Homeland Security Focus Areas

Business and Economic Issues

TSA Offers Cargo Carriers Alternative to Reinforced Cockpit Door Rule

Owners and operators of airplanes that carry cargo only will no longer be required to install reinforced cockpit doors as congressionally mandated by a 19 November 2001 rule, but instead can choose to implement other enhanced security procedures, according to a new Federal Aviation Administration (FAA) and Transportation Security Administration (TSA) amendment published in the 18 July Federal Register. The FAA estimated that 1,257 cargo planes could be affected by the rule, which goes into effect on 18 August. All security plans must be approved by the TSA in order for owners and operators to be in compliance with the new rule. The FAA is accepting public comments on it until 16 September. All air cargo operators must implement the TSA-approved security procedures or outfit their planes with reinforced cockpit doors by 1 October 2003. Implementing the optional enhanced security procedures is estimated to cost the industry $1.705 million during the first year. The FAA anticipates that installing reinforced cockpit doors on just 540 airplanes would cost operators approximately $66.7 million in 2003.

ANALYSIS: Due to the urgency of having to secure airplane cockpits in the wake of the 11 September attacks, federal authorities had little time to evaluate alternatives for all-cargo planes, requiring all planes to install reinforced cockpit doors. Over time, several factors lead to an assessment of the requirement as it related to air cargo operations. One significant factor was that the cost of cockpit doors far exceeded FAA's original expectations as the installation of only one door jumped from $17,000 to at least $50,000. Air cargo operators successfully argued that enhanced security measures taken on the ground prior to lift off would have the same effect of preventing unauthorized access to the cockpit as reinforced doors. The change to the rule will allow new flexibility since each operator can develop individual security plans to reflect the various threats facing airlines. While economic considerations played a role in the rule change, the Federal Register clearly stated, "This rule is not just about money...Although cost is an issue, it is not the deciding factor in adopting this rule. Security is paramount."

Source:  Homeland Security Monitor

CQ HOMELAND SECURITY - TECHNOLOGY

July 18, 2003 - Updated 6:08 p.m.
Some Big Homeland Contractors Cited on Watchdog's Corporate 'Bad Citizen' List
By Martin Edwin Andersen, CQ Staff Writer

At least seven of the "top ten" list of federal government contractors cited by a Washington-based watchdog group as repeatedly engaging in misconduct -from compromising national security to defrauding shareholders - have won significant contracts from the Department of Homeland Security, an analysis by CQ Homeland Security has determined.
The companies are the Lockheed Martin Corp., the Boeing Corp.; Northrop Grumman; Raytheon; United Technologies, Textron, Inc., and TRW.
A DHS spokesman quickly responded that all companies doing business with the department would be "held to the highest standards."
"Those who don't ..." he said, "will be subject to investigation, review and potential action by the [DHS] inspector general..."
On Thursday, the Project on Government Oversight (POGO) released an updated report on contractor misconduct that revealed that from 1990 to 2001, ten federal contractors toted up 280 instances of misconduct or alleged misconduct and had to pay more than $1.97 billion in fines, penalties, restitution, settlements and clean-up costs.
In a statement, POGO noted that current federal regulations require contracts to be awarded only to "responsible" companies with a satisfactory record of "integrity and business ethics."
"Despite these numerous instances of misconduct," it observed, "the federal government continues to do business with the same companies."
The report pointed out, however, that none of the offending companies had been suspended or debarred from doing business with the federal government during the same time period.
Release of the POGO list came as a bipartisan group in Congress introduced legislation (HR 2767) to help strengthen public access to contractors' records of misconduct, as well as ensure enforcement of the government's debarment and suspension system.
The bill also would force a company with two or more similar violations to prove its corporate worthiness and eligibility for new contracts or financial assistance.
Bill sponsors include Reps. Carolyn B. Maloney, D-N.Y.; Peter T. King, R-N.Y.; Gary G. Miller, R-CA; Paul E. Kanjorski, D-Pa., Dennis Kucinich, D-Ohio; Edolphus Towns, D-N.Y., and Major R. Owens, D-NY.
"The federal government should not be in the business of repeatedly rewarding contracts to companies who repeatedly break the rules," Maloney said in a prepared statement. "At a bare minimum, they should be able to keep a list of those who break the rules."
Number two on the POGO list of scofflaws was DHS contractor Lockheed Martin which, according to the report, accounted for 9 percent of government contracts in 2002, with 84 instances of real or alleged misconduct with payouts of $426 million in fines and other penalties.
In the past decade, Lockheed Martin has been accused by the U.S. government of misdeeds ranging from exporting missile delivery/reentry systems without export licenses to paying bribes to Egyptian officials.
TSA Contracts
The Bethesda, Md.-based firm won a $490 million Transportation Security Agency contract to support and coordinate the rollout of new security procedures at more than 400 U.S. airports as security there is taken over by federal employees.
Lockheed Martin and Los Angeles-based Northrop Grumman, which ranked fourth on the list, are the leading contractors in the Coast Guard's Deepwater program, a 30-year, $17 billion effort to upgrade the force's aging fleet of cutters and patrol aircraft.
The two companies are also said by industry insiders to be top contenders to land the biggest DHS technology contract yet - the development of the U.S. Visitor and Immigration Status Indication Technology System (US VISIT), designed to track all foreign visitors to the United States. DHS is expected to issue proposals to industry by November and make an award by May, 2004.
Boeing, the No. 3 offender, was charged by the nonpartisan group for 50 instances of misconduct, including serious violations of the Arms Export Control Act.
Boeing, with headquarters now in Chicago, shared a $1.37 billion TSA contract with the New York-based Siemens Corp. for the installation and maintenance of explosive detection systems at U.S. airports.
It also was awarded a contract to demonstrate cargo container security systems for Operation Safe Commerce, a DHS effort to improve security at U.S. ports.
Boeing also teamed up last year with Lockheed Martin to train airport screeners at the Federal Law Enforcement Training Center in Glynco, Ga.
Raytheon, the No. 5 offender on POGO's list, teamed up with Northrop Grumman to bid for the Transportation Security Administration's Explosive Detection System/Explosive Trace Detection System contract. It also has developed a First Responder Command and Communication vehicle for sale to government agencies.
"Raytheon has proven expertise in emergency management systems, advanced electronics and IT systems that provide 21st century solutions to tracking, monitoring and identifying potential threats and protecting our communities," according to a statement on the Raytheon Web site, which lists several homeland security-related initiatives.
Maker of the Patriot missile, Raytheon was cited for 31 alleged legal violations, including attempting to export communications equipment to Taliban-friendly Pakistan from 1990 to 1997 in contravention of U.S. export control laws.
In February, the Lexington, Mass.-based company agreed to pay the government $25 million, one of the largest settlements ever, to settle those claims.
Asked for his reaction to Raytheon being ranked in the middle of the Top Ten list, company spokesman David J. Shea said:
"We recognize that our reputation rests on an unwavering commitment to the highest ethical standards. ... We don't tolerate deviations from our business conduct standards, and we take appropriate disciplinary action against individuals who have authorized, condoned, participated in or concealed actions that violate these standards."
In rare cases, companies can be debarred from federal government business.
Shea said that it was "not appropriate" for him to comment on debarment issues. "There are procedures that are well-known for that and we'll just leave it at that."
Sikorsky Aircraft, a subsidiary of United Technologies Corp. of Hartford, Conn., sixth on the POGO list, makes Black Hawk helicopters, a big ticket item for DHS's Bureau of Immigration and Customs.
POGO noted that Sikorsky paid out nearly $32 million in penalties in two separate incidents involving Black Hawks in which nine soldiers were killed.
In May, Textron Systems, a wholly owned subsidiary of Textron, Inc., of Providence, R.I., received a $2.5 million contract to manufacture a test boat as part of the Coast Guard's Response Boat-Medium (RB-M) program.
Textron Inc., No. 8 of the POGO "Top Ten," paid out nearly $25 million in fines, penalties and settlements for 21 cases of real and alleged misconduct, the group said.
Texron officials reached by CQ/Homeland Security declined to comment "at this time."
TRW, headquartered in Cleveland, Ohio and No. 9 on the list with 19 alleged violations, was hired last year by the Coast Guard to conduct a five-year assessment of port security.
The Reston, Va., firm is set to receive up to $31 million for its efforts.
In December 2002, Northrop Grumman acquired TRW to create the nation's second largest federal information technology contractor, specializing in, among other things, intelligence data analysis.
Friends at the Top
Senior administration officials with homeland security portfolios also are closely tied to some of the corporate offenders.
Treasury Secretary Norman Y. Mineta, a former Lockheed Martin vice president, was responsible for TSA until it was transferred to DHS on March 1.
Gordon R. England, deputy DHS secretary, served as president of Lockheed from 1993 to 1995.
DHS spokesman Brian Roehrkasse vigorously defended the department's contracting procedures and pledged the agency will pursue any wrongdoing under its watch.
"The department will uphold all the rules [governing contractors] and hold all companies with which it does business to the highest standards as outlined in their contracts," Roehrkasse told CQ Homeland Security on Friday.
"Those who don't uphold the standards will be subject to investigation, review and potential action by the [DHS] inspector general, and could be subject to the same type of investigation as NCS Pearson is now."
NCS Pearson, a Minneapolis-St. Paul-based company that has undergone reorganization, is currently being investigated by the department following recent congressional disclosures that company recruiters seeking to hire airport screeners for TSA allegedly had vouchered expensive stays in posh resorts in Colorado, Hawaii, and the Virgin Islands, as well as in other places.
CQ/Homeland Security called the seven companies on POGO's Top Ten list known to have with Homeland Security contracts, but only Raytheon and Textron responded - the latter with a "no comment."
POGO Executive Director Danielle Brian said in a brief telephone interview that her group's report underscored the fact that not enough is being done throughout the federal government to ensure scofflaws aren't winning taxpayer-funded contracts.
"This is why the government needs to have a comprehensive database," she said, "so that contracting officers can see for themselves who they are doing business with. Right now, they are not adequately protecting U.S. taxpayers' dollars."

