90s. These increases will introduce predictability into the industry's planning process—lack of which in the past damaged the industry and caused the loss of skilled people. The call for production on a number of important new weapons systems to replace those of the last four decades, a "generational change," will result in large-lot buys of many new items. This will drive down unit costs, increase margins, and allow the industry to re-capitalize—encouraging news for stockholders.
Corporations are also taking security and safety issues much more seriously. The position of chief security officer (CSO) is emerging as an important role in many firms—charged with overseeing the corporate risk management strategy, encompassing cyber-security as well as physical security. Companies are devising "business continuity" plans that will enable them to keep operating, no matter what the cause of work stoppage: a terrorist attack, a natural disaster, or even a planned occurrence.
Vigilance is paramount in the war on terrorism. As Peter Brookes, senior fellow for homeland security and national defense at the Heritage Foundation, comments, "It's incumbent upon the Office of Homeland Security to make sure we don't become complacent at any level—state, federal, or local—since that creates a seam for terrorists to attack the country."
"Terrorism has become a permanent condition of our nation and the world," concluded Brookes.
 
The National Defense Industrial Association (NDIA) and its affiliates, headquartered in Arlington, Va., provide a legal and ethical forum for the interchange of ideas between government and industry. NDIA, with 1,000 corporate and 25,000 individual members, represents the interests of the defense industry, fostering technological growth and weapons system excellence. Primary areas of focus for NDIA and its 50 chapters throughout the United States include the business and technical aspects of the government-industry relationship, including the acquisition process; research and development, procurement, logistics support, and many technical areas. NDIA annually holds numerous conferences and symposiums around the United States which examine these issues and which feature numerous industry exhibitors. Complete information can be found at www.ndia.org.
The National Training Systems Association (NTSA), an affiliate of NDIA, promotes the growth, development and application of training systems, products and services that contribute to the quality and effectiveness of training and education. NTSA seeks to enhance understanding of the vital contributions made by the training and simulation industry to the nation's economy and to national defense, while fostering research and educational programs aimed at further advancing training technology. Visit NTSA at the NDIA website.
Northrop Grumman Corporation
www.northropgrumman.com
 Over the next decade, homeland security will fuel significant growth in federal, state and local budgetary expenditures. Northrop Grumman Corporation, a major defense contractor, is poised to acquire a significant share of this new and evolving market, according to Steve Carrier, the company's homeland security team leader.
"Our proven technologies and expertise will allow us to assist all levels of government going forward," commented Carrier. "Some companies are forming 'homeland security' departments, but it's more PR than real. In our case, we already have all the pieces in place to address this market."
For example, Northrop Grumman is focusing on the need to secure America's information systems. "One of the real fears among government and business leaders is of a possible 'cyber-attack,' in which computer systems are disrupted for critical operations, such as the Pentagon, the banking system, or the nation's power grids," noted Carrier. Thanks to systems developed by Northrop Grumman, both government and corporate clients can protect their intelligent networks across the spectrum.
Northrop Grumman's solutions further address the key elements of interoperability; command and control systems; and "total information management," which will allow government agencies to consolidate and correlate key data from dozens of databases in numerous organizations.
"One critical area that you'll see in the homeland security initiative is an emphasis on sharing of information across government agencies. That means putting in place a total information management system where you have visibility across all these agencies," said Carrier. "This will require a big cultural change to make it work, since sharing of information is not something that federal, state and local agencies are used to doing."
How might "total information management" have averted the terrorist tragedy of 9/11?
As Carrier pointed out, Mohammed Atta, the leader of the hijackers, was listed in a number of U.S. government databases prior to the attack. This included the State Department, because he had obtained a visa to come here; the Treasury Department, since he had been wired $100,000 from overseas; the local Traffic Violation Database, because he had received a speeding ticket in Florida; and the Federal Aviation Administration, since he had taken flight lessons.
"At the time, none of those databases talked to each other," pointed out Carrier. "It's not enough to simply have the information; you have to be able to correlate it with all the other relevant data. Once you have the total picture of what's going on you can act accordingly." Northrop Grumman has other initiatives in place to address America's homeland security needs. For example, in the Detection, Surveillance and Intelligence area established by Tom Ridge's Office of Homeland Security (OHS), Northrop Grumman has many capabilities that could be immediately useful. Among them are the firm's Global Hawk unmanned aerial surveillance system that can provide continuous surveillance and monitoring of key assets such as highways, pipelines, and power transmission networks. Northrop Grumman is also competing for a U.S. Postal Service contract to protect consumers and postal employees from the threat of bio-terrorism.
EMC Corporation
www.emc.com
 In the aftermath of the 9/11 tragedy, one lesson became abundantly clear: the ability to share information instantaneously across a number of federal, state, and local agencies—known as "interoperability"—is critical in the continuing operation of the U.S. government. It is so crucial, in fact, that President George W. Bush has asked that $4.5 billion of the proposed $50.52 billion federal budget for information technology be earmarked for the interoperability of IT systems.
