An industry takes flight

Countless business opportunities have grown out of the tragedy of Sept. 11

September 10, 2006|By Jamie Smith Hopkins and Allison Connolly | Jamie Smith Hopkins and Allison Connolly,Sun reporters

A video game firm. A maker of collapsible tents. A provider of office space.

Who would have thought, five years ago, that this hodgepodge of Maryland companies would be doing significant business in homeland security?

The terrorist attacks of Sept. 11, 2001, changed not only the country but corporate America as well - particularly companies with offices near Washington. Maryland, always a big beneficiary of U.S. taxpayer money, has seen federal spending on goods and services soar.

Federal contracting dollars in the state nearly doubled from fiscal 2001 to fiscal 2004, the most recent year for which Census Bureau figures are available. They topped $20 billion in 2004, propelling Maryland to No. 2 among states in per capita spending.

That's all spending, not just homeland security, but much of the increase is a side effect of Sept. 11. Procurement here rose faster in each year after the attacks than in the previous six years combined, because of terrorism concerns and the related attention to defense.

"It unfortunately - or fortunately, depending on how you see it - has created opportunities," said Aaron J. Greenfield, president and chief executive of the Anne Arundel Economic Development Corp., the county's economic development arm. Anne Arundel, home to Fort Meade and the National Security Agency, launched a homeland security business incubator in 2003.

Local governments have struggled to measure the industry's full impact. Participants are a tight-lipped bunch, and though the NSA says it expects to do more than $2 billion in business with Maryland companies this fiscal year, its total budget is classified.

Teasing out the amount of spending on homeland security is nearly impossible because the money flows from a variety of federal agencies, not to mention state and local governments that decide to devote part of their own budgets to the cause. "Homeland security" itself is a catchall term that ranges from airport screening to smallpox research as well as a host of things that aren't terrorism-related, such as storm preparedness.

All the region's jurisdictions have seen the ripples. Anne Arundel counted more than 6,300 jobs created between October 2001 and June of last year by organizations involved in homeland security, defense or "informatics."

The statewide effect ranges from obvious to surprising. For example:

Northrop Grumman Electronic Systems in Linthicum has received $100 million to date from the Department of Homeland Security to develop a laser for commercial airliners that would deflect shoulder-launched surface-to-air missiles.

BreakAway Ltd. in Hunt Valley, a video game design shop that in 2001 had 20 employees focusing largely on entertainment, reinvented itself after Sept. 11. Now 80 percent of the business is defense and homeland security; employment has ballooned to 100 to design games that train people with war and disaster simulations. "Since 9/11, what we call the `serious side' of gaming exploded," said Chief Executive Officer Doug Whatley.

The University of Maryland Center for Health and Homeland Security, formed six months after Sept. 11, has expanded its staff from one to 25. Its work includes training first-responder agencies to plan how to continue operating after a disaster. "It's a sector that's growing very, very rapidly," said director Michael Greenberger.

Glenn Dale-based TVI Corp., which started making collapsible tents and shelters for the military in 1996, quickly added decontamination rooms and mobile hospitals after the attacks. Homeland security is now about 90 percent of the company's business.

Columbia-based Corporate Office Properties Trust can't build offices fast enough to meet demand from the homeland security and defense sectors. About half its space is used by government or government-related clients, compared with less than a quarter in 2001. Its NSA-adjacent National Business Park, with specialized offices designed to protect information from eavesdroppers, is packed. And its stock price has quadrupled since 9/11.

Biodefense is blossoming here, from the commercial - Emergent BioSolutions Inc., a Gaithersburg anthrax vaccine provider, just filed to go public - to the academic. The University of Maryland School of Medicine is leading a group of biodefense researchers with a $42 million grant from the federal government.

The market hasn't lived up to everyone's expectations, however.

Some complaints

Homeland security hopefuls complain that their ideas - bright or otherwise - are lost in bureaucracy.

More than $5 billion handed to the Department of Homeland Security is essentially sitting in the bank, yet to go to state and local governments to spend, said Jim Krouse, director of market analysis for INPUT, a research firm in Reston, Va.

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