From the "Congressional Quarterly Homeland Security Daily," 21 July:

Customs Could Publish Long-Awaited Cargo Rule This Week

The Bureau of Customs and Border Protection could publish a much-anticipated new cargo-reporting rule in the coming week, Commissioner Robert C. Bonner told a conference on cross-border trade and safety July 16. "I'm optimistic that we will get the proposed rules within a week or so," Bonner said at the meeting, sponsored by the Washington-D.C.-based Center for Strategic & International Studies, according to the Journal of Commerce Online. Under the Trade Act of 2002, the bureau must draw up rules by Oct. 1 for shippers to submit advance electronic data on all cross-border cargo. The agency had hoped to publish the proposed rule in early June. Shipping industry officials have groused that the delay threatens to curtail the traditional 90-day comment period for major regulations. - Jeremy Torobin

Study: Canada a Potential Terrorist Haven
Monday, July 14, 2003

TORONTO - Toronto is home to one of the largest Islamic communities in North America and is widely regarded as one of the world's most ethnically diverse cities.
But critics charge this tolerant and open society has also created an opening for terrorists who have their sights trained across the border at the United States.
"Al Qaeda is here," said John Thompson, of the Mackenzie Institute, a Toronto-based think tank.
A Mackenzie study released last month found 15 of 80 identified international terrorist groups, including those responsible for homicide bombings in Israel, have a presence in Canada.
The report charges Usama bin Laden's terrorist network extends to at least 25 operatives in Canada and included Ahmed Ressam, who used America's northern neighbor as a base for his millennium bombing plot. Ressam was convicted for his conspiracy to bomb Los Angeles International Airport in December 1999.
Canada is certainly no stranger to terrorism. Until Sept. 11, 2001, the most deadly case of air terrorism in history originated in that country.
More than 300 people died aboard an Air India flight in 1985 en route from Montreal to Delhi when explosives planted in luggage detonated over the Atlantic Ocean. No one has been convicted in the killings, which remain under investigation.
The Air India bombing case, currently in court in British Columbia, is the Canadian equivalent of the 1989 Pam Am bombing over Lockerbie, Scotland, that killed 259 passengers traveling from Frankfurt to New York and 11 people on the ground.
Despite that history, however, critics say Canada’s open immigration and refugee policies could be creating a safe harbor for terrorists targeting the United States. Potential terrorists could be slipping under the radar of Canadian politicians wary of appearing intolerant, they say.
"It's political correctness. No political figure can really afford to be charged with racism by an interest group," Thompson said.
A senior administration official told Fox News the United States sees potential repercussions of Canada's leniency for security within U.S. borders. The United States needs Canada's cooperation to prevent future terrorist attacks.
And once terrorists make it across Canada's more lenient borders, it's all too easy for them to gain access to the United States, experts say.
"We need to harmonize our visa policies," said Asa Hutchinson, undersecretary for Borders and Transportation Security. "We've had great discussions with them. They have their own relationships with countries and their own policies, and we respect that, but they understand that’s a vulnerability that has to be looked at."
But Canada's solicitor general, the equivalent of the U.S. attorney general, clearly feels otherwise.
"Overall, antiterrorism cooperation with Canada remains excellent …The government of Canada has been a helpful and strong supporter of the United States in the fight against terrorism," according to a statement released from that country in regards to a recent State Department report.
Canadian officials say the Mackenzie report contains a number of inaccuracies, but the author is standing by his work.
"We've been lucky twice. We're lucky Ahmed Ressam did not actually get inside the United States with his load of explosives. We're also very lucky the 9/11 attackers did all directly enter the United States. We might not be lucky a third time," Thompson said.
Fox News’ Catherine Herridge and Darragh Worland contributed to this report.

In homeland-security era, a market for bulletproof cars
Ford and Cadillac are set to unveil new armored sedans aimed at CEOs who fear terrorist reprisals.

By Eric C. Evarts | Special to The Christian Science Monitor

If you thought the Hummer was the closest thing to a tank on the roads of America, think again.

Lincoln's new Ballistic Protection Series Town Car looks like a regular, if portly sedan, but it's equipped with 1,800 pounds of bullet-resistant armor. The limited-edition version of the Town Car also comes with "blast blankets" that cover the undercarriage and are able to absorb the force of an explosion, the gas tanks are coated in rubber to minimize leaks, and its run-flat tires maintain the ability for a speedy getaway even if pierced by bullets.

Not exactly your standard menu of extra features. Yet Ford, which produces the Lincoln brand, is set to roll out 300 of the bulletproof cars onto several car dealers' lots by the end of summer. It's not the only major automaker getting into the game of making automobiles that makes James Bond cars look about as battle-ready as a Yugo jalopy. Cadillac is gearing up to release an armored version of its DeVille (price tag likely to be north of $100,000) and, since it introduced the impenetrable S500 Sedan in 2001, Mercedes has sold an average of 15 per year.

Car manufacturers say the vehicles are a response to terrorism concerns in an era of homeland security. And not just from diplomats and politicians. Some American CEOs in international markets fear they may be targeted by terrorists. A few buyers are willing to pay an additional premium for peace of mind at a time when the color-code alert never dips below yellow.

"Since 9/11, people who were on the fence about buying armored cars are now buying them," says Tony Scotty, a retired expert in rolling armor. "Before 9/11, the threat was random violence," what's known in the industry as the smash and grab. "Now the threat is targeted violence."

Though the armored-car industry also sees a potential market for, say, doctors worried about extreme abortion-rights activists or celebrities shadowed by overzealous fans - experts predict that some CEOs with international connections may take extra precautions on the road to guard against terrorist reprisals against the US.

"What nobody's saying is that if you are a company that has Israeli or Jewish ties, you're a target," says Mr. Scotty.

Experts call the market for armored cars "tiny" but say it's growing at a sturdy rate and had been even before Sept. 11. "We studied the market and found that it was growing 20 percent a year," says Mark Bentley, the product marketing manager for the Lincoln Town Car.

Until now, most armored cars have not been tooled at the factory plant, but at armory specialists who customize the vehicles for their clients. Often, they're car-rental agencies. We're not talking about the likes of Hertz and Avis, but specialty companies such as Secure Car Worldwide. Rich Cooley, vice president of operations for the company (Motto: "Visible Luxury with Invisible Protection") says they have about 20 armored cars nationwide. The cost for a bulletproof car can be $2,000 per day.

There may be 20 armored sedans in the streets of Los Angeles at any time - and they're all rented out on Oscar night. "Entertainers have a definite need for 'security cars,' " says Mr. Cooley, known as an expert in the industry. "Many have stalkers," for example.

And some have slightly more to worry about. In April, gunmen opened fire on a convoy carrying rapper Snoop Dogg through Los Angeles. When the rapper, whose real name is Calvin Broadus, arrived at an award show late last month, he and several body guards piled out of a bulletproof van with gun ports.

Most armored vehicles, though, are ordinary looking - but nevertheless cream-of-the-crop - Mercedes S500 sedans, BMW 750iL's and ubiquitous black Suburbans.

Inside the cars, however, are ceramic and Kevlar linings in the doors and roof and in strategic locations in the engine compartment. Window glass is shatter -proof and up to four inches thick (forget about rolling down the windows for the see-and-be-seen network on Rodeo Drive).

All that weight means these cars aren't exactly the ultimate driving machines. They're more akin to overloaded Sherman tanks. Armored cars wear so much on suspension and brakes that the average life expectancy of cars that have been fixed up by aftermarket armories is two years.

That's one reason why car manufacturers are producing the cars themselves.

"There were all these companies out there not manufacturing to any standard," says Mr. Bentley, who says Ford rigorously tests its armored vehicles for their resistance to bullets and bumps in the road.

Corporate Security Spending Up Only Slightly Since 9/11

Security still has not been given a high priority by most U.S. companies in the wake of the 11 September terrorist attacks, according to a study released on 9 July by The Conference Board, a New York-based nonprofit research organization. That conclusion was based on the findings of "a cross-country survey of more than 331 business security directors, risk managers, and information technology security officers," which showed "that the median increase in security spending is 4 percent since September 2001." The study, "Corporate Security Management," showed that seven percent of the companies significantly increased security spending "by 50 percent or more." It also showed median security spending increased about 9 percent for companies located in northeast cities, particularly cities near where the terrorist attacks occurred, but less than a three percent median increase for the rest of the country. It found that companies "most likely to have permanently increased their security spending are those in six 'critical infrastructure industries - transportation, energy and utilities, financial services, media and telecommunications, information technology and healthcare."

ANALYSIS: The study's findings are contrary to the expectations of some analysts, the New York Times reported. They are especially surprising given that the companies surveyed are large corporations-generating sales of more than $1 billion annually. "In the current environment, large-scale capital improvements that cannot demonstrate an immediate return on investment are a particularly tough sell to management," the study's chief author, Thomas E. Cavanagh, offered in explanation, according to the Times. The study was sponsored by ASIS International, an association of security professionals, which is lobbying Congress to pass, among other security-related legislation, the Public Safety and Protection Investment Act, which would give tax deductions to companies for purchasing security equipment, the Washington Post reported. A spokesman for Representative Gerald Weller (R-Illinois), one of the sponsors of the proposed legislation, told the Post that the congressman "feels that this legislation would...obviously be a catalyst to encourage corporations throughout the country to improve the pace of security improvements."

