PHOENIX — Scores of security companies selling everything from Taser-resistant clothing to armored vehicles packed a convention center here this week. Outside the showroom, speakers from the top of organizations like Border Patrol and the Department of Homeland Security gave talks to members of the security industry about their organizations’ operations and needs.
Now in its eighth year, the Border Security Expo may be more important than ever for the security industry. With America’s foreign wars in Iraq and Afghanistan over or coming to a close, many security companies are now forced to look for new markets to maintain their business levels.
Many within the security industry have turned to border security, a potentially lucrative alternative to fill in the gaps. Still, it remains to be seen just how much, if anything, the border region can offer the security industry.
“If you follow the policy debates, the potential could be multibillions of dollars of this kind of technology, but there is also the potential that it could be almost nothing,” says Mark Borkowski, assistant commissioner for the Office of Technology Innovation and Acquisition at U.S. Customs and Border Protection (CBP). There remains a healthy constituency calling for more technology along the border, but just how much money becomes available is up to policymakers still mired in the immigration debate.
Without the wartime surge of business, staff at Night Vision Depot have started to get creative about finding new clients. While they’ve looked into more niche markets, such as doomsday preppers, border enforcement agencies hold significant appeal and now make up the company’s third or fourth biggest market.
“I see Customs and Border Protection or Border Patrol as still having access to federal grant money, more so than the other federal agencies,” says John Lesniak, director of business development for the Allentown, Pa.–based firm. “In the short term, the next three to five years, this is a very good place to market to.”
Already immigration enforcement agencies receive more funding than all principal federal criminal law enforcement agencies combined. The Migration Policy Institute found that in fiscal year 2012 spending for immigration enforcement agencies was 24 percent larger than the combined budgets for the FBI, Drug Enforcement Administration, Secret Service, U.S. Marshals Service and Bureau of Alcohol, Tobacco, Firearms, and Explosives.
In this environment, technology makers are looking for ways to turn creations that served the military in Iraq and Afghanistan into equipment that can assist domestic law enforcement equally well.
Still, the amounts of spending at stake are likely to pale in comparison to the money previously available for defense projects. The wars in Iraq and Afghanistan created a major surge in overall Department of Defense contracting. Between 2001 and 2008, DoD contract spending more than doubled before starting a gradual decline, according to a report by the Center for Strategic and International Studies detailing defense contracting trends between 2000 and 2012. Overall U.S. defense spending also increased by about two-thirds in the decade following the 9/11 attacks. Now, however, defense budgets have begun a steady decline.
“As we see the ramping down of Afghanistan and Iraq and cutbacks in defense spending, you’re going to see more and more of these companies look to develop markets in nontraditional defense areas,” says Bruce Wright, associate vice president for university research parks at the University of Arizona.
Despite the changes, Wright sees big opportunity ahead within the security industry. Speaking to a group of mostly security industry representatives at the expo, he cited one projection that showed the industry expanding to 25 times its current size by 2018. He later admitted that the numbers for that specific projection were “fuzzy” but reiterated that exponential growth is likely.
While border security opportunities look good for the immediate future, he says that, “in the long run, border security may be the smaller component of the whole industry.” Opportunities to protect American infrastructure, stadiums and airports, among other facilities, may drive future investment potential.
“Internally, we have a profusion of opportunities,” says Frank Albano, vice president of USA Sales for Alpha Technologies Company’s industrial power division, which specializes in backup power supplies. Though it has worked with the military, his company has found numerous civilian clients within the U.S.
Despite such optimistic outlooks, a number of hurdles remain for companies looking to expand their domestic operations, such as the competition created by the return of surplus military equipment. As troops come home, much of the equipment they relied on to fight wars is no longer needed. To date, CBP has inherited 1,500 items worth $30 million. This is a relatively modest amount, considering the immigration enforcement agencies' nearly $18 billion budget in 2012.
CBP’s Borkowski describes it as a “quick shot in the arm and a good incremental step,” but says the organization would likely have to buy new gear if it wanted to adopt widespread use of most of the former DoD technologies.
Still, it’s a source of angst for vendors like Bob Alexander, a marketing consultant for night vision maker Aramasight who says the used military equipment makes it difficult to enter markets where potential clients can get equipment for free. “It’s a battle, because we’re all out there looking for business,” he says.
Additionally, it may prove an uphill battle for Congress to allocate more funding for border security amid concerns that the enforcement agencies underutilize the technology they have.
This month, the Government Accountability Office released a report questioning if CBP had the ability to evaluate the effectiveness of up to $700 million worth of cameras and sensors that will be installed on a section of Arizona’s border with Mexico. Without determining how the technology helps interdict drugs and illegal entrants, the report indicated that the investment could be wasted.
For his part, Borkowski has rejected this assessment, saying the risk is relatively low and technologies along the border have already proved useful. “The more interesting question going forward is not ‘Is it useful?’” he says. “Because it appears that it’s very useful, it appears that it’s very effective. It’s going to be ‘What is the right price to pay for that effectiveness?’”
Reported from Phoenix with the support of the Robert Novak Journalism Fellowship.