Although spending on homeland security has risen substantially since 2001, it is unclear how much of this spending is relevant to economic development. Some of the spending supports activities not directly related to homeland security. For example, the Department of Homeland Security (DHS) carries out various functions, such as fishery enforcement and the provision of emergency shelters, which have little to do with homeland security. Some of DHS spending is delegated to local authorities, which frequently use the funds for general law enforcement and emergency response services. Some of DHS spending is simply wasted. How much is hard to say. Congressional oversight of the agency is notoriously convoluted, involving scores of committees and subcommittees.
These examples suggest that DHS spending, while substantial, may offer less to economic development than one might guess. But it is also true that many federal agencies besides DHS perform homeland security functions. Besides DHS, the largest contributor is none other than the Department of Defense. Other contributors include Health and Human Services, Justice, State, and Energy. All told, federal spending on homeland security for 2009 is approaching an estimated $70 billion, of which DHS spending accounts for roughly half.
Finally, not all homeland security activities are directly supported by the federal government. According to the Civitas Group, the federal government accounted for about 58 percent of all homeland security spending in the United States in 2006. Roughly 31 percent came from the private sector and quasi-governmental agencies such as transit and port authorities. And state and local spending accounted for about 11 percent.
If these proportions were to hold through 2009, the level of federal spending would indicate that total homeland security spending in the United States this year would reach approximately $120 billion. This is a huge number. Granted, it is a good deal smaller than the defense budget or the stimulus package, but it seems large enough to justify considerations that homeland security qualifies as a distinct driver of economic development. At roughly 0.8 percent of the gross domestic product, spending on homeland security surpasses outlays associated with other potential drivers, such as biotechnology and nanotechnology.
Given the scale of homeland security spending, it is no surprise that private contractors are lining up to garner their share of contracts. Interest on the part of contractors has grown so intense it has given rise to the usual epiphenomena – a proliferation of specialty publications, trade shows, consultants and lobbying efforts.
At the risk of dampening the enthusiasm, it should be pointed out that homeland security involves a range of activities. And each activity absorbs a portion of homeland security spending. As a result, homeland security advances across a broad front, which suggests a breakthrough in any given activity, at any particular place on the front, is unlikely.
According to the Civitas report cited earlier, these activities include aviation security; bioterrorism and chemical agent prevention; border security; counterterrorism and law enforcement; cyber security; emergency preparedness and response; ground transportation security; intelligence; nuclear/radiological prevention; physical security; and port security.
Besides having a tendency to become diffused, being split among many competing activities, homeland security spending appears to be leveling off. If spending figures are marked on a graph, the familiar S-shaped logistics curve emerges. Toward the left, spending is flat through the last half of the 90s, quickly rises between 2000 and 2006, and then begins to flatten again. The new administration proposes that the discretionary budget for DHS should be $42.7 billion in 2010, modestly higher than the corresponding 2009 figure, $40.1 billion.
As if all this were not enough to concentrate the minds of contractors and developers, the lion’s share of homeland security spending, all but approximately one-third of the total, goes to a select group of large defense contractors. Typically, these contractors are integrators. Many of them are household names. They have offices in or near Washington, D.C. And they are well acquainted with the procedures and personnel of the existing (and emerging) procurement channels.
These integrators are also practiced in distributing work to geographically dispersed subcontractors. So, in a sense, the primacy of the established integrators may yet preserve opportunities for other contractors, however far beyond the beltway they may be found. It does, however, create another layer of complexity. For example, it may be necessary for smaller, more specialized contractors to seek opportunity at different layers in a shifting, evolving homeland security hierarchy.
Smaller contractors seeking a niche will also have to distinguish between “one-off” projects and richer opportunities. Typically, one-off projects would involve the elimination of some obvious deficiency, for example, filling a warehouse with emergency stockpiles, or replacing an outdated and poorly integrated communications system. Once that is accomplished, what’s next?
This question, finally, gets us to the ultimate justification for the DHS – the anticipation and, ideally, the nullification of any conceivable threat. The DHS has scarcely started addressing all the conceivable threats, and for good reason. Merely clamping down – here, there and everywhere – would be self-defeating. Inspecting every container at every port would slow commerce to a crawl. Imposing security standards on various kinds of private facilities might impair their ability to operate profitably. Restrictions on the entry of foreign nationals might choke off infusions of talent to domestic industry. The advantages and benefits of living and working in an open, free society could be diminished even while spending on homeland security soared. Not only would the economy stagnate, morale would suffer.
