As the year draws to a close, it’s time to revisit the 10 companies that HSToday named as up-and-comers in April. Although they did not make the list of the top 25 contractors with the Department of Homeland Security (DHS), they were selected for their dynamism.

These companies are noteworthy because they reflect the breadth of the field, from major systems integrators to biometrics firms to detection companies. They promise to grow quickly in coming years, either because of recent contract wins or their overall positioning in nascent growth areas within homeland security. Over the past year, the companies continued to show that promise by winning new contracts, introducing new products and making acquisitions.

Despite a volatile and uncertain year, these companies still show promise as future leaders in their field. Five larger companies (Raytheon Co., Honeywell Inc., Harris Corp., BAE Systems and Mine Safety Appliances) are likely to reach the Top 25 in coming years. The five small to mid-size companies on the list may not reach the Top 25 but demonstrate the dynamic and technologically driven nature of homeland security. They range across a number of specialty areas, including biometrics (Cross Match Technologies), information technology (Dynamics Research Corp.), unmanned aerial vehicles (AeroVironment) and detection (ICx Technologies and FLIR Systems).

1. Raytheon

Raytheon Corp., Waltham, Mass., made major strides in its homeland security work this year. Homeland security will account for approximately $1 billion of Raytheon revenues, up from $750 million last year, William Swanson, Raytheon’s chairman and chief executive officer, said at “Morgan Stanley’s Global Industrials CEOs Unplugged Conference” on Sept. 11. Last year, Raytheon booked $2 billion of new homeland security business and is on track for another good year, he added. The company’s border security work is booming. It is ramping up on the United Kingdom’s e-border project, a £500 million pound sterling (about $872 million) contract to connect airports and seaports into a national data collection system. It also is in the process of bidding on a hotly contested, but massive, Saudi Arabian border opportunity. Raytheon also is continuing to build up its cybersecurity expertise through a series of niche acquisitions building on the company’s core expertise. In July it acquired Telemus Solutions Inc., Falls Church, Va., which provides customized infrastructure protection. In April it purchased SI Government Solutions, Melbourne, Fla., a provider of vulnerability assessment studies to protect critical information technology assets. That followed the October 2007 purchase of Oakley Networks, Salt Lake City, Utah, a leader in passive forensic engineering and detections.

2. BAE Systems

BAE Systems, Farnborough, UK, announced its first major acquisition in July, intended primarily to improve its position in the homeland security market. The acquisition comes as the company is working to prepare itself for the rapid growth in UK homeland security in preparation for the 2012 London Olympics.The planned purchase of Detica for £538 million pounds sterling (about $929 million) will give BAE Systems a consulting provider in the counter-threat area. Detica applied its expertise in commercial markets through a focus on the information areas of security, fraud containment, risk management, regulatory compliance and customer management. BAE Systems sees Detica as building up its strength not only in UK homeland security but also in the United States through work here. This continues to build BAE Systems’ strong position in the United States.  Although many of the at least 12 American defense companies acquired by BAE Systems since 2000 have focused on defense, they also served to build the company’s capabilities in homeland security. BAE Systems is already in the process of combining expertise—in its $4.5 billion Armor Holdings acquisition and its earlier United Defense acquisition—to provide new capabilities in tactical vests, helmets and armor to first responders.  

3. Harris Corp.

Harris Corp., Melbourne, Fla., is continuing to put a high priority on developing its homeland security business, offering a series of new communications products. In July it introduced the Unity family of multiband portable land mobile radios to provide federal, state and local public safety authorities with secure interoperable communications. The first product of the family is the Unity XG-100. Another new product, the MPH in-band mobile digital television, will allow the broadcast of vital public safety information to mobile, pedestrian and handheld devices in emergency situations. Local broadcasters are able to deliver news, traffic and weather as both video and data even when on the move or using handheld devices. The product, introduced in April, was developed by LG Electronics Inc. and Harris. This followed the February introduction of another new product, a public security radio intended to allow federal users in DHS, the Department of Justice and the Coast Guard to communicate more easily with local authorities in a crisis. It is potentially a $600 million market.Harris is also applying its systems integration expertise to homeland security in other areas such as border control and maritime vessel control programs.

4. Honeywell

Honeywell International Inc., Morristown, NJ, has been active this year in expanding its reach in homeland security. It played an important role in offering security for the Olympics in China, where it provided a computer monitoring system for cameras covering Olympic sites. Florida’s Miami-Dade Police Department has been engaged in an evaluation of the company’s Micro Air Vehicle, a small unmanned aerial vehicle, to examine its utility for law enforcement. The Micro Air Vehicle, which is already being used in Iraq, is able to hover and stare. Honeywell also demonstrated a willingness to build its position in homeland security with its $1.2 billion purchase of Norcross Safety Products, an Oak Brook, Ill., provider of personal protection equipment for emergency responders, industrial and other users. Norcross reported sales of $609 million in 2007, including air-purifying respirators, firefighters’ turnout gear, footwear, headgear, high-voltage sleeves and gloves and arc flash protection.