CQ HOMELAND SECURITY - TRANSPORTATION AND INFRASTRUCTURE
July 10, 2003 - 8:34 p.m.
Private Companies Elbowing In on Port Security Grants
By Jeremy Torobin, CQ Staff Writer

When the Department of Homeland Security announced in June that it had awarded grants totalling $170 million to improve the security of the nation's ports, there were 199 winners out of 1,100 proposals for projects.
But the winners aren't all ports: Fully a quarter of the funds - $42.8 million - went to private chemical plants, oil refineries, tank terminals and other facilities that store hazardous materials, shipping companies that haul oil, gas and chemicals, and pipelines, according to an analysis by CQ Homeland Security.
Last year, just three percent of the $92.3 million in port security grants went to those types of companies.
The high number of private-sector grant recipients has some port officials and congressional aides wondering whether scarce taxpayer dollars are going where they're needed most.
"The money that is handed out in grants should be done fairly selectively, and if it's being handed out to private sector entities that have the capability to fund the security upgrades themselves, then I think that deserves a second look," said Justin Hamilton, legislative director for Democratic Rep. Chris Bell of Texas, co-chairman of the bicameral Port Security Caucus.
The biggest winner in this round of grants was Citgo Petroleum Corp., the U.S. subsidiary of Petroleos de Venezuela, which received $13.5 million to improve security at its refinery in Lake Charles, La. The company also received about $2.2 million to upgrade security at facilities in Georgia, Texas and New Jersey.
At the end of the lake, the state-run Port of Lake Charles applied for $4.2 million in TSA grants, but received nothing in the June round of awards.
According to company documents, Citgo's net income for the first quarter of 2003 was $140 million. The company netted $180 million in 2002. It's grant award was first reported last month by The Philadelphia Inquirer.
At issue is whether the grants to Citgo and other private companies fall under Congress' definition of "critical national seaports" that should receive grants under the fiscal 2002 defense spending law.
"When you talk about energy resources and things like that, there's a strong argument to be made that lots of that stuff is critical infrastructure," Hamilton concedes.
Bell's district includes the Port of Houston, which is 50 miles long and encompasses several privately owned refineries.
"While some private sector entities may be able to pay for [security upgrades], others can't but need the money immediately," Hamilton added.
But the grants, which are administered by the Transportation Security Administration in coordination with the Coast Guard and the Transportation Department's Maritime Administration (MARAD), are not awarded based on the applicants' needs.
All entities that received grants for physical security upgrades prepared vulnerability assessments, said Marianna Merritt, director of resource management with the TSA's Office of Maritime and Land Security.
"The big differences here are in how robust the applications were and how they demonstrated the link between the vulnerabilities that had been assessed and the mitigation strategies that they proposed," she said.
In that, Citgo had an advantage.
The company's Lake Charles refinery sits in one of eight port areas considered so critical that the Coast Guard has conducted its own security assessments. Citgo also had done two assessments of its own in the past two years.
"What ultimately distinguished this company in this process is that they have already done a significant amount of the risk assessment work . . . so were in a much better position to move forward with the next logical phase of their development," TSA spokesman Brian Turmail said.
Merritt said the TSA plans to help future applicants - public and private - by including examples of "robust project development" on the Internet, with the port names and areas removed.
Secrecy Rules
The grant process is marked by two other characteristics: A lack of standards upon which to base their needs, and the heavy secrecy surrounding security-related grants to private companies.
Neither the TSA, the Coast Guard nor the Transportation Department have set security standards for ports and other shoreside facilities.
Without standards, Hamilton said, it's "difficult to know if we're prioritizing or spending money wisely."
Nor can applicants glean best-practices information from well-heeled private companies, who can better afford sophisticated security assessments. Neither Citgo nor TSA officials would comment on how the company plans to spend the money.
"That was a part of the application, that the information we provided in that application would remain confidential, so we're abiding by that," said Kent Young, a spokesman at Citgo's Tulsa, Okla., headquarters. "It's a part of the application process and it's stated in the application."
TSA officials said only that the money will be used for "access control" projects which could theoretically include fencing, lighting, cameras and identification readers.
Aides to Louisiana lawmakers say there was no political intervention on behalf of constituents like Citgo.
Staffers for Louisiana's two Democratic senators, John B. Breaux and Mary L. Landrieu, as well as an aide to Democratic Rep. Chris John, whose district includes Citgo's Lake Charles refinery, said their offices had no information about the Citgo award and both Merritt and Turmail argued the multi-step grants process leaves no openings for lawmakers to intervene on behalf of constituents.
Other private companies receiving grants included Sunoco, which got $5.1 million to improve security at its plants in Philadelphia and Houston; Tesoro Hawaii Corp., which owns a petroleum refinery in West Oahu, received $2.9 million; Dow Chemical Co. won $1.4 million for a facility in Freeport, Texas; and Hovensa LLC's refinery in the Virgin Islands was awarded $1.3 million.
Needs Testing
Many who got nothing from the most recent round believe the grant program should be restructured to reflect the financial need of applicants.
"I think there should be a needs test, absolutely," said Jim Robinson, director of navigation and security for the state-run Port of Lake Charles - which runs 34 miles along the Calcasieu River Waterway from the Gulf of Mexico to the city of Lake Charles. "If there were, our particular port, given our responsibilities, we'd be at the top of the list because we're operating in the red big time."
The Port of Lake Charles still may get its money. The Homeland Security Department will award another $75 million later this year through the Office of Domestic Preparedness to ports and facilities in 12 "high-threat" urban areas around the country, including nearby Beaumont, Texas. The TSA grant-review committee sent Robinson's application on for review under that grant program.
But Robinson isn't holding his breath.
"If [ODP]'s evaluation is as drawn out as TSA's and MARAD's and the Coast Guard's is, we won't get any money yet this year," he said.
TSA spokesman Turmail declined to discuss whether the grant program should be based on financial need.
The key to awarding the grants, he said, is determining, "who provides the best application for the best possible use of taxpayer funds, to enhance security at facilities that have an impact on the national economy and who have the potential to have an impact on those who live around and work in those facilities."
Direct Deposit
The debate over the award criteria notwithstanding, there is general agreement in the industry that private ports and facilities should receive some federal assistance in bolstering their security.
Stephen Flynn of the Council on Foreign Relations, one of the harshest critics of the Bush administration's port security efforts, said that because most of the port infrastructure is privately owned and port authorities "in most places act largely as landlords, providing grant money directly to private companies may be the most expeditious way to address serious vulnerabilities which, if targeted by terrorists, would seriously endanger the public."
Port authorities, he added, "often have as torturous a process for disbursing funds as the federal government has, so using them as middle men could add months or longer to get grant monies out to where they need to go."
Even the American Association of Port Authorities, which has argued repeatedly since the Sept. 11 terrorist attacks that the nation's public ports need far more money - possibly billions of dollars more - to adequately protect themselves against terrorist attacks, has no official quarrel with grant money going to private companies.
"We don't have a position saying the money should only go to public port authorities," said Susan Turner, the association's director of government relations. "But we feel [the TSA, Coast Guard and MARAD] need to look at not only the commodity, but also at whether the port area is a transportation hub, and they're not doing that right now."

July 9, 2003
Companies seek financial relief for increased security costs
By Matthew Weinstock
mailto:mweinstock@govexec.com

Corporations seeking to shore up defenses against future terrorist attacks are looking to Congress to help reduce their financial burdens.
In particular, firms are getting behind legislation introduced in the spring by Rep. Jerry Weller, R-Ill. The bill, H.R. 2970, would provide tax relief for companies as they make improvements to both physical and information technology security.
Companies aren’t necessarily seeing costs rise in terms of new products or new spending, but rather for insurance and risk assessments. The median increase in property insurance was 28 percent from 2001 to 2002, according to a report released Wednesday by the Conference Board and ASIS International. For critical industries, such as energy and telecommunications, the increase was 37 percent. Liability insurance jumped 40 percent for critical industries during the same period.
Tax relief is the kind of short-term fix firms need until insurance premiums come under control, said Don Walker, chairman of Security Services, USA Inc.
According to the study, which polled more than 330 firms nationwide, corporations have modestly increased spending on overall security since Sept. 11, 2001. The median increase was 4 percent. The seemingly small jump could be the result of increased funding for security during the past decade, said Marene Allison, director of security for Avaya Inc., a Basking Ridge, N.J.-based communications firm. She noted that several firms boosted spending after the first attack on the World Trade Center in 1993.
Additionally, there are substantial regional differences in spending. For instance, firms in the Northeast-mainly from Boston to Washington, D.C.-increased security spending by 9 percent, compared to 3 percent in the rest of the country, the report said.

Press Releases
Secretary Ridge Announces New Financial Investigations Initiatives
For Immediate Release
Office of the Press Secretary
July 8, 2003
Unveils Comprehensive New Programs to Protect U.S. Financial Systems from Criminal Exploitation

