As the financial crisis, future of energy resources, and healthcare debate rank at the top of this administration's priorities, a reduction in attention or support of homeland security operations could lead to weakness in what Secretary Chertoff has referenced as our "layers of security." The new administration must strike a careful balance of attention between those pressing issues and the constant pressure to keep our homeland safe.

In completing INPUT's newest market forecast released this week, the Federal Industry Analysis team took an in-depth, 5-year look into the border and transportation security market. DHS components like CBP, TSA, US Coast Guard as well as other participants like the Department of State (DoS) play lead roles in the four segments of this critical mission:

• Aviation and Surface Transportation Security
• Border/Perimeter Security
• Port/Maritime Security
• Cross-cutting Initiatives (including US-VISIT and DoS)

By the Numbers

The federal border and transportation security market will increase from $23.7 billion in federal fiscal year 2008 to $33.9 billion in 2013 at a compound annual growth rate (CAGR) of 7.5%. In an unstable federal fiscal environment that may threaten federal budgets in the near term, this market emerges as a high priority that will see continued investment. Of the market segments, border and perimeter security is forecast to grow the most with a CAGR of 8.4% over the next five years.

Segment-Specific Observations:

Border/perimeter operations are the largest mission area and have the greatest potential for growth as well. Part of this potential is influenced by issues ranging from the agencies' need to integrate technology to the possibility of future threats or attacks. CBP recognizes that new ideas and technology solutions are needed to establish a robust security infrastructure and stay one step ahead of dangerous people.

The aviation security market segment intensified dramatically in the nation's attention and funding priorities as the result of the terrorist attacks on 09/11/01. Since then, this segment continues to grow, but has been impacted by the limited scope (number of airports) and the rapid pace of investment within a relatively short period of time.

The port/maritime security market is a hybrid of the long-standing tradition and culture within agencies like the US Coast Guard and the new infusion of funding and attention from DHS. Port and maritime security issues remain a priority and are forecasted to continue to be funded. Moreover, future drivers are expected to expand as current equipment and infrastructure investments are completed. Once complete, other technology advances and implementation can occur. Vendors who can help the USCG modernize as well as implement new processes/technologies will be well placed through the next 3-5 years.

With regard to the final market segment, cross-cutting initiatives mostly in the areas of informatics are increasing in popularity and importance. More than ever, DHS, DHS components, State Department, and Justice Department (including FBI) must collaborate during field operations, intelligence gathering, and information sharing. Databases and information systems are expanding and becoming more integrated. As many defense and homeland security agencies continue to rely on each other and specialize their mission operations, cross-cutting initiatives and opportunities will become more available and lucrative.

Finally...the Balance of Power

While threats and future threats exist in each segment and for the border and transportation security market as a whole, the level of government attention (specifically by Congress) directly impacts many other areas. For example, Congress can drive two crucial elements: the urgency of mission-related mandates and the availability of funding. Under the current environment and last few budget cycles, Congress has shown no signs of limiting funding or support for homeland security mission/functions. What's more, as the new administration shifts priorities to match the President-elect's agenda, it will be up to Congress and Janet Napolitano, recently named as Obama's choice for Secretary of DHS, to guide the funding and focus of how the next few years in border and transportation security and homeland security will be handled. For the homeland security market, we know that President-elect Obama will be pushing for efficiency, dependence on technology and possible reallocation of defense resources for domestic purposes. As the administration settles in, it will be imperative to prioritize threats and operations, especially SBInet (the fence along the southwest border), intelligence gathering and research and development.

For more information on this topic, read INPUT's Border and Transportation Security Market Forecast 2008-2013.

In a recent article, GovExec reported that an "official use only" terrorism assessment identifies threats and weaknesses in the US government's homeland security mission. The report covers threats like al-Qaida and chemical weapons to capabilities like intelligence community analysis for the next 5 years. As for a market currently on our minds here at INPUT, border security remains a top priority for terrorists and DHS officials alike. Here's what the report said: "Terrorists will continue to try to evade U.S. border security measures and place operatives inside the mainland to carry out attacks." According to the article, it also said that they may pose as refugees or asylum seekers or try to exploit foreign travel channels such as the visa waiver program, which allows citizens of 34 countries to enter the U.S. without visas.

GovExec went on to address immigration and entry issues. "Long waits for immigration and more restrictive European refugee and asylum programs will cause more foreigners to try to enter the U.S. illegally. Increasing numbers of Iraqis are expected to migrate to the U.S. in the next five years; and refugees from Somalia and Sudan could increase because of conflicts in those countries, the assessment said." These operations and threats usually test three agencies – USCIS, CBP and Department of State.

