Rich Cooper

Feb 2

In what was billed as the first State of Homeland Security address, DHS Secretary Janet Napolitano talked about the maturing of the Department that she leads and the “shared responsibility” that is homeland security. As important as her words might be, they unfortunately do not speak to the state of the homeland security industry. Despite awarding $11.6 billion worth of service contracts and hundreds of millions of dollars of contracts for physical products, (e.g., X-ray scanning machines, surveillance cameras, etc.) in Fiscal Year 2010, the tremendous homeland security industry that was expected to emerge after the September 11 attacks has not materialized the way it was forecast. Most companies expecting large returns have not seen them materialize; profit margins, if any, are small. The cost of doing business in the homeland security arena is expensive, and the lethargic turnaround on government procurements and grant payments does not inspire confidence in the private sector.

Though the market is incredibly decentralized with opportunities at every level (federal, state, local, tribal, etc.), “resigned frustration” best describes the relationship between Congress, the U.S. Department of Homeland Security and the private sector. As a result, my colleagues and I at Catalyst Partners and in NDIA’s Homeland Security Division have increasingly seen firms contemplating walking away from the homeland marketplace.

The causes for this shift in the private sector’s thinking about the homeland security industry are nuanced. One cannot point to a specific cause. Rather, ongoing inefficiencies, institutional attitudes and sloth-like bureaucratic processes throughout Congress and government agencies have made the road to profitability difficult for small businesses and individual entrepreneurs. Even larger enterprises accustomed to long lead times have expressed aggravation over how to work with DHS and other government bodies in what is a demanding and complex national mission space.

For all the rhetoric from current and past administrations about public-private partnerships, there remain tremendous challenges to success in the market when it comes to doing business in homeland security.

Exacerbating these challenges is the posture of DHS itself when it comes to outreach to the private sector. For example, established outreach programs to the private sector, previously run by its Science & Technology Directorate, no longer exist. Several weeks ago, ICE cancelled its own outreach programs that were specifically designed to engage the vendor community. Within FEMA, its Acquisition Industry Liaison Program has also become relatively dormant.

The list of the Department’s less-than-stellar behavior can go on, but the point very simply is it is hard to build relationships and understanding when no one wants to talk with you. Despite these conditions, there remain enormous opportunities for companies and individuals, and it is important to understand how a race to protect U.S. citizens, infrastructure and interests has devolved into a frustrating enterprise.

The Public Sector: Cooks in the Kitchen

The state of DHS’ procurement operations is troubling. Since the Department was stood up over seven years ago, it has had four chief procurement officers, faced tremendous shortfalls in trained contracting officers, and encountered numerous Requests for Proposals (RFPs) that have either been pulled back, restructured, or challenged (e.g., TSA’s IT contract; SBInet Support Services contract, the joint GSA/DHS St. Elizabeth’s campus development contract, etc.).

Excessive congressional oversight is also cause for industry concern. With over 110 individual committees and subcommittees claiming jurisdiction over DHS and other federal homeland security areas, finding the most accurate and stable direction for various policy and program areas is tantamount to finding calm seas in the midst of a Category 5 hurricane. For example, last year’s bipartisan efforts by the House Homeland Security Committee to support the recommendations of the WMD Commission were stopped cold by three separate congressional committees, all claiming jurisdiction over the matter. Similar redundancies and turf wars prevented any effective cybersecurity legislation from being passed out of the 111th Congress. Efforts to consolidate jurisdictional oversight were ignored by then-House Speaker Nancy Pelosi (D-CA) and Senate leaders and have again been ignored by the new Republican leadership in the recently seated 112th Congress.

While industry has a plethora of solutions for the range of security challenges and other threats Americans face, these critical technologies and services will go nowhere so long as those on the Hill continue to engage in counterproductive jurisdictional battles.

Meaningful dialogue between the public and private sectors has also been insufficient. For example, in the latter half of 2010, the debate over the Transportation Security Administration’s (TSA) use of body-scanning imaging equipment and the now infamous pat-downs reached a public boil. The debate over these techniques and tools remains contentious, but regardless of how one feels about them, they have nevertheless impacted the travel and tourism industry domestically and abroad. It was not until concerns on all sides of these issues reached their boiling point (circa Thanksgiving 2010) that the White House and homeland officials reached out to meet with travel and tourism leaders, giving an audience to industry concerns over repercussions from TSA screening. Had there been better coordination before implementing these new protocols, a number of problems and adverse public perceptions may have been avoided. The same can be said of Customs and Border Protection and other DHS components when it comes to understanding the impacts security efforts have on the private sector.