NEW YORK, NY - In a speech at the New York Federal Reserve, the Secretary of Homeland Security, Tom Ridge, today announced programs to safeguard the nation's financial systems against criminal exploitation. Two of the many actions being taken by the Department of Homeland Security (DHS) include the creation of a new financial crimes investigative initiative and an expansion of already successful electronics crime task forces. Secretary Ridge also announced a groundbreaking initiative designed to share specific information with the nation's top financial institutions, about financial systems weaknesses discovered through the Department's criminal investigations.
Secretary Ridge announced Operation Cornerstone, a new financial investigations initiative that will not only prosecute money laundering crimes but will initiate a new approach of working with the private sector to shore up potential weaknesses in financial systems.
In short, Operation Cornerstone, run by the Bureau of Immigration and Customs Enforcement (ICE), is a new financial investigations program that will identify vulnerabilities in financial systems through which criminals launder their illicit proceeds, bring the criminals to justice and work to eliminate the vulnerabilities. Through a working partnership with industry representatives, ICE will share information learned from these investigations to eliminate industry-wide security gaps that could be exploited by money launderers and other criminal organizations.
Secretary Ridge also announced that the Secret Service is expanding its highly successful Electronic Crimes Task Forces to four additional cities. The Secret Service currently runs task forces in 9 cities. The four new cities are Cleveland, Houston, Dallas and Columbia, South Carolina. The 9 existing task forces are operating in New York, Los Angeles, Miami, Charlotte, San Francisco, Las Vegas, Boston, Chicago, and Washington, D.C.
These task forces investigate a wide range of computer-based criminal activity. Examples include e-commerce frauds, identity crimes, telecommunications fraud, and a wide variety of computer intrusion crimes that affect a variety of infrastructures. Since its inception in 1995, the New York Electronic Crimes Task Force alone has charged over 800 people with electronic crimes valued at more than $500 million.
Earlier in the day Secretary Ridge toured the Secret Service's Electronic Crimes Task Force in New York, as well as ICE's El Dorado Task Force. The El Dorado Task Force has investigated numerous money laundering and other financial crimes since its inception in 1992. In eleven years El Dorado Task Force agents have arrested 1,753 individuals and seized nearly $560 million in criminal proceeds.
"Safeguarding the integrity of America's financial systems is a key part of homeland security," said Secretary Ridge. "Criminal organizations are seeking new ways to finance their operations, and the Department of Homeland Security is moving aggressively to identify vulnerabilities within U.S. financial systems that could be exploited to those ends."
To aid the financial industry in its own efforts to shore up vulnerabilities in its systems, Secretary Ridge announced a new program jointly run by ICE and the Secret Service. Under this new program called SHARE (Systematic Homeland Approach to Reducing Exploitation), officials from the Secret Service and ICE will jointly conduct semi-annual meetings with executive members of the financial and trade communities impacted by money laundering, identity theft, and other financial crimes. In these meetings special agents and analysts from the two Homeland Security agencies will share data on specific investigative outcomes from investigations into money laundering, identity theft, and other financial crimes.
By taking the Secret Service's long experience with investigating crimes like counterfeiting, identity theft and credit card fraud, and ICE's long experience with investigating illegal efforts to launder or mask the true source of criminal proceeds - and sharing that experience with the financial community, American pocketbooks and bank accounts will be far safer, Secretary Ridge explained in his remarks.
Before his speech, Secretary Ridge met with leaders from the top financial institutions to brief them on the new initiative. "It's critical we work in partnership with the financial community," Secretary Ridge told the financial leaders. "Unless we share the specific findings of our investigations, we run the risk that our nation's financial systems will remain vulnerable to exploitation. We can't let that happen."
Secretary Ridge announced that the first meeting under the SHARE program will take place by mid-October.

June 30, 2003
Homeland Security flooded with antiterror tech plans
By Molly M. Peterson, National Journal's Technology Daily

The Homeland Security Department has received more than 3,300 responses to last month's solicitation of a wide array of innovative counterterrorism technologies, Homeland Security Secretary Tom Ridge said on Monday.
"There are several million dollars available to the private sector," Ridge said during the first meeting of the department's 18-member Homeland Security Advisory Council. "What we're looking for right now is some off-the-shelf technologies that we may use in a variety of different venues."
The department had set a June 13 deadline for one-page technology proposals, including for contamination detectors, data-management applications and satellite communications tools. Homeland security officials now are evaluating those proposals, according to Charles McQueary, the department's undersecretary for science and technology. McQueary said his division has received an additional 500-plus unsolicited proposals through e-mail.
In order to encourage private-sector innovation, Ridge said the department is planning to establish a "Homeland Security Department award" that would be similar to the Commerce Department's Malcolm Baldrige National Quality Award.
"I think it's very important for us to recognize the quality and the ingenuity in the private sector, as well as best practices," Ridge told the council. He added that the council will be charged with helping the department establish criteria for the award and a review process to select candidates.
Ridge said the council will take various other steps to help the department reach out to the private sector. He also asked for the council's help in developing a homeland security "lexicon" to ensure that all the federal, state, local and private-sector players are "singing off the same song sheet" when they discuss risk management, critical infrastructure and other complex topics.
"Interoperability isn't just communications and equipment," Ridge said. "Interoperability is making sure that everybody understands concepts and definitions, up and down the line."
William Webster, a former director of both the FBI and CIA, said one of the council's "most significant" tasks will be to help the department improve its ability to communicate with state and local government agencies and emergency "first responders."
"We have never ... in our federal system, really addressed that issue, and now we must," said Webster, who is vice chairman of the council.
Former Rep. Lee Hamilton, D-Ind., who now serves as director of the Woodrow Wilson International Center for Scholars, said budget issues will be another key concern for the council. "Are we spending enough money to prepare fire, police, rescue and medical agencies to handle another catastrophic attack? I do not believe that we are," Hamilton said.
A Homeland Security Advisory Council member, he cited a recent estimate by a Council on Foreign Relations task force that the federal government plans to spend $27 billion on first responders over the next five years.
"After talking to a number of my former colleagues on the Hill, I think it's a safe bet that that figure will rise dramatically in the years ahead, and it probably should," Hamilton said.

CQ HOMELAND SECURITY - COURTS AND JUSTICE
June 20, 2003 - 6:04 p.m.
Separate Accounts? Banks Slamming Door on Some Muslim Customers
By Anjali Cordeiro

"We regret to inform you that we have decided that it is not in our best interest to continue your banking relation with us," read the letter that Hossam Algabri, an Egyptian-born software consultant in Massachusetts, received from Fleet Bank last November.
The Muslim American Society says that, like Algabri, at least 15 individuals and institutions around Boston with Muslim or Arab backgrounds have had their accounts closed by Fleet over the last few months.
And it's not just Fleet Bank in New England that's provoking questions among Muslims.
In New York, Farooq Firdaus, a Pakistani-born businessman, accuses American Express of discrimination.
Firdaus claims that, over the last year, he and at least seven other members of the Muslim community were contacted by American Express and asked to submit tax returns, bank statements and information on the jobs they held for the previous six months.
According to Firdaus, the credit card company said it needed the information for "security reasons," within two weeks.
Firdaus, who believed that he had been singled out because he is Muslim, refused to submit the information and soon found his credit card cancelled. He says he had no trouble getting a credit card from another company.
In New Jersey, a Muslim American doctor who did not wish to be named claims he had a similar experience with American Express.
Both Fleet Bank and American Express strongly deny the allegations of discrimination. In order to maintain customer privacy, both financial institutions say they cannot disclose why accounts were closed or credit cards cancelled.
"We don't have information on our customers' religious backgrounds so that has no place in our decisions," says Judy Tenzer, a spokesperson for American Express. "We routinely monitor all our card accounts and we may ask them to give us information to associate risk."
Muslim organizations are not convinced.
In the Black
The Council on American-Islamic Relations (CAIR) believes that many financial institutions are blacklisting Muslims and says that companies are wrongly using the bundle of antiterrorist legislation known as the U.S.A. Patriot Act to justify closing accounts.
"Financial institutions are under pressure to protect themselves. They are given very little guidance on how to implement many of the new financial regulations," says Khurram Wahid, legal adviser for CAIR.
"To avoid running afoul of law enforcement agencies, they are being as cautious as possible. They would rather lose a legitimate customer, rather than risk violating any anti-terrorism law," he said
The executive director of the Muslim American Society, Mahdi Bray, believes the alleged discrimination is a fall-out of the war against financial terrorism and the result of a "black hole of secrecy and lack of transparency that emerged after 9/11."
Under the so-called Patriot Act and the Bank Secrecy Act, financial institutions in the United States are required to identify their customers, verify details and ensure that they do not appear on the list of Specially Designated Nationals and Blocked Persons issued by the Office of Foreign Assets Control.
They also are required to monitor all accounts, keep an eye out for any 'suspicious activities' and file a Suspicious Activity Report with the Treasury Department if they notice anything out of the ordinary.
Balancing Act
As banks try to balance their legal requirements with their privacy obligations to their customers, they are forced to make tough calls. Non-compliance with any of the regulations on money laundering could mean penalties that range from large fines to jail-time for responsible officials.
According to a Treasury Department spokesperson, "It is the responsibility of the bank to be diligent." Banks which are careless and deal inadvertently with a terrorist or terrorist group, could face penalties, he says.
However, both Treasury and FBI officials say that they cannot ask a bank to close down an account.
"That would be the bank's own decision," says an FBI spokesperson, "The FBI can freeze a bank account only on the basis of a court order, in which case the individual would be aware that the FBI had asked for his account to be shut down."
According to Dalia Hashad of the American Civil Liberties Union, the organization has been receiving increasing complaints from Muslims claiming discrimination by financial institutions.
"After Sept. 11, the government issued lists of people it wanted to talk to. There were many normal, everyday people on the lists. The government did speak to many of them and found them innocent. However, these lists, created by different federal agencies, are still floating around and are being used, at will, by private agencies. The government has been very irresponsible in not taking them back," Hashad claimed.
Khurram Wahid of CAIR also believes there is insufficient regulation of the OFAC list and that as a result, "private companies are overstepping their roles and acting as agents of the government."
Proof of Life
One his clients, Muhammad Ali, had difficulty making a $80 transfer through Western Union, he said, because there were 50 people with the same name on the OFAC list of blocked persons.
Ali had to return to the Western Union office to prove his nationality and date of birth to show that he was not one of those named on the list, Wahid said. Only then was the transfer completed.
The Treasury Department also gives banks a list of activities to keep an eye out for, while monitoring accounts. Some of the indicators Fleet would watch out for include large dollar transactions or the use of ATMs at several different locations, says Alison Gibbs, spokesperson for Fleet.
"It's a pretty thorough process. We are not making frivolous calls. We are looking to be fair. Our account monitoring process cannot target any group or segment of customers because we don't maintain any background on race or ethnicity on our systems. Fleet is committed to diversity," she says.
The Muslim American Society believes Fleet Bank may have shut down about five Muslim accounts in Boston because they were employees of Ptech, a Boston firm investigated last November by federal agencies who suspected its financier of having terrorist links.
But Mahdi Bray of the Muslim American Society describes Fleet's decision to close down those five accounts as "overreaction and a rushed judgment. The bank wanted to err on the side of caution," he said.
"They decided to close accounts to make sure that if there was anything to the investigation they wouldn't have to deal with the bad the publicity; they wouldn't be in a situation where one of their customers was involved in financial terrorism," Bray said.
Checking Accounts
Hossam Algabri, also a former employee of Ptech, says that he was never investigated and has never been questioned by any law enforcement agency. He says that although a number of Ptech employees had accounts with Fleet, only Muslim employees had their accounts closed.
"If Fleet has a reason for closing these accounts they should come forward with it. At the moment their decisions seem random," says Salma Kazmi, assistant director of the Islamic Society of Boston. "If the Ptech investigation was the reason why some accounts were closed, then why weren't non-Muslim accounts closed too? The other Muslims who had their accounts closed, by Fleet, were not Ptech employees."
She concludes: "The Fleet decisions seem random."
Fleet, however, stands by its statement: "It is committed to diversity and does not maintain records of religious background."