5. Mine Safety Appliances

Mine Safety Appliances (MSA), Pittsburgh, Pa., a manufacturer of safety products, has been achieving new milestones in its pursuit of homeland security-related markets. In September the company was awarded two contracts worth $24.6 million to supply the US Air Force with a newly developed, self-contained breathing apparatus. The contract builds on an earlier $36 million Air Force contract won in 2006. The system will provide air base firefighters with long-duration respiratory protection, while providing protection from chemical, biological, radiological and nuclear contaminants.

This builds on strength the company has found in the domestic homeland security market. MSA identified homeland security respirators as one of the fastest growing areas of its North American business in 2007. For example, the company received $10 million in contracts from New York State, New York Transit Authority and New York police departments for chemical, biological, radiological and nuclear Ultra Elite Gas Masks, Response Tactical Hoods and Safe Escape Hoods.

6. Cross Match Technologies

Cross Match Technologies, Palm Beach Gardens, Fla., a biometrics company, is continuing to play its role as a consolidator in the fragmented industry. The company, which offers finger-print-based biometric products, sees acquisitions as its route to greater cross marketing and profitability. In February Cross Match announced the purchase of the biometric authentication business of Canada’s Labcal Technologies Inc., a provider of ruggedized mobile and wireless biometric identification and authentication solutions. The company’s plans for an initial public offering of its stock remain on hold due to the current turmoil in US equities markets.

7. ICx Technologies

ICx Technologies, Washington, DC, a developer of sensor technologies for homeland security, has been achieving notable successes despite a difficult stock market for a newly listed company. ICx completed its initial public offering in November 2007, but in an uncertain economic climate, it has seen its stock (symbol ICXT) trade anywhere from $15.50 to $3.81 per share. It closed in mid-October at $7.95. Despite this rocky environment, ICx Technologies achieved notable successes in 2008. It sold handheld, radioisotope identification devices worth $2.5 million to the Chinese government for use at the 2008 Beijing Olympics. The devices are used to detect possible dirty bombs.It also sold Cerberus unmanned mobile surveillance systems for use on the US southern border. The Cerberus is a fully integrated mobile surveillance tower that combines high-resolution radars with thermal and imaging cameras using a common software platform. ICx continued the acquisition drive that has netted 18 company purchases since it was created in 2003. In May it paid $5.3 million for Reisterstown, Md.-based S3I, LLC, a technology company specializing in biological threat detection through its Instantaneous Bioaerosol Analyzer and Collector. ICx plans to couple that product with its BioXC and AirSentinel product families to provide faster information to first responders and military customers.

8. AeroVironment Inc.

AeroVironment Inc., Monrovia, Calif., a manufacturer of small, unmanned aerial vehicles (UAVs), continues to develop UAVs applicable to homeland security.

It recently received notice that the US government would exercise an option to build a second Global Observer demonstrator under the Joint Capabilities Technology Demonstration. Global Observer is a potentially breakthrough technology program to build a hydrogen-powered UAV that would be able to fly for as long as a week on station at 60,000 to 65,000 feet. This technology could be useful for either land or sea border security.

There is also progress on opening opportunities for the company’s small UAVs. The Federal Aviation Administration has set up a committee to begin studying how to introduce small UAVs into national airspace, although it is not clear how long the effort will take. Current safety concerns mean there are severe restrictions on using UAVs, preventing their widespread adoption. Ultimately, AeroVironment plans to offer a family of UAVs that could meet a broader range of homeland security needs.

9. FLIR Systems

FLIR Systems Inc., Wilsonville, Ore., a manufacturer of thermal imaging cameras, has continued to build its position providing sensors needed to protect US borders. In June it received a $23.1 million US Coast Guard order to provide sensors to be installed on HH-60 and HH-65 helicopters. FLIR also signaled its intention to provide more complete systems by acquiring Ifara Tecnologias LS, a provider of middleware and client application software needed for sensor networks. Ifara’s system work enables integrated control of sensor networks that include thermal, fence and ground sensors, closed circuit television cameras, alarm contacts, radars and UAVs. These sensor networks can be used for security, surveillance reconnaissance, force protection and maritime applications.

10. Dynamics Research Corp.

Dynamics Research Corp. (DRS), Andover, Mass., a provider of technology management services and solutions, took a major step toward expanding its homeland security business with the $42 million purchase of Kadix Systems LLC, Arlington, Va. Kadix added new capabilities in homeland security and greater revenues. Kadix was already doing approximately $20 million worth of homeland security work annually, considerably more than the $10 million done by DRS prior to the acquisition. In addition, Kadix can receive task orders under the DHS Enterprise Acquisition Gateway for Leading Edge Solutions (EAGLE) contract (functional area 5—Program Management and functional area 3—Independent Verification and Validation Services) and the DHS Program Management Strategic Sourcing (PMSS) contract.