INPUT recently completed a market analysis and forecast for the border and transportation security market which will be released this week. As a result, we thought through many of these same threats, technologies and trends mentioned in the government's assessment. Not only do reports like this one underscore the need for increased intelligence activities and a technological advantage, they open the door for sustained or increased funding and support from Congress and the White House.

As other issues dominate our immediate focus as a nation and a government, reports like this are a reminder to be vigilante in our homeland security mission. Expect those in Congress who were on the forefront of border security and homeland security issues for last few years like Representatives Thompson (D-MS) and King (R-NY) and Senators Lieberman (I-CT) and Collins (R-ME) to remain at the forefront of DHS oversight and monitoring. We're waiting to see how these players will interact with the new administration and specifically, the new Secretary, former Gov. Napolitano. From the vendor perspective, these reports and the attention of these Congressional committees will ensure DHS continues to spend on security issues and remains open to technology advantages, especially those which promote greater mission coverage and efficiency.

For more information on this topic, look for INPUT's Border and Transportation Security Market Forecast 2008-2013....coming soon!

As expected, President-elect Obama's first cabinet-level appointee selections have come early and align with the most critical issues he'll face coming into office - the economy and national defense (however, Obama has not confirmed any of the picks circulating throughout the media, and we're hearing that he's more than a little irritated by the leaks coming from his transition team).

Word on the street is that New York Federal Reserve President Tim Geithner will be taking over the Treasury Department, Arizona governor Janet Napolitano has been selected as DHS Secretary, and Hillary Clinton as Secretary of State. Most recently announced is his choice to keep Robert Gates in his position as Secretary of Defense, and retired General James Jones as his National Security Advisor. We've also heard rumors of New Mexico Governor Bill Richardson for Commerce Secretary and former South Dakota senator Tom Daschle for DHHS Secretary. These individuals still face a fairly lengthy confirmation process (although a DHS Administration Transition Task Force recommended a expedited confirmation process for top DHS leadership for the sake of national security).

Following up on work it did in 2000 at the request of Congress (which was concerned about the lack of "depth and breadth of experience required to manage a federal agency effectively"), GAO has compiled a list of questions that should be included in the confirmation process. What could Tim Geithner, Janet Napolitano, Hillary Clinton, and Robert Gates be asked?

Here are some of the questions that GAO recommends:

Timothy Geithner, Department of the Treasury

There are inherent challenges in implementing and managing any new federal program. However, the Troubled Asset Relief Program faces a number of unique challenges in achieving its statutory purposes, which include mitigating foreclosures, stabilizing financial markets and protecting taxpayers. How will your prior experience help you in meeting your responsibilities over the Troubled Asset Relief Program?

Governor Janet Napolitano, Department of Homeland Security

The department is pursuing the Secure Border Initiative, a multiyear, multibillion-dollar program aimed at securing U.S. borders and reducing illegal immigration. Concerns have been raised about whether early results are meeting user needs, and whether the department will be able to deliver the program on schedule and at cost. Do you have significant experience you can cite with major programs or initiatives depending on the integration of technology? What were key success factors? Based on your experiences, what would be key considerations for deciding whether to continue when faced with significant delays or cost overruns?

Senator Hillary Clinton, State Department

What experience do you have successfully working with a wide variety of civilian and military stakeholders and balancing competing priorities, approaches, and objectives?

Robert Gates, Department of Defense (he may not have to go through the confirmation process again, but will likely face the same scrutiny from President-elect Obama)

To what extent do you have experience in managing complex organizations with large budgets, including developing near-term and long-term investment strategies, prioritizing resource needs, and balancing needs with resource constraints to prepare affordable program plans and funding requests? Given the significant challenges facing the department to address current, emerging, and future threats and the considerable increases in the department's funding to address these threats, if confirmed, what management actions and timelines would you establish to identify defense plans and budgets that are linked to a strategic, risk-based framework?

There are also questions specifically addressing acquisition management and information and technology management:

Acquisition Management

Information and Technology Management

Confirmation hearings are a matter of public record, and it will be interesting to see the new leadership's responses to these questions, especially those surrounding acquisition and informatio/technology management. While it would be promising to have a department Secretary well-versed enough to answer acquisition and technology questions in depth, I wonder if we may end up seeing responses that ultimately say, "I'll hire someone to think about that for me." As long as he or she sees the vision of technology in government, perhaps that's all that the contracting community can wish for - for now.

Of all the changes that will take place with the new Congress in 2009 there may be few that have the potential to impact federal contractors as much as the leadership and composition of the House Oversight and Government Reform Committee. Most of the federal acquisition and procurement reform initiatives that impact technology contractors in recent years have originated in this committee.