From the "Congressional Quarterly Homeland Security Daily," 20 June:

New Intelligence Unit Slated for Treasury

The Department of Treasury will get a new Bureau of Intelligence and Enforcement that will chiefly focus on terrorist-related financial investigations under a proposal in the House version of the Intelligence Authorization Act for Fiscal Year 2004, released last week. The new Bureau will include the Financial Enforcement Center, or FINCEN, a money-laundering intelligence and investigative support center, plus the Office of Foreign Assets Control and the Office of Intelligence Support, according to the report by the House Permanent Subcommittee on Intelligence. The law would create a new assistant secretary for intelligence who would be appointed in “consultation” with the CIA Director, the proposal said. -Jim McGee

CQ HOMELAND SECURITY - TECHNOLOGY AND INFRASTRUCTURE
June 18, 2003 - 6:33 p.m.
Business Rounds Up Another Group to Lobby DHS
By Jeremy Torobin, CQ Staff Writer

Another group has cropped up to lobby Congress and the Department of Homeland Security for a business-friendly solution to antiterrorism security legislation and regulations.
Michael M. Meldon, president and CEO of the new Homeland Security Business Executive Council, told an audience of corporate and government officials at the National Press Club Wednesday that his organization is "kind of a think tank and an association blended together."
Its senior vice-president and executive director, Kim Dougherty, is an Air Force reserve colonel who recently left the U.S. Chamber of Commerce, where she arranged meetings between the organization's members and DHS officials.
But beyond greasing wheels on Capitol Hill and Nebraska Avenue, Meldon, a former Science Applications International Corp. executive, said the group will serve as a forum for the development of "dual-benefit" policies that enhance domestic security as well as global competitiveness.
"The substance piece is every bit as important as the access piece," Meldon said.
The group's first meeting is scheduled for July 2, where members will meet behind closed doors in the exclusive City Club of Washington with DHS privacy officer Nuala O'Connor Kelly, to discuss privacy issues associated with efforts to track the entry and departure of certain visitors and assign every airline passenger a terrorist threat "score."

From the "Congressional Quarterly Homeland Security Daily," 17 June:

Treasury Seeks Industry Advice on Insurance Policies
The Treasury Department is asking the insurance industry to help it measure the effect of terrorism on life insurance and other personal insurance policies. As part of the terrorism insurance law passed in November, Congress asked the department to prepare a report on the issue by the end of August. The law requires the Treasury Department to consult with the National Association of Insurance Commissioners, the insurance industry and other “experts.” In the June 16 Federal Register, the department asked for comments on the types of insurance policies that would be most affected by terror attacks; the characteristics of those policies; and whether large or small firms that provide certain insurance would be affected more by an attack. Answers should be submitted to the Treasury Department by July 5. - David Clarke
• Text of the Federal Register notice

June 13, 2003 - 7:39 p.m.

Can the Homeland Security Department Secure America's Borders Without Hindering Commerce?

By Jeremy Torobin, CQ Staff Writer

Before Sept. 11, coming to America was relatively simple.

Hop a plane in Paris after breakfast and arrive in New York City in time for dinner. Drive truckloads of goods back and forth between Windsor, Ontario, and Detroit several times a day. Customs was usually a breeze, with agents rarely giving European passports or Canadian driver's licenses a second look. The same went for cargo: If inspectors opened a container of Pakistani shirts arriving in a U.S. seaport, it was probably to check that importers were following rules set up to protect U.S. textile workers, not because they thought it might be hiding a "dirty bomb."

In the year since President Bush announced that his administration would create a Department of Homeland Security (DHS), the government has struggled with initiatives designed to shine a bright light on every foreign student, business traveler, tourist and cargo load seeking entry into the United States.

Because it is impossible to check every person and item that comes across the border, success will be a matter of accurately - and speedily - determining which "low risk" individuals and shippers can receive faster processing by agreeing to extensive background checks.

The challenge is to find a way to efficiently screen out terrorist threats without choking off the routine flow of people and goods that is America's economic lifeline.

Administration officials and a bevy of contractors insist technology is the key. New systems are quickly being dispatched on every front: at - and between - highway border crossings, at airports and shipping ports of call. Some programs even aim to track cargo and individuals while they are here.

"[I]n the 21st century border security can no longer be just a coastline or a line on the ground between two nations. It's also a line of information in a computer telling us who is in this country, for how long and for what reason," said Asa Hutchinson, the former Arkansas Republican congressman running the new department's border and transportation security directorate, in a May 19 address to the Center for Strategic and International Studies.

But each new system also brings its own challenges.

Checkpoint Gadgetry

Hutchinson was referring to the Visitor and Immigration Status Indication Technology, or U.S. VISIT, system, an ambitious and controversial project that will use biometric identifiers in travel documents to screen arriving visitors who are required to have visas against terrorist watch lists and track foreign visitors' entries and departures.

Although Hutchinson argues that an entry-exit control system could have tipped off officials when Sept. 11 hijackers Hani Hanjour and Mohamed Atta violated the terms of their visas, it is unclear whether Congress is prepared to give the department enough money to meet deadlines it has set for the program.

Homeland Security Secretary Tom Ridge has promised that U.S. VISIT will be functioning at every airport and seaport of entry by the end of this year, and at the nation's 50 busiest border crossings by the end of 2004, as required by a sweeping border security law enacted in 2001 (PL 107-173). Congress has appropriated $380 million for the project so far, but some estimates put its cost well into the billions.

Moreover, a request for a proposal to develop the technology behind the program, which Hutchinson has promised the department will issue by this fall, is already a year late. The former INS was supposed to solicit bids last summer.

Regardless, many lawmakers continue to worry about the long stretches of undefended border between ports of entry. The Mexican border, where the vast majority of drug and immigration arrests occur, is naturally more heavily manned than the U.S.-Canadian frontier. But each boundary has gaping holes, illustrated last month by the deaths of 19 illegal immigrants abandoned in a hot, airless trailer in south Texas.

"My worry is all the focus on crossings may push aside the fact that a terrorist could just slip across the border in an unguarded area," Maine Republican Sen. Susan Collins, chairman of the Senate Governmental Affairs Committee, said June 3.

One approach to tackling that problem, which has gained currency on Capitol Hill and in the Homeland Security Department, is the use of unmanned aerial vehicles, or UAVs, such as the ones the Pentagon used with great effect to track enemy forces in Kosovo, Afghanistan and Iraq.

Balancing Passenger Screening and Civil Rights

After deploying an army of federal airport screeners and training the first group of commercial pilots to carry guns in the cockpit, the Transportation Security Administration (TSA) is counting on a computer-based profiling system to spearhead its efforts. The Computer-Assisted Passenger Pre-screening System (CAPPS II), scheduled for deployment next year, would match passengers' names against the government's terrorist watch lists as well as credit bureau reports and other commercial databases, assigning each passenger a color-coded terrorist threat "score."

According to the TSA, the system will be better than an existing government "No Fly List," which is prone to errors and misinterpretation by airline clerks, resulting in erroneous detentions and an American Civil Liberties Union (ACLU) lawsuit.

But the ACLU and other groups - plus lawmakers in both parties, the European Union and even some U.S. officials - worry that CAPPS II's potential usefulness in stopping another hijacking may not outweigh its potential impact on privacy and civil liberties.

CAPPS II and U.S. VISIT are arguably Homeland Security's most complex undertakings to date. But while the department has streamlined border-security functions and broken up the dysfunctional INS, many other elements of border and transportation security policy have been just as problematic.

For instance, U.S. VISIT will incorporate the Student Exchange and Visitor Information System (SEVIS), an Internet-based foreign student tracking system meant to replace an older, unreliable paper-based INS database. Keeping tabs on foreign students has been a congressional priority because Hanjour, Atta and others among the 19 Sept. 11 terrorists posed as foreign students. But SEVIS, in place since February, has been plagued by technical glitches, staffing shortages and general confusion.

Now that the Department of Homeland Security sets the rules for State Department consular offices to follow when issuing visas, State plans to hold in-person interviews for nearly all overseas visa applicants, to the delight of security and immigration hawks. But the U.S. Chamber of Commerce warns that a lack of resources to help overseas consulates deal with tighter security measures already has created backlogs and delays that have hurt small U.S. businesses competing in international markets.

Also, since last fall, males 16 and older holding temporary visas from 25 countries on a list of terrorist havens have had to register and periodically check in with the federal government. Supporters say the "special registration" program has proven successful in netting at least 11 suspected terrorists.

More than 13,000 of the men who came forward to register have been found to be living here illegally and could face deportation, according to the Bureau of Immigration and Customs Enforcement. The wave of cases suggests the degree to which the administration believes the immigration system can be used to weed out potential terrorists.

But immigration lawyers, Muslim groups, civil liberties activists and some Democrats have complained that the initiative smacks of racial profiling. They say it has led mainly to the arrests of law-abiding men who overstayed their tourist visas while waiting years for the INS to act on their green card applications.

Also within DHS, the TSA is now scrambling to complete criminal background checks on thousands of screeners whose pasts were not thoroughly checked before they were hired. It also is cutting thousands of screener positions to stay within budgetary limits imposed by congressional overseers who say the TSA has become a bloated bureaucracy.

In November 2004, all 429 of the nation's airports will be allowed to "opt out" of the federal system and instead use private screeners with TSA training. Airport managers and some lawmakers, including House Aviation Subcommittee Chairman John L. Mica, R-Fla., already are suggesting that the TSA should permit airports to opt out earlier.

The Weakest Link

TSA Administrator James M. Loy has promised that his agency will focus more heavily this year on securing other modes of transportation. But the TSA has come under fire this spring for seeking to divert port security grant money to pay for cost overruns in aviation security.