Of course, such an outcome might well be the actual goal sought by those who would threaten homeland security. The game plan: (1) Launch an attack. (2) Raise a panic. (3) Provoke a poorly considered response. (4) Wait. Let your enemy become increasingly isolated. If it should bleed from self-inflicted wounds, so much the better. (5) Repeat.
So, the challenge is this: Enhance security without going broke and without unduly hampering the movement of people, goods and ideas. To meet this challenge, there is a very American response: Trust in ingenuity.
Aside from its role in disaster preparedness and response, the DHS is, broadly speaking, charged with managing various kinds of borders. They must be made secure, but still conveniently passable. There are, in addition to the actual physical borders between the United States and its neighbors, a variety of more abstract borders. These include the virtual borders that secure computer networks, the rings of sensors that inspect luggage and cargo, and the inspection regimens that protect the food supply.
The DHS is promoting research and development that enhances the control of all these borders, thwarting the passage of harmful agents, facilitating the passage of all things helpful and necessary. Such selectiveness emulates the ultimate in border control.
To achieve comparable sophistication and efficiency in these various border-control tasks, several federal agencies support R&D related to homeland security. The leaders include the National Institutes of Health, the DHS, the Department of Defense, and the National Science Foundation.
Over its brief history, the DHS has become the seventh largest R&D funding agency. In 2009, the DHS research portfolio is expected to be about $1 billion, a small but significant portion of the agency’s discretionary budget. The DHS’s primary research and development arm, the Directorate for Science and Technology (S&T Directorate), partners with the private sector, national laboratories, universities, and other government agencies (domestic and foreign).
According to a report published by the American Association for the Advancement of Science, the DHS spends its R&D in roughly equal thirds, with the recipients consisting of intramural laboratories, industrial firms and national laboratories. In 2009, the DHS will spend about $44 million on university programs, including university-based Centers of Excellence, multi-year university consortia to perform R&D on homeland security-related topics. They also provide fellowships to encourage U.S. students to pursue scientific and technical degrees in areas of study related to homeland security.
Although the DHS Homeland Security Centers of Excellence (HS-Centers) represent a small portion of total homeland security spending, they are much coveted. Any would-be HS-Center must pass through a competitive process before it is selected by the S&T Directorate and authorized by Congress.
Perhaps one reason HS-Centers are so important to states and regions is that they promote a collaborative, interdisciplinary approach. Such an approach meshes well with economic development programs that try to build industry clusters, which are mutually reinforcing networks of interrelated companies. Typically, clusters are designed to leverage a region’s comparative advantage in a particular industry. The same could be said of potential HS-Centers.
The desire for an HS-Center is often plain. For example, in a 2005 report, the Massachusetts Insight Corporation complained that Massachusetts and New England had been virtually invisible in Washington on homeland security. Prominent among the steps outlined to remedy this situation was support for an effort to win a DHS Center grant. At that time, a Center for Study of High Consequence Event Preparedness and Response, led by the University of Massachusetts, was envisaged. However, when the first university in the state won a Centers of Excellence grant in 2008, it was for an effort led by Northeastern. This university will lead a center called ALERT, for Awareness and Localization of Explosives-Related Threats.
Each HS-Center represents the beginning of a potential cluster or an opportunity to reinforce an existing cluster. For each HS-Center, the lead academic institution could be the initial commercialization vehicle for a relevant technology, as well as a source of trained personnel. To hasten the aggregation of related companies, incubators and science parks could be developed, encouraging the founding of start-up companies. In addition, local and regional authorities could recruit relevant companies.
With or without an HS-Center, states are leveraging unique regional resources to build industry clusters related to homeland security. For example, Enterprise Florida, a public-private partnership that serves as Florida’s primary organization devoted to statewide economic development, cites Florida’s prominence in several key areas: photonics and optics; modeling, simulation, and training; marine science; information technology; and biotechnology. Enterprise Florida argues that the state would be a strong contender in several mission areas: information analysis and security, threat detection and prevention, emergency preparedness, response, and recovery.