Not all is lost though. On a positive note, improvements made to the SAFETY Act (Support Anti-terrorism by Fostering Effective Technologies Act of 2002) have increased homeland security companies’ confidence level. DHS, however, has inconsistently incorporated SAFETY Act considerations into its own procurements (e.g., EAGLE II RFP, TSA RFPs for Explosive Detection equipment, and others). While this tool could make a positive difference in encouraging technology developers and providers to deploy their wares in homeland defense and security, leaving it on the shelf is a detriment to many and is yet another example of why the homeland security market is so challenging (read: maddening).

The Private Sector: A High-Risk Venture

Extreme public exposure for homeland security companies has not helped the situation either. For every story about Wal-Mart or Home Depot performing admirably during a disaster, there are untold more stories where a private sector actor has fallen short of success and paid dearly in the public eye (e.g., Accenture and US VISIT, Boeing and SBInet, Lockheed and Deepwater, etc.).

Working in the homeland environment can be perilous to name and brand reputation – assets most companies strive to protect at all costs. When something does go wrong – be it natural or human-caused – homeland security companies are often the first to be thrown under the bus.

Assigning blame always follows a disaster, and there are few more skilled at redirecting criticism than those who solicit and regulate homeland security technologies and techniques (i.e., Congress and other federal departments and agencies). Those left without a chair when the music stops are, rightly or wrongly, hung out to dry, and unfortunately, this seems to frequently fall on the private sector.

Additionally, reviews by DHS executives on private sector programs seem to be never ending and are often conducted in overly secretive and often-politicized deliberations. In the end, these “analysis paralysis” reviews offer incredibly vague (if not innocuous) conclusions when it comes to actual hard decision making. The same can be said for defining the operational requirements for front-line programs. In a dynamic, all-hazard threat environment, it is impossible to know all that is essential, or for that matter, known to make a program successful.

There are similar issues with technology deployment – nothing ever works as planned or as hoped and maligning companies that try to provide products and services in these environments are of no benefit either. These kinds of challenges seem to be happening fairly regularly, and it is yet another reason why the homeland security industry is growing weary of a business that rarely seems to pay off.

Calm Amidst the Chaos: A Matter of Leadership

To say FEMA has become a far more welcoming place for the private sector would be an understatement. Five years ago, if you had told me I would write those words, given all my experiences at DHS and especially after my deployment during Hurricanes Katrina and Rita, I would have told you that you were nuts. At the height of the post-Katrina debacles (for which FEMA became the national fall-guy for a state and local government that utterly failed its citizens), the thought of agency engagement with the private sector would send some FEMA personnel running in a panic, screaming, “We can’t do that!”

Yet, in today’s homeland security environment, perhaps the greatest center of gravity for private sector engagement at DHS is FEMA. The work they are doing should be enthusiastically applauded.

How did this happen? How did FEMA overcome the hostile cultural and operational attitude towards the private sector?

It comes down to leadership. Post-Katrina Administrator David Paulison and current Administrator Craig Fugate were willing to challenge long-held cultures and behaviors. They drove policy and programmatic changes to make things better. Putting people like Dan Stoneking and the FEMA Private Sector Office in place have helped tremendously to change the FEMA culture when it comes to engaging the private sector but more can be done.

Another example of successful private sector engagement comes from the DHS Infrastructure Protection (IP) division. The previous Assistant Secretary, Bob Stephan, and the current Assistant Secretary, Todd Keil, deserve enormous credit for putting in place programs like the Protective Security Advisors, placing advisors outside the Washington Beltway, that is, in the real world. In this way, relationships were established and strengthened so they are in place whenever and wherever the need arises.

In both places, FEMA and IP, the engagement of the private sector is a change for the better, but it is not a permanent victory. It will always be an uphill battle to convince homeland security professionals (both in DHS and outside it) of the value these relationships and interchanges bring. Debate is healthy, even essential to a free society, but security efforts tend to achieve a greater impact when that debate is based on mutual respect and an appreciation that despite sometimes being on opposite sides of the table, the public and private sectors are always at the same table when it comes to homeland security.

That’s what is happening at FEMA and IP today, and it needs to be occurring in more places at DHS. Bold leadership willing to challenge institutional attitudes makes the difference. In both the Bush and Obama Administrations, there have been shining examples of people willing to take a stand and make tough calls for the betterment of all. Unfortunately, there remain those whose words ring hollow because their actions do not follow promise.

That’s a culture that desperately needs to change across the board, lest we forfeit homeland security for an unwillingness to work together. Greater partnerships ultimately mean greater success, but both parties must be willing to have open dialogue with one another. Unfortunately, on the part of DHS that level of conversation seems to be in shorter and shorter supply every day, and that is no way to have a “shared relationship.” It just means more resigned frustration for everyone.

This piece was originally posted in Security Debrief.


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