Indeed, although the Bureau of Customs and Border Protection has placed agents in major foreign seaports and now requires ocean carriers to send detailed manifests 24 hours before their cargo is loaded overseas, analysts continue to see shipping containers that come through U.S. seaports as a dangerously weak link in security.

Inspecting every container would grind international commerce to a halt, so the government has emphasized targeting those coming from lesser-known companies or from the least secure overseas ports.

But the Coast Guard, intended to be the lead agency on port security, is still waiting for funding to help it verify that foreign ship owners and port authorities are complying with last year's comprehensive port security law (PL 107-295). U.S. port authorities, meanwhile, say they are not receiving anywhere near enough federal funding to secure their own facilities. The law enacted last fall did not include a funding mechanism because the shipping industry lobbied fiercely for Congress to scrap a proposed user fee.

As Democrats have seized every opportunity to point out, the money woes facing the Coast Guard and local ports are just one example of a hard truth about the homeland security era: Everyone agrees on the need for more security, but there is wide dispute over how to pay for it.

CQ HOMELAND SECURITY

June 10, 2003 - 7:09 p.m.
Shipping Industry Anxious for First Glance at New Cargo Rule
By Jeremy Torobin, CQ Staff Writer

The Bureau of Customs and Border Protection still has not proposed a new cargo-reporting rule, and shipping industry officials say they are worried the delay could hamper their ability to lobby for changes before the final rule comes out this fall.
The proposed rule was supposed to be published in early June, but reportedly will not be ready until later this month.
The Trade Act of 2002 required the former U.S. Customs Service to draw up rules under which information on all cross-border cargo would be provided to Customs electronically before cargo enters or leaves the United States. The rule is supposed to be in place by Oct. 1, 2003.
Customs is not required to publish a draft rule by early June, but the agency and industry leaders had set that as a target for the draft to allow for the traditional 90-day comment period for major regulations.
"We think that the sooner they get them out the more time trade would have to review and provide meaningful comments, and the more time the government would have to make any adjustments that might be appropriate as a result of those comments," said Carol A. Fuchs, a member of a panel that advised Customs officials as they developed the rule. "We don't know when it will be out, but I was just told a few minutes ago that they are hoping to have it out by the end of June."
Fuchs, a government relations counsel at the Chicago-based law firm KMZ Rosenman, serves on the Treasury Advisory Committee on Commercial Operations of the U.S. Customs Service (COAC), a 20-member industry advisory panel created by Congress. Customs enlisted the committee to draft recommendations for the rule.
But since submitting those recommendations - which were considerably different than initial "straw man" proposals Customs officials floated in January - the group has essentially been kept in the dark.
"In that sense, we would prefer sooner rather than later," Fuchs said. "Frankly I think [Customs] would like to have them out as soon as possible, too."
Asa Hutchinson, undersecretary of Homeland Security for border and transportation security, told a cargo security conference in Nashville on Monday that the rule has been drafted and will be published by the end of June, pending a review by the White House Office of Management and Budget, according to the Journal of Commerce Online.

New Partnership to Deliver Homeland Security Alerts via Cell Phones

Only days after Department of Homeland Security (DHS) Secretary Tom Ridge promoted the idea of an emergency warning system that used cell phones, pagers, and other mobile systems, XSVoice, Inc. and AlertsUSA, LLC, announced a partnership that will seek to fill that niche, according to a 2 June PR Newswire report. XSVoice, a wireless platform and application developer, will work with AlertsUSA, a provider of homeland security alerts, to deliver immediate "threat information via live and on-demand audio broadcasts" from the DHS, the departments of Justice and State, the FBI, the National Infrastructure Protection Center, and other federal agencies. The service, which can currently be accessed by any cell phone user for a fee, initially alerts users via text messaging, permiting access to live or on-demand audio feeds of new security developments.

ANALYSIS: With an increasingly mobile society, government officials worry that the Emergency Alert System, which broadcasts alerts over television and radio, may not reach enough people in case of an emergency. AlertsUSA President Steven Aukstakalnis said, "More than 140 million Americans carry cellular telephones. The ability of this service to flash 'instant awareness' of official alerts and warning to such a large segment of the population is unmatched by any other form of delivery." XSVoice Chairman Jay Deragon added that, "Providing the American public with homeland security alerts and information is an important service. Our strategic partnership creates a unique and robust offering for consumers to stay informed as they become increasingly more mobile." Currently the service only keeps cell phone subscribers on top of homeland security developments, but the partners are looking to expand the service to additional wireless applications.

CQ HOMELAND SECURITY
May 30, 2003 - 8:32 p.m.
Thanks to Robert Byrd, West Virginia Turns from Coal to Homeland Technology
By Jim McGee

For two days last week, federal officials met privately at the Mountaineer Race Track and Gaming Resort in Chester, W.Va. to counsel local business owners on how to win homeland security contracts.
A resort town in the Mountain State might seem an unusual place for powerful federal agencies and executives from the nation's biggest defense contractors to send advisors to meet with potential subcontractors on federal contracts.
Not, however, when the contracts involve the technology of biometrics and home state Democratic Sen. Robert C. Byrd, 84.
So long synonymous with coal, poverty and Appalachian lore, West Virginia has spent a decade remaking itself into a national center of biometric research centers and start-up firms, with much help from Byrd, a Senate legend for bringing home the federal bacon.
Many states and business groups are vying for contracts with the new Department of Homeland Security and other agencies of the federal government gear up to spend vast millions on ID cards, border screening systems and other hi-tech safeguards that employ biometric technology.
West Virginia, though, stands at the front of the line, principally due to the influence of Byrd, the white-haired patriarch and senior Democrat on the Senate Appropriations Committee known to friends and critics alike as "the king of pork."
For over a decade now, Byrd has used his overarching influence on the appropriations process to dispatch hundreds of millions of dollars in federal spending related directly or indirectly to biometrics to his fellow West Virginians.
In the late 1980s Byrd championed moving the FBI's entire fingerprint and criminal records divisions to a new campus-sized facility in Clarksburg.
There, FBI contractors overseen by Lockheed-Martin assembled the complex parts of the Integrated Automated Fingerprint Identification System, a system that uses biometric technology to scan the digit whorls that are unique to every individual.
The FBI center laid the foundation for more federal spending in the Mountain State on university-level education programs and advanced research and development related to biometrics.

Be True to Your School
The nexus of these followup investments was the University of West Virginia in Morgantown. In 1997, the school developed an entire undergraduate degree program in biometric systems and forensic science, bolstered by a $3 million Justice Department grant.
By this time, the Republicans had lost control of the Senate and Byrd was back in the saddle as chairman of the Appropriations Committee. He resolved to have the Pentagon follow the FBI's footsteps.
In May of 2000, Byrd announced that he had put $27 million in the fiscal year 2001 defense budget for a new Department of Defense Biometric Fusion Center, to be lodged in Bridgeport, W.Va.
Companies that wanted to be players in biometrics noticed the trend. In August of 2000, industry leaders formed the Biometric Foundation, a Washington, D.C.-based association that says it sponsors research for the "guidance of industry leaders and experts." One of its first moves was to announce a working partnership with the University of West Virginia.
Appreciate it, Byrd said in a press release. "I hope that their combined efforts will complement my work with the Department of Defense."
A year later, in June 2001, Byrd announced that the Defense biometric center would be getting an additional $47 million for fiscal year 2002. It was also forming a working partnership with the Center for Identification Technology Research, another federally funded, biometrics incubator at the University of West Virginia.
Meanwhile, a high tech corridor blossomed along Interstate 79 in the northern region of the state. Recently, a major biometrics firm, Security First Corporation, moved into the area.

All Together Now
The commingling of politics, business, government and technology was distilled last week at the Mountaineer Race Track and Gaming Resort in Chester, home to "the world's largest teapot," in the work of a nonprofit corporation called Teaming To Win.
Launched 14 years ago, Teaming To Win consolidates the efforts of local firms in their pursuit of federal contracts. In anticipation of the May 28-29 conference, the Energy Department posted a notice on the government's main procurement Web site, fedbizopps.gov, announcing the date and location of the gathering.
"The conference is designed for West Virginia businesses seeking teaming relationships for the purpose of capturing federal and commercial contracts," it said. "Numerous federal agencies, federal prime contractors, and small businesses will be in attendance."
Inside the handsome resort's big meeting rooms, federal officials, company executives and local entrepreneurs could browse the exhibits and company booths, the alliance promised.
But the main attraction, DOE explained in its notice, was the chance local business owners would have to attend "one-on-one counseling sessions" with government officials and major defense firm executives who are likely to serve as prime contractors on the largest homeland security business offerings.

Winning Through Losing
During last year's debate over the creation of a new Homeland Security cabinet department, Robert Byrd was second-to-none in his opposition to the Bush administration's plan.
"If ever there was a need for the Senate to throw a bucket of cold water on an overheated legislative process that is spinning out of control," Byrd said July 22 on the Senate floor, "it is now.
That was then.
Now Byrd contends that the administration is not moving fast enough, at least when it comes to spending money on DHS projects that incorporate biometric technology.
At recent Senate appropriations hearings with senior officials from the Department of Homeland Security, Byrd has pressed to know why DHS was not moving faster and thinking bigger on projects that that incorporate biometric technology.
"The budget requests $480 million for the entry, exit system." Byrd told Border Security and Customs Commissioner Robert C. Bonner during a May 16 hearing. "In light of the recently announced biometrics component to the new U.S. Visits system, will this request be enough?"
Bonner said he wasn't sure.
In addition to pressing for more spending, Byrd has also pushed for DHS to include West Virginia in the mix.
At a May 6 hearing with DHS Science and Technology chief James McQueary, Byrd wanted a commitment that DHS would consult with the Biometric Fusion Center.
"On biometrics, Dr. McQueary, are you aware of the Defense Department's biometrics initiative?" Byrd asked.
Only generally, McQueary said.
The Defense Department is "quite active" in the field, Byrd said. "I hope that you will pursue that opportunity to build on the testing there."
"I assure you," said the undersecretary, "we will."

