By WYATT BUCHANAN SEATTLE POST-INTELLIGENCER WASHINGTON BUREAU
WASHINGTON -- When the Department of Homeland Security announces in the coming days who will develop a huge new program to track every foreigner entering the United States, one company that will be most interested is The Boeing Co.
That's because Boeing -- a powerhouse in the defense industry -- is also the largest contractor for the Homeland Security Department thus far, winning almost $1 billion in contracts last year. The second-largest contractor has won just half that.
"(Boeing) is a significant player in homeland security, but there are a lot of other players as well," said William Loiry, president of Equity International, a business development firm focusing on global security. "US-VISIT would make them a player at a top level for many years to come."
That's remarkable considering Boeing decided to enter the homeland security market at the last minute and with much internal debate.
With contracts such as US-VISIT, the company hopes to double or triple its share of dollars over the next few years, said Ron Maehl, vice president of strategic development for Boeing's homeland security division.
US-VISIT is the border-protection program that will use fingerprint scans and digital photographs to verify the identity of those entering the country. Boeing is a partner on the Computer Sciences Corp. team bidding for the contract, and the company's role will be to develop future technology for border security, Maehl said.
The program is the biggest prize in the emerging homeland security industry, currently worth $10 billion over 10 years. The other bidders are Lockheed Martin and Accenture.
Boeing officials are cautious not to overstate their role in homeland security contracts, noting that many of the 22 agencies in the department have longstanding contract commitments with other companies and that the focus of the department could change rapidly in the case of a large-scale attack.
But if US-VISIT continues as the top priority of the department, and if the Computer Services team is selected, Boeing would make huge gains.
"We could become a major player depending on where it goes," Maehl said.
The homeland security industry sprang out of the Sept. 11, 2001, attacks. In 2001, the federal government spent $20 billion on security activities. With the intense focus on security and the push for new programs after the attacks, that amount has more than doubled. President Bush has requested $47 billion for homeland security in his 2005 budget.
Not all of that money goes to the Department of Homeland Security, because the Defense Department and Health and Human Services also have security functions. While Homeland Security's budget is the fastest growing in the federal government, it still pales next to the Defense Department's 2005 budget request of $402 billion.
For Boeing, entry in the market came with Congress' directive that every piece of luggage at airports had to be screened. The company had to decide whether to bid on the contract to install the screening machines.
The company's Space and Communication Services wing had fewer than 1,000 employees at the time and focused largely on developing satellite technology. Executives debated whether to shift focus to homeland security issues. Entering the market would open the company to new liabilities and would force it to buy expensive terrorism insurance.
On top of that, the government would give the contract winner only six months to integrate and install new machines and to train bag screeners to use them. It would be one of the largest short-term projects in the country's history.
"We decided that it was really essential for Boeing to become involved in homeland security. Sept. 11 had a big impact on us, and it was the logical thing to do to increase the confidence of the flying public," Maehl said.
The division won the $1 billion contract, temporarily expanded its work force to nearly 30,000 employees, including subcontractors, and installed 5,500 machines at 400 airports on time.
After that, the division changed its name to Homeland Security and Services and now employs about 2,500 people, with headquarters in Seal Beach, Calif., and employees in cities across the country.
Along with the US-VISIT program, Boeing is developing a port security system that's meant to ensure cargo coming into the country is safe and to eliminate tampering with the supply chain.
Different companies are demonstrating their systems. The project will be the next major contract awarded by the department. The original date for awarding the contract was May 15, but the announcement was delayed and could come any day.
The growing numbers and sizes of contracts for Homeland Security are starting to attract attention from watchdog groups, such as the Center for Public Integrity and Taxpayers for Common Sense. Neither group has closely examined the contracts, but both say a thorough vetting will happen soon.
"It's a recipe right now for a lot of problems," said Keith Ashdown, vice president of Taxpayers for Common Sense. "We gave it somewhat of an initial pass because it's a new agency, but now it is time not to continually give the benefit of the doubt and to get critical."
Because the homeland security industry is so new, some have worried that companies will sell the department unnecessary products for threats that are unlikely to materialize.
Department officials have daily contact with industry representatives, and the department is much more open to ideas for new technology from contractors than are counterparts in the Defense Department, Maehl said.
"We talk a lot with DHS about how they want to operate," he said. "We help them evolve their strategy and understand the art of the possible."
Despite concerns, there is no evidence of improper collusion, said Michael O'Hanlon, a senior fellow with the Brookings Institution who has studied the contracts and the department.
"I see it more as a hypothetical concern," O'Hanlon said.
A reality for the industry, however, is the overarching pursuit of security -- a goal with no end.
"All you can know is there is never enough," O'Hanlon said. "If you have a successful outcome, you can never be sure what caused it. So in that sense, you can never really be sure you succeeded."
Then there's the time frame, another big shift for defense contractors, who typically get years to develop countermeasures for other nations' weapons.
"It's about speed now -- how fast you can react and how fast you can stay in front of the morphing threat," Maehl said. "It can never be done."
P-I reporter