Retirements, Defeats, & Bigger Opportunities

Since Rep. Tom Davis, the top Republican on the committee and widely considered a friend to technology vendors, announced his retirement all eyes turned to Rep. Chris Shays of Connecticut and California Rep. Darrell Issa and the impending competition over who would assume the ranking member spot on the committee. But with Shays' defeat on Tuesday it is uncertain if any other member of the Republican caucus can vie for the position over Issa, who has officially announced his intent to seek the position.

To further complicate the issue, the current committee chairman, Henry Waxman, D-CA, has gone public in challenging fellow Democrat Rep. John Dingell of Michigan for the chairmanship of the House Energy and Commerce Committee. It will take some time before we know whether Mr. Waxman will succeed in this coup, of sorts, but if he does move then that means additional leadership transitions on the Oversight committee. Media reports suggest the most likely contender to succeed Waxman as chairman would be Rep. Edolphus Towns, D-N.Y., the committee's senior member. Other potential contenders include Reps. Paul Kanjorski, D-PA., and Carolyn Maloney, D-N.Y.

INPUT's Take

What will all this mean for federal IT contractors? At this early point there are more questions than answers.

• If Rep. Waxman does leverage his way to chair the House Energy and Commerce Committee will that result in broader-sweeping reforms in government acquisition? Or will he have larger fish to fry like energy policy, health care and the environment? Will the contracting community see another attempt at a round of sweeping reforms that get clogged in debate, or will the practice of adding piecemeal reforms to larger bills like the Defense Authorization bill continue to be the approach? Rep. Waxman has been a strong proponent of acquisition reform and a move could quell the momentum we have seen in recent years.

• In the wake of Freddie Mac and Fannie Mae will the Reform panel even take up additional procurement reform or contractor oversight initiatives? They may be more likely to spend their time deconstructing the ongoing financial challenge. On the other hand, if the new congress takes a more combative stance toward the contracting community then we could possibly see sweeping changes.

• How will Rep. Issa shape his role on the panel, assuming he lands the ranking slot? Will he be effective in providing the balance necessary to any such deliberative body? And will the federal vendor community look to him for support or will they seek other channels? Popular opinion is that the exit of Tom Davis leaves a void on the committee and in the House that many may rush to fill.

• And what might we see out of Mr. Gerry Connolly, Davis' Democrat successor in Virginia's 11th Congressional district? Is it possible that he might receive from his party's leadership a seat on the Oversight and Reform Committee? This Northern Virginia district is a hub for many government contractors and high-tech companies and Connolly currently serves as Director of Community Relations for SAIC, one of the largest federal government contractors.

The Government Accountability Office (GAO) was given the authority to review task order protests since May, through a provision in the Defense Authorization Act of 2008. Now that several months have passed: What has been the overall impact of this change on the procurement process, and what does it mean for the future?

The above question was the overall theme of an ACT-IAC sponsored panel on task order protests late last week. Overall, the picture painted by the impact of this rule on the contracting community was often bleak. According to panelists like Karen Kopf and Jim Ghiloni, whose respective offices are involved in the ongoing GSA FAME and Alliant procurements, contracting personnel are overworked, overstressed, and scared of missteps that might be cause for protest later in the process. Despite being short staffed, procurement offices are spending more time reviewing each procurement, and even building time for protests into their schedule.

Several government representatives at the event supported the idea of oversight on task orders, recognizing that task orders look more like contracts than in years past, when they were designed to be more streamlined.

The officials acknowledged weakness in their own internal procedures such as:

• Poorly written requirements
• Insufficient oversight
• Increased workload

The real issue from the Government perspective seems to be the perceived free reign given to contractors in submitting protests without repercussion as part of their business strategy. One official expressed concerns over incumbents who file protests when they lose the recompete of a contract – giving themselves another shot at winning but also guaranteeing a few more months on the job while the protest is being reviewed.

Despite the fears expressed, Ralph White, an Assistant General Counsel for GAO, noted that although protests have increased, the GAO is able to dismiss most protests by the 30th day of review. The GAO maintains standards for each protest, allowing them to dismiss unsubstantiated protests early in the process. Additionally, protests often help government, industry, and procurement in general, by adding greater transparency and oversight to the task order process which will ideally lead to better procurements.

Several officials have found that protests decrease with open and early communication with industry through draft RFPs and industry days. Senior Contracting Officer for NIH's Image World 3 procurement, Donald Wilson, said many problems can be prevented simply by ensuring that all contract holders have a fair chance to compete for each task order. The debrief process is also significant as it gives losing bidders a chance to understand how to be more successful. However, as incoming protests increase, changes in the protest process may be necessary in order to recoup the financial burden placed on government resources. With the issue of contracting coming up frequently in this year's presidential race, perhaps the new administration and Congress will address this arena.