May 30, 2003
U.S. Cautiously Begins to Seize Millions in Foreign Banks
By ERIC LICHTBLAU

WASHINGTON, May 29 - The Justice Department has begun using its expanded counterterrorism powers to seize millions of dollars from foreign banks that do business in the United States, creating tensions with the State Department and some allies.
Law enforcement officials say the tool has proven invaluable in seizing ill-gotten money that criminals hide overseas and that was once out of the government's reach. Under the counterterrorism measures approved by Congress after the Sept. 11 attacks, prosecutors are not even required to trace the money back to the target of an investigation.
Officials at the State Department, however, have raised concerns over the practice - in part because most of the seizures have involved fraud and money-laundering investigations that are unrelated to terrorism.
State Department officials worry "that this might be seen by other countries as arbitrary or trying to extra-territorially impose our laws" under the guise of fighting terrorism, said a Bush administration official who demanded anonymity. Diplomats from several nations, including Switzerland, have voiced private objections, officials said.
The Justice Department has seized at least 15 foreign-based bank accounts in the United States in recent months, confiscating what prosecutors say they believe to be tainted money belonging to overseas banks in Israel, Oman, Taiwan, India, Belize and elsewhere, according to law enforcement officials who spoke on condition of anonymity. Other seizures are also being considered, officials said.
Justice Department officials acknowledged the diplomatic problems that can be created by seizing money from foreign banks, and they said they have sought to use the new power sparingly after considering all other legal options.
The authority to seize ill-gotten foreign funds "is a very powerful tool and one that can affect our international relationships," said Bryan Sierra, a spokesman for the Justice Department.
Mr. Sierra said that to protect the law enforcement relationships the United States has developed with governments around the world, the Justice Department "scrutinizes prosecutors' use of this provision before it is exercised."
The Justice Department has sent out guidance to prosecutors around the country about how to use the new power and has reached an informal understanding with the State Department to consult more extensively with officials there before seizing foreign money. State Department officials had complained that the Justice Department had kept them out of the loop in some cases.
"This is a process of last resort," said a senior law enforcement official. American diplomats "are worried about it, and we understand that, which is why we want to use this judiciously," said the official.
The State Department declined to comment on the issue. But a department official who spoke on condition o anonymity acknowledged that there was still the potential for abuse in foreign seizures, despite the Justice Department's pledges to consider diplomatic issues in its decisions.
"From a diplomatic point of view, we've got concerns," the official said. "We're the ones who have to ensure diplomatic relations, and this complicates that."
Traditionally in money laundering and terror financing cases, federal authorities have worked through international law enforcement treaties in requesting that a country that is home to a foreign bank move to freeze "dirty money" and turn it over to the United States. In countries with no treaty with the United States, American authorities say, their efforts often ran into dead ends.
But a little-noticed provision in the sweeping antiterrorism legislation passed in October 2001, gave federal authorities in such cases the power to seize money that passes through banks in the United States without notifying the foreign government. Most overseas banks maintain what are called "correspondent accounts" in American banks, allowing them to exchange American currency and handle other financial transactions in this country. Section 319 of the Patriot Act, as the legislation that grew out of the Sept. 11 attacks is known, allows federal authorities to seize money from the foreign bank's correspondent account if they can convince a judge that the money deposited overseas at the bank was obtained illicitly.
Information about the seizures has been tightly guarded, and federal judges have sealed the records on most of them. The Justice Department acknowledged two cases in which authorities have seized a total of more than $2 million from foreign banks, but declined to give the total number of seizures.
Law enforcement officials said the Justice Department had employed the new tool in about a half-dozen investigations, seizing money from at least 15 bank accounts. Most of those came in recent months and involved fraud and laundering cases, officials said. Law enforcement officials said some of the seizures have involved money that they suspect was helping to finance terrorism, but they declined to discuss details. Officials also see the measure as a potentially powerful tool in seizing money from drug traffickers.
In a case that resulted in a guilty plea in federal court this week, federal authorities seized $310,000 from four banks in the New York City area that held correspondent accounts with foreign banks in Oman, India, and Taiwan.
In seizing the money, the authorities charged that a Sudanese citizen in Brooklyn, Ahmed Abdu, had illegally wired more than $5 million to bank accounts around the world. It was the first time the seizure tool had been used by federal prosecutors in New York's Southern District.
Mr. Abdu pleaded guilty on Wednesday to a charge of conspiring to run an unlicensed money transmitting business and faces up to five years in prison. The authorities seized the $310,000 from four banks in the New York City area that held correspondent accounts on behalf of overseas banks: Citibank, Standard Chartered Bank, Deutsche Bank, and HSBC Bank USA.
"It was a strange thing for the banks," said a financial investigator with the Bureau of Immigration and Customs Enforcement in New York who spoke on condition of anonymity. "There was resistance initially, because they weren't exactly sure what to do. They'd never seen something like this before."
The seizure power has opened up doors once closed in financial crime investigations, the investigator said. "Now we can get ahold of money where we couldn't before," he said. "But we proceed very cautiously. It's such a powerful tool, you could knock the economy of a country on its head if it were a big enough case."
A seizure in Belize, centering on a lawyer and financial manager who was accused of embezzling money from his clients, has become a model for how the law can be applied, officials said.
The lawyer, James Gibson, was accused of bilking clients out of millions of dollars and then fleeing to Central America. Prosecutors said that Mr. Gibson, indicted by a federal grand jury in 2001, deposited some of the money in banks in Belize.
Although the government of Belize initially agreed to freeze the money, a court there blocked the move, and prosecutors said they believed that Mr. Gibson and his wife were looting the accounts to buy yachts and other luxury items.
But after the passage of the Patriot Act, the Justice Department moved within weeks in late 2001 to seize the money from the Belizean banks' correspondent accounts in the United States, according to a report prosecutors gave Congress last week on the new law enforcement powers.
Officials said that the money seized from Belize totaled about $1.7 million, and that it would be used to compensate Mr. Gibson's victims.
Charles A. Intriago, a specialist in money laundering law in Miami who publishes Money Laundering Alert, said he considered the Justice Department's new power to seize foreign bank accounts "maybe the most startling provision of the Patriot Act." He said: "It's an awesome power, and it may even go too far because of the diplomatic problems it could cause."
But Mr. Intriago added that he did not fault the Justice Department for considering the new tool in a range of fraud, laundering and drug trafficking cases that are unrelated to their counterterrorism mandate.
"If Congress had wanted this tool to be limited to terrorism, it would have done so," he said. "It didn't."

May 28, 2003
Report details homeland security contracting opportunities
By Bara Vaida, National Journal's Technology Daily

Only nine of the 12,500 companies that proposed homeland security technologies for the Defense Department after the Sept. 11, 2001, terrorist attacks received funding, demonstrating just how risky investments in that market may be, according to one investment firm.
To help venture capitalists and corporations determine how to better target their dollars in the market, the Washington, D.C.-based homeland security investment firm O'Gara Company on Wednesday unveiled a guide http://www.ogara.com/pressrelease.html for determining where federal dollars will be spent and where the likely growth areas in the sector are.
"We wanted to understand what was driving this market, and so we created a roadmap to understand what the opportunities may be," said Tom O'Gara, founder and chairman of the firm.
While the Homeland Security Department has a fiscal 2003 budget of $28.2 billion and that is projected to rise to $36.2 billion in fiscal 2004, O'Gara Company has estimated that the actual market for federal security contracts is only $6.13 billion in fiscal 2003 and $7.21 billion in fiscal 2004.
Most of the remaining money is being spent on personnel and other costs of operating the department and hence is not available to private contractors, according to the report.
The report identifies the areas most likely to provide the highest investment returns for corporations and venture capitalists as cargo-screening technology, equipment for "first responders" to emergencies, multi-model cargo security for tracking and authentication, aviation screening technology and physical security upgrades.
The areas least likely to provide high returns involve integration of the Homeland Security Department and in the intelligence community, law enforcement intelligence training, identification systems for national and population segments, and state and local intelligence sharing, the report said.
O'Gara also warned companies that Homeland Security is trying to make decisions about the best technologies even though it has existed only five months, and hence in the short term officials are likely seeking off-the-shelf technology solutions with proven markets, not new technologies.
O'Gara noted that many technology companies have come to Washington offering security technologies but so far have been frustrated with the Bush administration's follow-up to requests for ideas. He described the Homeland Security officials charged with private-sector outreach-Homeland Security Undersecretary of Science and Technology Charles McQueary and Al Martinez-Fonts, special assistant to the secretary in the Office of the Private Sector-as currently being public-relations specialists without any real power to help companies get contracts.
Despite that difficulty, the report said some companies are making money in the market. To demonstrate, it identified 30 "pure play" security companies-such as CACI, Entrust, Intergraph and Symantec-that have seen an increase in their market share since Sept. 11.
As to frustrations that money has yet to begin flowing to the private sector, O'Gara said, "Politically, I think homeland security money will be flowing by the summer of 2004," before the presidential election. "Homeland security money is like God and country."

Feds Need Help in Responding to Threats: Treasury Official

Although the federal government will work to share threat information with the financial sector, financial institutions and state and local agencies will carry much of the burden if a threat emerges against a specific firm, Treasury Department Deputy Assistant Secretary for Critical Infrastructure Protection and Compliance Policy Michael Dawson said on 21 May. Dawson said the Treasury Department had been asked by a "critical financial institution" about whether there is a "coordinated federal, state, and local response to protect the critical institution if a specific and credible threat against it were to emerge." There is no such plan, Dawson said, and even though "many of the agencies who would be involved in protecting the institution did, in fact, have a plan for what they would do," they "had not coordinated this plan with all of the agencies that they needed to." To address the institution's concerns, Treasury "agreed to jointly host an all-day exercise where we would outline a coordination plan," and recently "brought together...every agency that would likely have a role in protecting the institution."

