SAIC, based in San Diego, Calif., already has
a track record of beating larger contractors in pursuing homeland
security. It beat Raytheon Co. to win the Olympic contract in a tough
contest in which it benefited from its work on the Salt Lake City
Olympics in 2002.
It then beat a number of companies, such as
Lockheed Martin Corp., based in Bethesda, Md., and Battelle Science and
Technology International of Columbus, Ohio, towin the $390 million,
three-year U.S. Army Guardian Installation Protection Program Lead
Systems Integrator (LSI) contract. The Guardian contract, awarded in
May 2004, is intended to provide detection and protection for American
military bases in the United States and overseas against chemical,
biological, radiological and nuclear threats.
All of the largest defense contractors — The
Boeing Co., Lockheed Martin and Northrop Grumman Corp. — are
positioning themselves to become lead systems integrators for the
Department of Homeland Security (DHS), although DHS has no such plans
yet. Should DHS decide on a lead systems integrator strategy, then SAIC
will be actively pursuing that contract with its larger competitors.
While DHS has not yet indicated an interest
in pursuing such a lead systems integrator approach, it is a
contracting structure that has been gaining greater acceptance in the
Department of Defense (DoD). For example, Boeing and SAIC together are
lead systems integrators for the Future Combat System, the Pentagon’s
second-largest program, which seeks to provide the technology of the
future for the US Army.
DoD has begun using a lead systems integrator
in particularly difficult tasks in which a prime contractor is given a
complex program that will require integrating the work of many
subcontractors. It is effectively a step beyond the typical role of
Without the large, vertically integrated
organizations of many of its competitors, SAIC’s management sees its
role as bringing together the industry’s best technologies. SAIC’s
Public Safety Integration Center in McLean, Va., is key in highlighting
homeland security applications of SAIC’s skills in systems integration
and its interest in integrating the best-of-breed technologies. The
center works with 40 to 50 technology vendors in areas such as
intelligence, understanding system vulnerabilities, interoperable
crisis management and public safety communications. Government and
commercial systems are brought in and tested to evaluate their
interoperability and effectiveness in particular scenarios.
SAIC does about $450 million of annual
homeland security business, with $150 million coming directly from DHS.
The remainder comes from DoD and other agencies of the federal
Although homeland security budgets may be
under pressure in the near term, SAIC does see the potential for
long-term growth by targeting several large sectors as future growth
areas for homeland security, according to Wally Kaine, senior vice
president for homeland security at SAIC. Integrated detection promises
to be a strong growth area for the company following its win of the
Guardian program. The Guardian contract victory has the potential to
give SAIC an advantage in meeting the needs of DHS and local responders
in dealing with chemical, biological, radiological and nuclear threats.
SAIC’s approach is to work on systems
integration itself and then bring in sensors from other suppliers. That
gives it the ability to choose the best technologies available, rather
than trying to supply the sensors itself.
SAIC is also targeting as a growth area
integrated solutions involving defense and homeland security.
Increasingly, the integration of technologies, rather than individual
technologies, drives the solution of homeland security problems. The
Public Safety Integration Center is intended to position SAIC as an
integrator of such solutions, building on SAIC’s work at the Athens
SAIC also is working to expand its position
in ensuring secure shipping. SAIC’s new ICIS system is intended to scan
high volumes of containers to avoid disrupting the shipping process.
The company’s Mobile VACIS unit uses radiographic images to identify
the cargo of trucks, containers, cargo and passenger vehicles.
SAIC is expanding this detection work to
include improving the processes needed to ensure the security of the
supply chain. Such improvements include improved monitoring
technologies and modified container-loading processes.
SAIC’s management sees the company’s
potential growth in the market coming not only from these growth
niches, but also from potential acquisitions. The company, which is
cash rich following the sale of a major subsidiary, is interested in
making acquisitions in areas that include homeland security. HST
Philip Finnegan is
director of corporate analysis at the Teal Group, a firm based in
Fairfax, Va., that provides strategic and market analysis to major