The homeland security shellgame

Whether the long-expected wave of homeland security-related spending has begun is a matter of interpretation and perspective.

Indeed, the homeland security picture is resembling an inkblot test for the systems integrators hoping to lend a hand — and make some money in the process. Most industry executives report activity among the 22 subagencies that make up the Homeland Security Department, but some say most of the work moves through existing contract vehicles and represents a continuation of initiatives that predate DHS' creation.

The result is that an integrator who enjoys an established relationship with one or more of the subagencies may see a rise in business, while one less fortunate in that regard may not.

Jim Kane, president and chief executive officer of Federal Sources Inc., believes contractors previously entrenched at DHS agencies are getting more business. Vendors "have kept on doing what they were doing with modest-sized increases on top of it," he said.

Does the apparent increase in activity represent new business coming out of the government's efforts to secure the nation? Kane questions whether IT dollars that have moved under the DHS umbrella through pre-existing agencies can be counted as such. "Is there a significant increase in homeland security spending?" he asked. "Not really."

When it comes to new project opportunities, pickings have been slim. However, that situation could change shortly with two large procurements: the U.S. Visitor and Immigrant Status Indicator Technology (US-VISIT) and Security, Planning and Integrated Resources for Information Technology (SPIRIT) programs. US-VISIT, considered a cornerstone national security project, and SPIRIT, a services contract potentially worth $10 billion, may both be awarded this year (see boxes below and on Page 21).

Some observers even question the "newness" of those marquee projects. US-VISIT was originally launched as an entry/exit program under the Immigration and Naturalization Service; SPIRIT originated as a Coast Guard contract. As the department continues to define technology requirements, truly new DHS projects that involve services such as infrastructure support could still be months away.

Still, integrators are hopeful. Some have landed smaller projects, which may become steppingstones to bigger deals. "Things are starting to coalesce," said Jim Cheng, president and chief executive officer of Computer and Hi-tech Management Inc.

The 8(a) firm earlier this year landed a Federal Emergency Management Agency project to install secure videoconferencing systems. The company is now looking to capitalize on this opportunity within DHS.

"As far as a major uptick or huge volume of homeland security-type activity for IT support...items, that has not really materialized yet," said Anthony Valletta, a senior vice president in charge of SRA International Inc.'s homeland security business. He added that "everybody is hopeful" that the federal budget will support infrastructure improvements within DHS and data sharing between DHS and intelligence agencies.

Where the Action Is

The Coast Guard, Bureau of Customs and Border Protection, FEMA, and the Bureau of Citizenship and Immigration Services are among the DHS elements buying IT.

"We expect, for the near term, to see fairly robust growth within individual agencies," said Mark Heilman, executive vice president of corporate development at Anteon Corp. He said DHS agencies are modernizing systems or adding new functionality.

For the most part, those agencies are tapping existing vehicles. "They've been adding new tasking to contracts," Heilman said.

DHS agencies are modifying "a lot of those existing contracts by adding dollars to do what is now termed homeland security," said Jeffrey Westerhoff, a senior vice president with SRA.

The immigration bureau, for example, employs the old INS' Service Technology Alliance Resource program and its successor, Starlight. The National Institutes of Health's Chief Information Officer Solutions and Partners program is managing the Starlight program on DHS' behalf. Six integrators vie for business under the program: Accenture, Computer Sciences Corp., DynCorp (now a CSC company), Northrop Grumman Corp., SRA and Sytel Inc.

CSC captured the first task order in April, a mainframe systems support effort estimated at $36 million. Sytel snagged task orders for financial systems and administrative systems, the most recent of which was awarded June 13. Another five task orders will be awarded under Starlight, sources say. The customs bureau and other agencies, meanwhile, are continuing to use the Treasury Information Processing Support Services 2 contract, according to William Teel, president and chief executive officer of 1-Source Consulting Inc., a Seabrook, Md., 8(a) firm. The IT services program was awarded to 18 contractors in 2000.

Procurement Pipeline?

Although existing contracts show signs of life, new homeland security opportunities have proven elusive.

The SPIRIT and US-VISIT programs should start the procurement pipeline flowing, with requests for proposals expected in July and September, respectively. Industry executives anticipate more large procurements to follow as DHS seeks to create a unified IT infrastructure. Such deals might cover financial management or human resources systems, for example.

But before such departmentwide procurements can move, DHS must establish requirements that will span all of its agencies. Integration executives say DHS officials are starting work on that task now; however, they face other issues as well.

"The other factor in the mix is the federal enterprise architecture," Heilman said. The Office of Management and Budget is seeking agency compliance with the architecture and its reference models, which will provide tools for analyzing IT investments.

Getting the architecture right is critical, according to Renny DiPentima, president of consulting and systems integration at SRA. "I think it is essential to nail down the architecture before large systems are undertaken, particularly where we are looking for integration and consolidation."

DHS' Information Analysis and Infrastructure Protection Directorate is also expected to become a source of integrator revenue. SRA already has a small project to help the directorate with its analytical work.

The directorate's role as a nexus for intelligence data means that integrators may eventually find work in linking databases and taming the expected flood of information from federal, state and local sources. Valletta views the directorate as a "prime element" within DHS and one with an "information glut" to contend with. Heilman views the information analysis element as "potentially a very large area of opportunity."

Seeding Projects

While waiting for such opportunities, integrators are pursuing smaller tasks they hope will pave the way to bigger projects.

SRA, for example, is working with six states that have received FEMA grants for analyzing their emergency operations capabilities, according to Valletta. He said this money represents a small chunk of the dollars promised for first responders but could foreshadow an increase in this area.

Cheng of Computer and Hi-tech Management said he plans to build on the company's FEMA project, which covers all 50 states, Puerto Rico and the U.S. Virgin Islands. "We're working to expand the [secure videoconferencing] systems to other areas in homeland defense," he said.

Cheng acknowledged that finding a niche in homeland security is no easy task, but he feels fortunate for getting a foot in the door at FEMA. His company is "trying to establish a foothold while everything is coalescing and there are still opportunities available." Cheng said he's concerned that DHS may become a place for large contractors as it develops departmentwide contracts.

Establishing contacts early may be the key to winning the larger deals as they roll out. "A lot of the political appointees running DHS are new to government and now they've got the spotlight on them," one integration veteran said. "They want to do business with people they know and trust."

Moore is a freelance writer based in Syracuse, N.Y.