ANALYSIS: Although the federal government "should work to share timely threat information with state and local law enforcement authorities and, where possible, the private sector," it needs assistance in responding to this threat information, Dawson noted. The exercise held by Treasury showed that "the state and local authorities would be the first protectors on the scene," and "would be the ones with detailed knowledge about the institution and its environs." The drill also highlighted the responsibility of the institution itself, which "would have to actively participate in its own protection, working with local authorities to help them identify vulnerabilities and to find ways of carrying on their business despite the increase in physical security." Treasury will use the exercise to "develop a plan" for responding to this type of threat, Dawson said.

Treasury's terrorism risk insurance program working: official

The executive director of the U.S. Terrorism Risk Insurance Program (TRIP), Jeffrey Bragg, told the National Council on Compensation Insurance's Annual Symposium on 15 May that his organization has made progress toward ensuring the availability of terrorism coverage for those entities that desire it, but that challenges remain. Bragg said the Office of Financial Institutions Policy "has been extremely active in implementing the regulations necessary to support the [Terrorism Risk Insurance Act of 2002]," issuing "four interim guidance notices and two interim final rules." In the future, Bragg said TRIP will recruit and hire staff; establish procedures for claims, audits, enforcement, and policy surcharge recoupment; and issue final rules. Treasury will also "establish a virtual company that permits us to form new partnerships with the private sector, harnessing the insurance industry's talents and skills to make this an effective streamlined operation" rather than "creating a huge infrastructure," Bragg said.

ANALYSIS: The Terrorism Risk Insurance Act, under which the federal government is required to pay 90 percent of terrorism-related insurance claims above a certain amount until 2005, "has begun to have its intended effect, resulting in a drop in rates for terrorism coverage and broader coverage being offered by insurance policies," Mortgage Servicing News quoted Moody's Investors Service as saying. Moody's also said that insurance brokers "have reported terrorism insurance quotes ranging from 10 percent to 30 percent of the cost of a property's overall property and casualty insurance, which is 'half or less of where they were one year ago.'" The challenges still facing TRIP include: "adverse selection; spotty state regulation; continued lack of reinsurance availability; [and] huge exposures particularly in worker's compensation coverage."

From the "Congressional Quarterly Homeland Security Daily," 20 May:

Banks Say Cops Aren’t Calling Them About Terror Money

Bowing to resistance from large banks and financial trade associations, the Treasury Department's Financial Crimes Enforcement Network (FINCEN) announced Monday it is extending a May 31, 2003, deadline for requiring all financial institutions to begin including the true name and address of customers on all wire transfers over $3,000. Big hitters in the industry have argued that the cost of reprogramming their systems is not justified by the “paucity” of requests they receive from law enforcement agencies for customer information about numbered wire transfers, FINCEN said in the May 19 Federal Register. "Given their other Patriot Act tasks, they believed it would be impossible to complete such reprogramming before the deadline,” said the notice, which announced that the deadline for compliance would be extended to Dec. 1, 2003. -Jim McGee

Treasury Department reports on revision process for anti-money laundering regulations

While financial institutions have done a "remarkable" job of implementing Treasury Department-promulgated anti-money laundering regulations, they have requested more information and guidance to ensure the new regulations are helping to prevent terrorists from exploiting the U.S. financial system, a Treasury official said on 14 May. Michael Dawson, Deputy Assistant Secretary for Critical Infrastructure Protection and Compliance Policy told the Bank Secrecy Act Advisory Group that financial institutions and their industry groups have "pleaded with us for more information-as specific as possible-that would indicate that their commitment of time and resources is helping us win the war on terror." The Treasury Department's USA PATRIOT Act Task Force, formed in September 2002, has been examining regulations issued as required by the PATRIOT Act to determine how they can be improved and more effectively implemented. Dawson said that while "there are limits to what information we can share...it is in the government's best interest to provide financial institutions with this information." According to Dawson, the "principal challenge is to work together within these constraints to develop and share information that helps maximize the effectiveness of the regulations and sustains the strong private sector commitment to fighting terror."

ANALYSIS: The PATRIOT Act Task Force has not completed its work, Dawson said, although the best suggestions received from industry are being presented to high-level Treasury officials for review. "We expect the project to generate several specific improvements to the Act and its implementing regulations and practices," he said.

From the "Congressional Quarterly Homeland Security Daily," May 12, 2003

Hutchinson Urges Business Not to Be Lackadaisical on Security

Warning that “too many CEOs and entrepreneurs still believe security is a low priority,” Asa Hutchinson, undersecretary of Homeland Security for border and transportation security, called for “a cooperative, public-private partnership beyond any we’ve seen since World War II.” In a May 7 speech to the Economic Development Administration, Hutchinson also outlined measures taken by government and business to improve supply chain security. Also that day, the former Drug Enforcement Agency chief spoke to the Association of American Chambers of Commerce in Latin America, pledging to work through bilateral agreements like the U.S.-Mexico “Smart Borders” program to make sure the southern border is “open for business, secure for the flow of people, and closed to organized crime and terrorism.” - Jeremy Torobin

• Text of Hutchinson’s speech to the Economic Development Administration

http://www.dhs.gov/dhspublic/display?theme=44&content=626&print=true

From the "Congressional Quarterly Homeland Security Daily," 8 May:

Gold in Them Hills: West Virginia Hosts Homeland Business Fair

West Virginia Democratic Sen. Robert C. Byrd railed against the creation of a homeland security department last year, but who’s keeping score? Now everyone wants in on homeland security business, including entrepreneurs in his home state, and Byrd seems eager to help them. So now, West Virginians eager to win federal contracts related to homeland security and other concerns will gather May 28 and 29 for the state’s 14th annual “Teaming To Win” conference at the Mountaineer Resort and Gaming Center in Chester, W.Va. Teaming to Win is a 501(c)(6) nonprofit organization that says it sponsors activities aimed at helping “smaller firms pursue federal contracts as a group.” This year, the conference theme will be biometrics, a hot homeland security market. A major attraction is the chance to get one-on-one counseling on the contract chase from officials of 30 federal agencies. Another is the promised presence of Sen. Robert C. Byrd, D-W.Va. (ranking Democrat on the Senate Appropriations Committee) and Rep. Alan B. Mollohan, D-W.Va. (a member of the House Appropriations Committee). Conferences that staged similar network opportunities have been held recently in other states, including Florida and Rhode Island. - Jim McGee

Company awarded contract to support Army development of WMD countermeasures

VERSAR Inc., announced on 6 May that "its homeland defense pillar subsidiary, GEOMET Technologies, LLC," had been awarded a 5-year contract with a ceiling value of $500 million "to provide Analysis and Testing support to the U.S. Army Edgewood Chemical Biological Center's (ECBC) Research and Technology Directorate." The contract "will allow GEOMET to support the ECBC R&T Directorate in developing analytical methods and state-of-the-art techniques used for the analyses and characterization of chemical and biological agents in military and environmental samples," a statement reports. Ted Prociv, VERSAR President and CEO, said VERSAR will "use its laboratory experience and engineering capabilities in support of the Army's goal to design and develop better systems and equipment for the protection of our soldiers and citizens against the threats of chemical and biological weapons."

ANALYSIS: According to the U.S. Army Soldier and Biological Chemical Command, the Edgewood Chemical Biological Center is the "principal R&D center for chemical and biological defense technology, engineering, and service," for the Army. The Center's strategic plan notes that the ECBC "provides CB solutions to the warfighter and to U.S. civilian authorities at all levels of government." According to VERSAR, the ECBC R&T Directorate "combines basic and applied research with engineering to identify and develop technologies applicable to present and future defense against Chemical and Biological agents and weapons of mass destruction."

April 29, 2003
Former Domestic Security Aides Switch to Lobbying
By PHILIP SHENON

WASHINGTON, April 28 - When Tom Ridge arrived here after the Sept. 11 attacks and opened the White House Office of Homeland Security, the former Pennsylvania governor quickly surrounded himself with a group of trusted deputies, many of them drawn from the staff he assembled as governor.

But when Mr. Ridge was sworn in this year as the first secretary of homeland security, some of his inner circle did not follow. Instead, they emerged as lobbyists whose corporate clients want contracts from Mr. Ridge's multibillion-dollar agency.

Lobbying disclosure forms filed in Congress show that at least four of Mr. Ridge's senior deputies at the White House are now working as "homeland security" lobbyists, as is a chief of staff from his days as Pennsylvania governor.

They are a small part of a booming new lobbying business in Washington that is focused on helping large corporations get a share of the billions of dollars that will be spent by the vast domestic security bureaucracy that Mr. Ridge oversees.

The Homeland Security Department, with a budget of about $40 billion this year, and Mr. Ridge are obvious targets for an array of industries and their lobbyists in the capital.

"My one year is up, so I can lobby him and lobby the White House and lobby the Hill," said Rebecca L. Halkias, who was Mr. Ridge's legislative affairs director in the White House, referring to her former boss and to the one-year ban on contacts between former senior government officials and their colleagues.

Ms. Halkias, who also managed Mr. Ridge's Washington office when he was governor, is now a partner in a lobbying company, C2 Group, and Congressional filings show that her clients include Tyco Electronics, which would like to sell its wireless communications systems to government emergency response agencies.

"I'm not really comfortable talking about homeland security lobbying," Ms. Halkias said in a brief telephone interview, refusing to answer most questions. Asked if she was concerned about any conflict of interest in lobbying Mr. Ridge, she said, "This conversation is over," and hung up.

There is nothing unusual about former government workers lobbying their old colleagues. The surprising thing about Mr. Ridge's former aides is how quickly they chose to take up new careers as domestic security lobbyists.

Mr. Ridge's spokesman at the Homeland Security Department said that he was giving no special attention to products that were being promoted by lobbyists who had worked for him at the White House or in Pennsylvania. And there is no evidence that he is.

Brian Roehrkasse, a department spokesman, said that "all of the organizations that the Department of Homeland Security chooses to do business with will be judged upon the merits of their work, not on their relations with officials in the department."

Because lobbyists face few requirements