By Calvin Biesecker
Despite a potential budget crunch stemming from the federal government’s ongoing bailout of financial institutions and banks, spending on homeland security is likely to remain strong, according to analysts.
Democrats don’t want to be considered soft on defense and homeland security, Ray Shepherd, a partner with the law firm Venable LLP, told Defense Daily yesterday. Democrats have already demonstrated in the two years they have been the majority party in both chambers of Congress that are willing to strengthen port and cargo security, he said.
Shepherd pointed to the 9/11 Act passed by Congress and approved by President Bush that sets mandates and establishes dates for screening all air cargo being loaded into passenger planes in the United States and all container cargo being loaded on vessels at overseas ports that is bound for the United States.
These mandates will drive the need to develop non-intrusive inspection equipment that has higher throughputs and in general can do the screening job better than currently available equipment, Shepherd said.
However, Shepherd said there will be a host of issues that confront an Obama Administration, such as figuring out how pay for any increased investments in homeland security. There will also be thorny issues such as “reciprocity,” he said.
In the case of container security, reciprocity refers to the foreign countries demanding that the United States conduct the same level of screening on exports bound for their countries.
“A big issue will be how to pay for all of this,” Shepherd said.
Morgan Keegan security analyst Brian Ruttenbur believes there will also be an emphasis in the coming years on port and border security, in particular better identifying potential threats at checkpoints. He also thinks that infrastructure protection, such as security for power plant and chemical facilities, has largely been “ignored.”
“We see these areas in particular receiving greater attention over the next few years, but believe that almost all aspects of domestic security will continue to show solid growth,” Ruttenbur said in a note to clients yesterday. Companies that he covers and expects to benefit from this growth include American Science and Engineering [ASEI], ICx Technologies [ICXT] and OSI Systems [OSIS], he said.
One advantage to single party control of the White House and Congress is that appropriations bills should be passed on time, according to Stanford Group emerging technologies analyst Jeremy Grant.
Grant, who also believes that in general homeland security spending will increase under Obama, along with Shepherd, said that it won’t be until the FY ’11 budget process that that the new administration will make its stamp on things.
Grant thinks that government spending on information technology (IT) will grow under Obama and that cyber security will be “the top IT issue” with “billions” of dollars in added resources. Companies that will benefit here include SAIC [SAI], ManTech International [MANT], SRA International [SRX], NCI, Inc. [NCIT], McAfee, Inc. [MFE], and SourceFire, Inc. [FIRE], he said.
Once the transition period is over, President Obama is likely to do a “wholesale assessment” of homeland security priorities, Shepherd said.
“It will be at least a year before there are any new substantive homeland security policies,” Heritage Foundation security expert Jay Carafano told Defense Daily.