"Without interoperability, key information at various government agencies—such as the Federal Bureau of Investigation (FBI) or the Central Intelligence Agency (CIA)—becomes 'stove-piped' and cannot be shared or analyzed in a meaningful fashion," explained Stephen Higgins, director of marketing for business continuity at EMC Corporation, a world leader in networked information storage.
EMC's automated networked storage architecture solves this problem by allowing consolidation of data across many agencies. Using a robust infrastructure, data can now be managed, protected, and shared. "Ultimately, this will make government agencies more productive and efficient," said Higgins. "They'll be able to use the information to identify potential threats ahead of time—a critical approach to protecting our country."
There are many advantages to implementing a networked storage infrastructure. Fewer people are needed to handle data, thus reducing the chance of error and associated costs. Information can be exchanged at greater speeds. Data is backed up and secured, with critical information duplicated and dispersed geographically. In addition, all of the information is consistent and synchronized, ensuring the integrity of the data.
Automated networked storage solutions from EMC are currently being utilized by many federal and regional government agencies, as well as by leading corporations around the world. Higgins noted that, since 9/11, corporations have focused on the need to implement systems. Anticipating effects of terrorist attacks is important, but companies also need to prepare for a business outage, no matter what event precipitates it. "It doesn't matter what the cause of the outage may be—a man-made or natural disaster, or even a planned occurrence such as data migration or new application installations—companies need to have an infrastructure in place that gives them the ability to maintain their operations," he said. Experts predict that crafting and executing such plans will be a central function of the chief security officers (CSO) at major companies. The CSO will focus on the high-level responsibility of eradicating risks involving both physical security and IT systems across the enterprise.
A recent white paper entitled Becoming An Unbreakable Organization, explores the critical role executives have to play within corporations to create a bulletproof information infrastructure. Executives must develop a close partnership with their IT organizations, while encouraging them to implement an information infrastructure based on networked storage sooner rather than later. The paper further explains how investments in networked storage technologies can yield benefits far beyond business continuity. By maximizing the value of corporate information assets, organizations will become more operationally efficient and responsive to the changing demands of the marketplace.
"These same benefits extend to government agencies as well," said Higgins. "Such systems enable agencies to share information, resulting in more accurate and streamlined analyses, faster response times, and most importantly, an overall improvement in our homeland security."
DuPont
www.dupont.com
 Safety has emerged as a central concern of Americans since the tragic events of 9/11. Globally, safety and security issues have achieved heightened importance as well. Consumers are demanding specialized safety solutions to protect people at home, play, and work. Environmental issues require new solutions in prevention, testing and remediation. The Internet is driving demand for information security to protect the safety of children, families, and businesses.
Safety has been a strong core value at DuPont for 200 years. DuPont operates in communities around the world; retains a skilled workforce; has built one of the most respected consumer and business brands; and has saved millions in compensation claims, fines, and legal fees. As one of the safest industrial companies in the world, 92% of all DuPont sites had zero event-related, lost workday injuries in 2001.
DuPont's goal is to prevent injuries before they happen. Thus it was a natural evolution for the company to move into the sphere of safety as a business, deploying its knowledge and experience to other institutions. Recently, the firm ramped up its commitment to safety, security, and protection by creating the safety and protection platform—one of DuPont's five core business segments—staffed by more than 7,500 people. The business had $3.6 billion in sales in 2001 and is currently leveraging its capabilities, technologies, and brands into broader markets.
Ellen Kullman, group vice president of the DuPont safety and protection platform, comments: "For 200 years, DuPont has committed its science, resources, and experience to helping people protect what really matters. Doing whatever is needed so people come home safely to their families every single day is a core value that drives our business."
Creating a safe workplace requires that it be a secure workplace—and that, in turn, necessitates operational discipline and emphasis on sound procedures. "Security change management" has now become the focus of every employer. DuPont changed the mindset to safety management as a good business practice, and is now engaged in helping change the mindset about security in a similar manner. The DuPont safety resources (DSR) business unit has been assisting others with safety management for more than 30 years with proven, quantified success. DSR's safety consulting includes an emergency response solutions component that provides systems and procedures to effectively handle an emergency; evacuation planning, skills, and procedures; and a process to evaluate potential emergency scenarios specific to the client's environment.
In addition, DuPont's other business groups create a wide range of innovative technologies that provide valuable tools for security purposes. KEVLAR® brand fiber serves as just one example. Long before September 11, 2001, countless law enforcement officers and military personnel relied on KEVLAR®'s lightweight strength in bullet resistant vests to save lives. Since the terrorist attacks, thanks to innovations in the product by DuPont Advanced Fiber Systems, KEVLAR® is now being used to reinforce airplane cockpit doors; in FAA-approved, hardened cargo carriers; and as a reinforcement agent in the walls of government buildings.