Similarly, in a 2005 study commissioned by the Colorado Institute of Technology, Colorado’s location on the I-25 atomic corridor was highlighted. The study also noted the presence of military installations, nuclear cleanup sites, and the aerospace industry, specifically, NORTHCOM, NORAD, Ball Aerospace, and Lockheed Martin. “Defense, aerospace, and the aspects of homeland security related to these clusters have been a part of the Colorado economy for more than 50 years,” stated the report. “They provide a strong foundation for the growth of the cluster from Colorado Springs to Fort Collins.”
Similar arguments are being formulated by economic development professionals across the country. For example, in Texas, expertise in cyber security, an economic development priority that is also relevant to homeland security. In Virginia, a report commissioned by Arlington authorities noted that the county’s assets included the presence of a critical mass of government contractors, R&D policy institutions such as ANSER and the Homeland Security Institute, a talented labor pool, and federal agencies charged with conducting R&D in homeland security.
Finally, some states, like Illinois, have a more broad-based approach. Illinois authorities appear to be taking the conclusions of a RAND study to heart. The study recommended that the state should avoid defining the homeland security industry because companies would likely present themselves to the state to be considered for announced programs. This process of self-selection, argued the study, would be informative. Accordingly, target industries cited by the Illinois Homeland Security Market Development Bureau run the gamut, embracing information technology, food security, biotechnology, and advanced manufacturing.
The Homeland Security Industry: Potential for Regional Clusters
By Kevin M. Mayer
Although spending on homeland security has risen substantially since 2001, it is unclear how much of this spending is relevant to economic development. Some of the spending supports activities not directly related to homeland security. For example, the Department of Homeland Security (DHS) carries out various functions, such as fishery enforcement and the provision of emergency shelters, which have little to do with homeland security. Some of DHS spending is delegated to local authorities, which frequently use the funds for general law enforcement and emergency response services. Some of DHS spending is simply wasted. How much is hard to say. Congressional oversight of the agency is notoriously convoluted, involving scores of committees and subcommittees.
These examples suggest that DHS spending, while substantial, may offer less to economic development than one might guess. But it is also true that many federal agencies besides DHS perform homeland security functions. Besides DHS, the largest contributor is none other than the Department of Defense. Other contributors include Health and Human Services, Justice, State, and Energy. All told, federal spending on homeland security for 2009 is approaching an estimated $70 billion, of which DHS spending accounts for roughly half.
Finally, not all homeland security activities are directly supported by the federal government. According to the Civitas Group, the federal government accounted for about 58 percent of all homeland security spending in the
If these proportions were to hold through 2009, the level of federal spending would indicate that total homeland security spending in the
Today’s Procurement Priorities, Tomorrow’s Applications
Given the scale of homeland security spending, it is no surprise that private contractors are lining up to garner their share of contracts. Interest on the part of contractors has grown so intense it has given rise to the usual epiphenomena – a proliferation of specialty publications, trade shows, consultants and lobbying efforts.
At the risk of dampening the enthusiasm, it should be pointed out that homeland security involves a range of activities. And each activity absorbs a portion of homeland security spending. As a result, homeland security advances across a broad front, which suggests a breakthrough in any given activity, at any particular place on the front, is unlikely.
According to the Civitas report cited earlier, these activities include aviation security; bioterrorism and chemical agent prevention; border security; counterterrorism and law enforcement; cyber security; emergency preparedness and response; ground transportation security; intelligence; nuclear/radiological prevention; physical security; and port security.
Besides having a tendency to become diffused, being split among many competing activities, homeland security spending appears to be leveling off. If spending figures are marked on a graph, the familiar S-shaped logistics curve emerges. Toward the left, spending is flat through the last half of the 90s, quickly rises between 2000 and 2006, and then begins to flatten again. The new administration proposes that the discretionary budget for DHS should be $42.7 billion in 2010, modestly higher than the corresponding 2009 figure, $40.1 billion.
As if all this were not enough to concentrate the minds of contractors and developers, the lion’s share of homeland security spending, all but approximately one-third of the total, goes to a select group of large defense contractors. Typically, these contractors are integrators. Many of them are household names. They have offices in or near
These integrators are also practiced in distributing work to geographically dispersed subcontractors. So, in a sense, the primacy of the established integrators may yet preserve opportunities for other contractors, however far beyond the beltway they may be found. It does, however, create another layer of complexity. For example, it may be necessary for smaller, more specialized contractors to seek opportunity at different layers in a shifting, evolving homeland security hierarchy.
