Security State

Spinoff: Maryland is a principal beneficiary of the business boom spawned by 9/11.

Maryland Businesses Fight Terror

November 02, 2003|By Jamie Smith Hopkins | Jamie Smith Hopkins,SUN STAFF

HOMELAND SECURITY — In Maryland, terror is good for the bottom line.

Homeland security - a growth industry since 9/11 - has delivered a flood of money and jobs, thanks to proximity to Washington as well as key defense and private research centers.

Nobody knows how many of the billions in federal dollars being spent on homeland security are ending up in Maryland, but there are plenty of clues.

Corporate Office Properties Trust is building high-security, low-rise office buildings in a park next to the National Security Agency at Fort Meade faster than it intended because defense contractors are clamoring to get in.

At the Johns Hopkins University Applied Physics Laboratory in North Laurel, scientists are developing biohazard sensors and keeping tabs on the ebb and flow of illness in the area. Last year, a Montgomery County company bought a lab invention that scrubs potentially dangerous germs from office building air.

And the cabinet-size biohazard detectors the U.S. Postal Service has ordered for its 282 processing and distribution facilities are being manufactured in a Northrop Grumman Corp. warehouse in Elkridge. The first half of the job is worth $175 million.

Economists say homeland security spending has been a life raft keeping the state afloat while nearly 2 million jobs were cut elsewhere nationwide. It accounts for thousands of new local jobs, said Richard P. Clinch, director of economic research for the University of Baltimore's Jacob France Institute.

"We wish 9/11 had never occurred, but given that it did ... homeland security has emerged as a force to push the economy in another direction," said Anirban Basu, head of Optimal Solutions Group, an economic and policy consulting firm in Fells Point. "The federal government is collecting tax dollars from all over the country, and disproportionately these dollars are landing in Maryland."

The University of Maryland School of Medicine won a $42 million federal grant in September - the largest in its history - to lead a group of 16 institutions on bio-defense research, including better smallpox and anthrax vaccines.

Computer Sciences Corp.'s Lanham office just won a contract - which could eventually be worth $88 million - to maintain and improve systems that process travelers into the country for the Immigration and Customs Enforcement bureau.

Battelle, a research institute based in Columbus, Ohio, has been doing a booming business in building protection from its Maryland offices, analyzing federal agencies and hospitals to see if they need blast-proof windows, better control over air flowing through their vents or a closet full of decontamination equipment.

And last month Anne Arundel County officially launched the first homeland security business incubator in the United States, snagging the National Security Agency as a partner.

"I'm touching one part of the elephant, and it feels very big," said Michael Greenberger, director of the year-and-a-half-old University of Maryland Center for Health and Homeland Security.

It's definitely growing.

A recent Brookings Institution study found that more than $2.6 billion in homeland security contracts went to the Washington area - including five Maryland counties - in the 2002 fiscal year. Spending was almost $1 billion in the previous 12 months.

That's understating it because only 13 of the 24 agencies in the Department of Homeland Security had budgets Brookings could track. Those 13 were pumping more than half of their procurement dollars into the Washington region.

"It's very concentrated here," said Stephen S. Fuller, the report's author and a George Mason University professor. "The ... area didn't feel the downturn that the nation felt and recovered faster from the short-term effects of 9/11 because they were throwing all this money at the problem."

There's clearly a business downside to security efforts. Companies and the government are having to spend money for services - guards, for instance - that they didn't think they needed before, a drag on productivity and efficiency, said Loren Thompson, a defense analyst for the Lexington Institute in Arlington, Va.

"It's sort of like paying for insurance: You'd rather spend the money in other ways but you don't dare take the chance," he said. "What I'm saying is, it's a mixed bag. There's been some positive stimulus to the Maryland economy as a result of counter-terrorism expenditures, and there's been some significant burdens added."

But at least Maryland businesses are getting infusions of federal contracts to do newly required work, Thompson said. Plenty of states aren't.

Homeland Security Secretary Tom Ridge, speaking to an alliance of computer software businesses last month, argued that anti-terrorism efforts can mean innovation and growth rather than speed bumps.

"The measures we take to secure the homeland can lead to a safer world, a stronger economy and, yes, I believe, done correctly, even more freedom and less inconvenience," Ridge said.

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