Kullman concludes: "We need to anticipate the challenges we face not only today but in the future and respond with innovative solutions that are grounded in smart technology and proven systems." For more information, call 1-800-532-SAFE.
AT&T Government Solutions
www.att.com/gov
 Well before 9/11, AT&T was valued as a trusted partner by all levels of government for its skill at applying communications and professional expertise to defense and national security challenges. Today the company's focus and investment continue, ensuring it will meet the critical needs of national defense and homeland security.
"To help make sure AT&T continues to meet the critical needs of national defense and homeland security, we've dedicated a new organization, AT&T Government Solutions, to focus specifically on the specialized needs of the civilian, defense and intelligence communities," says Chris Rooney, president of AT&T Government Solutions. "We have brought in a new management team—including a new CTO—with decades of government experience and exceptional technical expertise. We've invested more than $300 million in acquisitions to extend our professional services capabilities, and we've created a new AT&T Office of Homeland Security under the leadership of Lou Addeo, who, as vice president and general manager of AT&T National Information Systems and Homeland Security, reports directly to me. Lou will lead the tailoring of our systems engineering, network management and IT outsourcing services to the requirements of the Defense Department and the Office of Homeland Security."
The result of this focus by AT&T Government Solutions is that now approximately 50% of its revenues are from professional services, and 80% of all sales are to the Defense Department and intelligence community.
"We also have invested in a specialized information security center for our government customers that provides public key infrastructure services and other specialized information assurance resources," continues Rooney.
"The AT&T Office of Homeland Security exists as a one-stop solutions provider for government agencies," says Lou Addeo. "AT&T Government Solutions can connect widespread offices into an integrated coordination center, such as the one we successfully implemented for government agencies during Y2K."
Recognizing one cannot wait for disaster to strike before taking action, AT&T began investing years ago in the vital infrastructure, processes and expertise necessary for its networks to operate under the most dire circumstances. Now realizing the value of these truly unique and specialized capabilities the civilian, defense and intelligence communities are turning to AT&T Government Solutions for its specialized application and infrastructure management services, hosting capabilities, data/IP networking products and professional services.
AT&T Government Solutions is also leveraging other corporate assets and expertise to the benefit of defense and homeland security. Billions of dollars have been invested to extend the company's intelligent optical network and local network infrastructure to ensure key government facilities have access to service diversity and resiliency. Its Integrated Global Enterprise Management System (IGEMS) provides proactive and predictive networking-management capabilities. AT&T Labs, composed of 6,500 engineers and scientists, is focusing its own innovative research and that of industry leading partners on the challenges facing the nation.
A $300 million, one-of-a-kind network disaster recovery program includes a dedicated team of 100-plus managers, engineers and technicians as well as a fleet of specially outfitted vehicles that are ready at a moment's notice to provide continuity of operations capabilities that no other company can match. These capabilities were deployed in New York City in the immediate aftermath of 9/11 and can be deployed anywhere in the country.
"AT&T Government Solutions is focusing the full power and resources of AT&T on the challenges facing our nation, just as we have done for the past 100 years," says Rooney. "A factor fundamental to the success of homeland security and net-centric warfare is the delivery of the right information to the right people at the right time, all the time and in real time. The unmatched resources of AT&T Government Solutions will help make that goal a reality."
Meridian Medical Technologies, Inc.
www.meridianmeds.com
Fending off bio-terrorism and chemical weaponry is of paramount importance in America's homeland defense.
Meridian Medical Technologies, Inc., based in Columbia, Md., is in a unique position to address the nation's needs when it comes to nerve gas attacks. With core businesses in specialty pharmaceuticals and cardiopulmonary diagnostics, the company is the dominant player in the "nerve agent auto-injector" market. This pen-like device, when pressed against the thigh, instantly administers a pre-measured dose of antidote to victims suffering from nerve agent exposure. Meridian Medical Technologies is the only Food and Drug Administration (FDA) -approved supplier of nerve agent antidote auto-injectors to the U.S. Department of Defense.
"We have a 95% share of this market worldwide, and sell the device to over 20 allied countries," commented James H. Miller, chairman, president, and CEO of the company.
Meridian offers an attractive investment opportunity for those seeking a growth sector of the economy. Its government business soared 73% in the last year, and Miller predicts additional growth as the homeland security market evolves. Moreover, the company also expects further growth from its commercial specialty pharmaceuticals and cardiopulmonary businesses. All three investment firms who follow the company— Fahnestock & Co.; Adams, Harkness & Hill; and Ferris, Baker Watts—have a "buy" recommendation on the stock (NASDAQ: MTEC). The company's stock price has more than tripled during the last year.
If you are interested in advertising in next year's Defense Industry and Homeland Security section, please contact Laurie Evans at 212-522-1253 or e-mail to Laurie_Evans@timeinc.com.
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