EADS, Europe’s second-largest defense company, has been seeking to do more systems integration in many areas of its defense business, and many of the same skills needed in defense integration are applicable to large-scale homeland security integration programs. There is a need to link satellites, helicopters, fixed-wing aircraft and ground units. After performing these missions for ministries of defense, it requires relatively little adjustment to do them for ministries of interior.
It is a market that has been growing by 30 percent annually, driven by new technologies and the recognition of new threats.
EADS’ ability to pursue opportunities tends to be limited more by the availability of skilled engineering talent than by the market itself.
The Romanian job
EADS’ showpiece is its Romanian border security contract, an opportunity to showcase its capabilities in large-scale system integration. With many border projects considered classified by national governments, there is rarely opportunity to discuss many such projects that are ongoing or being pursued.
Romania is beefing up border security in preparation for its 2007 ascension as a member of the European Union (EU). Instability in neighboring Ukraine and Moldova and the dangers of weapons and drug smuggling from Transnistria, a small breakaway republic from Moldova, makes border security particularly challenging.
Romania awarded EADS a contract valued at €650 million (about $790 million) in August 2004. The exact value of the contract is in the process of being renegotiated because of overlap with other contracts, but is likely to be worth approximately €550 million (about $670 million), according to EADS. That sum does not include any vehicles, vessels and helicopters needed to do the work, which could raise the overall value.
The project involves information and communication systems; equipment for checkpoints at airports and land borders; and coastal surveillance systems. It also involves the upgrading or building of infrastructure, such as operation centers.
The project has three phases. The first phase, ending in December 2007, will focus on the outer borders with Ukraine, Moldova and the Black Sea. The second phase, from January 2007 to March 2009, will focus on inner borders, such as the border with Yugoslavia, and on adding depth to border security near the Black Sea and southern Moldova. The third phase, from November 2008 to December 2009, will strengthen border security with Bulgaria and Hungary and will involve creation of the full-fledged headquarters in Bucharest.
In winning the contract, EADS was able to offer Romania not only its systems integration ability but also its knowledge of EU requirements.
It’s a formula that potentially could help EADS as other eastern European states seek to strengthen their border controls. Poland, in particular, though already a member of the EU, is known to be considering steps to strengthen its borders.
In addition to its work on border security, EADS is pursuing opportunities in security management for large events.
EADS’ interest extends outside Europe and nations planning to join the EU.
In particular, EADS is interested in pursuing security management for large events, such as the Beijing Olympics. It has put together a European team to pursue the Olympic security system.
EADS’ appeal as a leader of its European team comes from its ability to integrate the overarching system and also its ability to provide political support from the nations where EADS is based. EADS has extremely close political relations with the French, German and Spanish governments. The French and Spanish governments have ownership stakes in the company.
Although EADS is also pursuing homeland security opportunities in the United States, it has tended to focus less on competing against large American systems integrators, such as Lockheed Martin, Boeing Co., Raytheon Co. or Northrop Grumman Corp., in favor of a strategy of offering products.
EADS opened a Colombus, Miss., facility in October partially with the intention of serving the homeland security market. The facility is intended to produce 55 US Border Patrol EC 120 helicopters and components for re-engining kits to upgrade Eurocopter HH-65 Dolphin helicopters in service with the Coast Guard.