Smaller contractors seeking a niche will also have to distinguish between “one-off” projects and richer opportunities. Typically, one-off projects would involve the elimination of some obvious deficiency, for example, filling a warehouse with emergency stockpiles, or replacing an outdated and poorly integrated communications system. Once that is accomplished, what’s next?
This question, finally, gets us to the ultimate justification for the DHS – the anticipation and, ideally, the nullification of any conceivable threat. The DHS has scarcely started addressing all the conceivable threats, and for good reason. Merely clamping down – here, there and everywhere – would be self-defeating. Inspecting every container at every port would slow commerce to a crawl. Imposing security standards on various kinds of private facilities might impair their ability to operate profitably. Restrictions on the entry of foreign nationals might choke off infusions of talent to domestic industry. The advantages and benefits of living and working in an open, free society could be diminished even while spending on homeland security soared. Not only would the economy stagnate, morale would suffer.
Of course, such an outcome might well be the actual goal sought by those who would threaten homeland security. The game plan: (1) Launch an attack. (2) Raise a panic. (3) Provoke a poorly considered response. (4) Wait. Let your enemy become increasingly isolated. If it should bleed from self-inflicted wounds, so much the better. (5) Repeat.
So, the challenge is this: Enhance security without going broke and without unduly hampering the movement of people, goods and ideas. To meet this challenge, there is a very American response: Trust in ingenuity.
Borders: Real and Virtual
Aside from its role in disaster preparedness and response, the DHS is, broadly speaking, charged with managing various kinds of borders. They must be made secure, but still conveniently passable. There are, in addition to the actual physical borders between the
The DHS is promoting research and development that enhances the control of all these borders, thwarting the passage of harmful agents, facilitating the passage of all things helpful and necessary. Such selectiveness emulates the ultimate in border control.
To achieve comparable sophistication and efficiency in these various border-control tasks, several federal agencies support R&D related to homeland security. The leaders include the National Institutes of Health, the DHS, the Department of Defense, and the National Science Foundation.
Over its brief history, the DHS has become the seventh largest R&D funding agency. In 2009, the DHS research portfolio is expected to be about $1 billion, a small but significant portion of the agency’s discretionary budget. The DHS’s primary research and development arm, the Directorate for Science and Technology (S&T Directorate), partners with the private sector, national laboratories, universities, and other government agencies (domestic and foreign).
According to a report published by the American Association for the Advancement of Science, the DHS spends its R&D in roughly equal thirds, with the recipients consisting of intramural laboratories, industrial firms and national laboratories. In 2009, the DHS will spend about $44 million on university programs, including university-based Centers of Excellence, multi-year university consortia to perform R&D on homeland security-related topics. They also provide fellowships to encourage
Centers of Excellence
Although the DHS Homeland Security Centers of Excellence (HS-Centers) represent a small portion of total homeland security spending, they are much coveted. Any would-be HS-Center must pass through a competitive process before it is selected by the S&T Directorate and authorized by Congress.
Perhaps one reason HS-Centers are so important to states and regions is that they promote a collaborative, interdisciplinary approach. Such an approach meshes well with economic development programs that try to build industry clusters, which are mutually reinforcing networks of interrelated companies. Typically, clusters are designed to leverage a region’s comparative advantage in a particular industry. The same could be said of potential HS-Centers.
The desire for an HS-Center is often plain. For example, in a 2005 report, the Massachusetts Insight Corporation complained that
Potential Clusters
Each HS-Center represents the beginning of a potential cluster or an opportunity to reinforce an existing cluster. For each HS-Center, the lead academic institution could be the initial commercialization vehicle for a relevant technology, as well as a source of trained personnel. To hasten the aggregation of related companies, incubators and science parks could be developed, encouraging the founding of start-up companies. In addition, local and regional authorities could recruit relevant companies.
With or without an HS-Center, states are leveraging unique regional resources to build industry clusters related to homeland security. For example, Enterprise Florida, a public-private partnership that serves as Florida’s primary organization devoted to statewide economic development, cites Florida’s prominence in several key areas: photonics and optics; modeling, simulation, and training; marine science; information technology; and biotechnology.
Similarly, in a 2005 study commissioned by the Colorado Institute of Technology,
Similar arguments are being formulated by economic development professionals across the country. For example, in
Finally, some states, like
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