High-tech firms adjusting to the post-Sept. 11 world

High-tech companies have shifted their focus toward homeland security and government contracts, as they adjust to a new environment after the Sept. 11 terrorist attacks.

Dozens of small information technology firms have hired lobbying companies in Washington to help them obtain contracts with government agencies, while larger firms either have developed new security products or rushed to make appointments with the White House Offices of Homeland Security and Cybersecurity to tout their products.

"Homeland security solutions are probably the hottest thing that is going on in the IT market right now," said Booth Jameson, director of global government affairs at EDS, which has partnered with Sun Microsystems, Oracle and the PwC Consulting branch of PricewaterhouseCoopers to create a transportation-security product that it plans to pitch to the Transportation Department.

The Bush administration has proposed $38 billion in fiscal 2003 for homeland security, and a portion of that is certain to be allocated to technology solutions.

Apart from homeland security, agencies currently spend $45 billion a year on technology products and services, and the administration has asked Congress for $52 billion. That spending will focus on three concerns of President Bush: combating terrorism, increasing homeland security and revitalizing the economy.

"I think there has been a significant shift [in high-tech] when it comes to security, intelligence and knowledge management," said Phil Bond, Commerce Department undersecretary for the agency's technology administration and a former lobbyist for Hewlett-Packard. "The technology community has real expertise that it can provide to the government ... and they see government as a growing market."

Bond, however, has been cautioning companies that seek appointments with the Office of Homeland Security not to expect much, as the office does not handle procurement. Homeland Security Director Tom Ridge is acting strictly as an adviser to Bush and is interested in talking to IT companies-but cannot tell agencies what products to buy, Bond noted.

"The Homeland Security Office is overwhelmed" with technology solutions, Bond said.

In recognition of the breadth of technology solutions that deserve to be considered, Bond said the Commerce Department is considering holding a series of demonstration events in Washington and elsewhere to help ease the burden on Ridge's office.

He noted that not only can many technology products increase security, but they also can increase agency productivity.

Meanwhile, those who follow the government-contracting business advise that high-tech companies should unite if they want to get a piece of the government IT budget pie. One of the ways to do that is to join an association such as the Northern Virginia Technology Council, whose members include government contractors like EDS and Lockheed Martin.

The Northern Virginia Technology Council has helped small companies such as the Dulles, Va.-based data-security firm Server Vault connect with the large government contracting firms to build business.

Another association, the Information Technology Association of America, organized a meeting for some of its members with Transportation Secretary Norman Mineta, and is advising various agencies on how to sort through technology solutions.

"We were asked by multiple agencies to help them sort out some of the clutter and help them bring partners to the table to focus on solutions, rather than on particular products and approaches," ITAA President Harris Miller said.

Yet another means for companies to make inroads into the government market is to hire lobbying firms. Sonic Foundry, a small Madison, Wis.-based firm that makes identification systems, hired the lobbying firm Arent Fox Kintner Plotkin & Kahn to help boost its profile on Capitol Hill.

Or a company can expand its staff and create a new product from its existing line, as did the San Mateo, Calif.-based software firm Siebel Systems.

After Sept. 11, the firm, which already had a few government contracts, created a new information-sharing product aimed at boosting the abilities of the FBI and CIA to analyze information. The company made a splash with an advertising blitz in the Washington area for its new product.

Jameson said another note of caution for high-tech firms is that the homeland-security procurement process is occurring more slowly than many expected.

For example, the administration has taken seven months to analyze the proposed GovNet project-and while the government-wide intranet has been tapped to receive $5 million in initial funding, it is unclear whether it would be a large-scale contract.