Border Security Abroad

Team Infidel

Forum Spin Doctor
Wall Street Journal
May 8, 2008
Pg. B7
Defense Firms Chase Lucrative Missions In Global Market
By August Cole
WASHINGTON -- Even as defense companies work out the kinks on high-tech border security systems meant to protect the U.S., they have their eyes on an even bigger prize: the rest of the world.
Defense contractors such as Raytheon Co. are going after foreign contracts valued at billions of dollars as governments in Asia, Europe and the Middle East seek to crack down on everything from terrorists to travelers overstaying their visas. Some analysts and industry officials believe the international homeland-security market could be worth tens of billions of dollars a year, making it a prime target for U.S. companies with wares to peddle.
Foreign governments are looking at increasingly sophisticated systems and want a defense company to tie together off-the-shelf technologies. "They're coming to us saying 'We've got a problem, what's your solution?' " says Tom Culligan, who heads Raytheon's international and domestic business development efforts.
This push toward new markets abroad for high-tech screening and "virtual fence" systems is being driven in part because the U.S. border-security market, which seemed promising in the months following the Sept. 11, 2001, terrorist attacks, has instead been slowed by false starts and bureaucracy.
Boeing Co. in 2006 won a high-profile contract with the U.S. Department of Homeland Security to help develop a system of fences and other technology for the southern and northern borders. But the company's first effort, high-tech spy towers along a 28-mile stretch of the Arizona-Mexico border, failed to perform as Boeing had promised, raising questions about whether the technology will be widely adopted.
At the same time, major U.S. contractors are under pressure to keep growing beyond their aerospace and military-hardware businesses. Pentagon spending is expected to flatten in the coming years after rising to peak levels of more than $500 billion a year during the Bush administration.
Raytheon in November defeated a team led by the British Telecom unit of BT Group PLC for a 10-year, $1.5 billion contract to assist the British government's new U.K. Border Agency with its heightened focus on terrorism, immigration, smuggling and related issues. Under the "e-Borders" contract, Raytheon is building a computer system that will screen people before they travel into and out of the United Kingdom. The system, which is scheduled to be ready for the 2012 London Olympic Games, is expected to take information provided by train, plane or ship travelers and check it against other databases before they depart. If the system finds a problem, the traveler is prevented from boarding.
"The system is all about knowing who is coming into the U.K. and who is leaving the U.K.," says Brooke Hoskins, Raytheon's e-Borders program manager.
The Middle East, where governments are banking revenues from record oil prices, has been an attractive market for U.S. firms selling planes and weapons, and now is for border-security systems as well. Terrorism is a regional threat and U.S. and European defense companies want to sell systems that can help allied governments thwart potential attacks.
DRS Technologies Inc., a longtime player in the border-security market, won a contract through the U.S. Army in April to provide Jordan with a surveillance system that uses command centers and tower-mounted sensors. Eventually, Jordan wants to monitor its approximately 1,000 mile border, making the contract a breakthrough award.
One of the largest opportunities is in Saudi Arabia, where Raytheon is vying for a border-technology contract that could be valued at more than $10 billion. Its competitors include European Aeronautic Defence & Space Co., Italy's Finmeccanica SpA and France's Thales Group SA. In a twist, Finmeccanica is now in advanced talks about acquiring DRS, according to people familiar with the situation. Such a deal would bolster Finmeccanica's border-security offerings world-wide.
But this new strategy presents unique challenges. Rather than dealing with familiar defense departments, border-security efforts often are under the umbrella of an interior ministry or home office. Exporting such technologies hasn't raised security concerns, however, because of their defensive nature.
Another obstacle is a lingering question over liability in the event a system is foiled and an attack's victims sue the contractors. The U.S. in 2002 enacted a law that can protect contractors from limitless liability. Stephen Oswald, vice president and general manager of Boeing intelligence and security systems, said Boeing is taking a measured approach to international sales, in part because of liability concerns.
Daniel Michaels in Brussels contributed to this article.
 
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