Securing the Future of Defense and Homeland Security

01 Aug, 2012

In This Article

Funding challenges won’t slow the expansion of homeland security activities.

By Mark Kleszczewski

Though defense spending faces shifting priorities and looming budget “sequestration,” parts of the defense and homeland security industry continue to grow. Despite the added uncertainty of an election year, new innovations and initiatives between the military, communities and the private sector are proving that partnerships are a key tool to thriving in today’s challenging defense and security economy.

Challenges And Opportunities

One of the biggest problems currently facing Defense of Department (DoD) and homeland security suppliers — and the communities where they are clustered — is funding uncertainty and the lead time needed to adjust to new priorities.

By the National Defense Industrial Association’s estimates, if no further legislative action is taken before January, the Budget Control Act will direct a reduction of $97 billion in discretionary federal spending for FY 2013, including defense. Subsequent defense cuts are expected to decline by $55 billion per year, with reductions gradually falling to $32 billion by 2021.

Yet according to the Congressional Budget Office (CBO), overall DoD discretionary funding is projected to grow 1.8 percent annually between 2010 and 2015 based on current policy. Furthermore, financial services firm Morgan Keegan calculates that the homeland security niche is expected to grow 12 percent annually through 2013. Other emerging areas of growth in the industry include renewable energy, cyber security and next-generation “agile” goods and services.

Turning Guns Into Green

The Army’s Armament Retooling & Manufacturing Support (ARMS) program is a highly successful example of the government recovering a portion of its massive investment in defense infrastructure by partnering with local communities to benefit from available military property and equipment.

One ARMS complex on the upswing is located at the Milan Army Ammunition Plant (MLAAP) in western Tennessee, spanning 22,000 acres and offering more than 1 million square feet of working space and storage facilities.

“Although we still retain production for surge capacity, we’ve been transitioning to a commercial complex where private companies can locate in a very unique facility with help from the public sector,” says Amy Allison, deputy director of business development, Milan Commercial Complex – MLAAP. “The unique synergies and incentives here make our entire facility marketable to industries beyond just defense.”

What differentiates this type of site from typical industrial parks, Allison notes, is high security and extensive specialized infrastructure such as industrial x-ray and environmental labs, test ranges and machine shops. As a result, in addition to defense contractors, the facility has attracted energetics manufacturers, rail services and a highly-specialized motor carrier group.

In the mid-Atlantic region, Virginia Beach, Va., has been deepening long-standing ties to the military to great effect. Two notable local developments this year have been the expansions of AMSEC — a subsidiary of shipbuilder Huntington Ingalls Industries, and ADS — a provider of custom operational and tactical equipment.

“With the world’s largest concentration of active duty military, we have a huge talent pool and access to both service members as well as decision makers here,” says Scott Hall, business development coordinator, Virginia Beach Economic Development. “Of course, it’s a very fluid situation from a federal budget perspective, but private defense businesses are still going strong in our area.”

“The city has also been really proactive in working with the military,” Hall adds. “When the needs of Naval Air Station Oceana were brought up during the 2005 BRAC discussion, the city came up with a very unique plan to deal with the order to eliminate incompatible use property and reduce encroachment around the base.”

Under the city’s initiative, local leaders crafted an award-winning solution that didn’t use the power of eminent domain, but instead applied relocation incentives and zoning regulation tools in a creative way. “Thanks to the collaboration between the city and state,” Hall says, “we were successful in reducing non-conforming encroachment around the base and providing both the Navy and us a good response to their concerns.”

In Ohio, where the Air Force Research Laboratory at Wright-Patterson Air Force Base (WPAFB) generates cutting-edge aerospace innovations, the declassifying and commercialization of technologies is being put to good use in nearby Dayton.

Groups such as Wright-Patterson 2020, Dayton Development Coalition and Wright State University have partnered with industry leaders Science Applications International Corp., Radiance Technologies Inc. and others to grow Ohio’s aerospace and defense workforce while turning technology into commercial products. The Institute for Development and Commercialization of Advanced Sensor Technology is another organization working to develop and integrate advanced sensor technology for defense, homeland security and commercial applications.

Redeploying Resources

Two trends in the defense and homeland security industry worth noting are the acceleration of DoD outsourcing to the private sector and the emerging growth of new subsectors, thanks to technological developments and increasingly sophisticated domestic and foreign threats.

“There’s a lot of DoD interest in innovation and investment going on, certainly on the renewable energy side,” confirms Thomas Swoyer, Jr., president, Infinity Development Partners. “Energy is where private industry and defense innovation can come together and give the military tremendous operational flexibility while reducing the ‘contractor tail.’”

In addition to direct procurement, Swoyer explains, the DoD’s tools to achieve their goals include Energy Savings Performance Contracts, Utility Energy Service Contracts, Power Purchase Agreements and Enhanced Use Lease projects. It’s less expensive and risky for the government to just buy the electricity, he says. With this approach, there’s no need to employ the people to produce it or invest taxpayers dollars in building capital-intensive assets — both of which the private sector can do.

Cyber Security Takes Off

Market research firm INPUT projects growth in the federal IT market to $98 billion in 2013, with demand for information security products and services by the federal government — including civilian, defense and intelligence agencies — increasing to $11.7 billion in 2014. In the private sector, as financial service companies, online retailers, universities and creators of intellectual property need to better protect valuable information, the commercial market for cyber security is expected to surpass the government market in short order.

One region that stands out in this subsector is Maryland which hosts 13 higher education institutions designated by the National Security Agency and Department of Homeland Security as National Centers of Academic Excellence in Information Assurance education and research.

“Cyber security is one of the areas that has not seen any cuts,” says Patrick Tonui, program manager, Maryland Department of Business & Economic Development. “In fact, thanks to anchor of Fort Meade, along with the related innovation and technology throughout the region, it’s a growth sector for us.”

In 2009, Bethesda-based Lockheed Martin opened its NexGen Cyber Innovation and Technology Center in Gaithersburg, to serve as a cyber research and development facility, while 2012 saw the launch of a new National Cybersecurity Center of Excellence — hosted by the National Institute of Standards and Technology in collaboration with the state and Montgomery County.

Recent initiatives like the Maryland Cyber Challenge & Conference (MDC3), says Tonui, are among those being created to help to elevate the visibility of the industry and make Maryland a leader in this critical field.

Elsewhere in the state, General Dynamics opened its new 28,000-square-foot Cyber and Intelligence Solutions Center earlier this year in Annapolis Junction, which also features an EDGE Innovation Center, part of a company-sponsored, worldwide innovation network.

“This center is all about bringing the best and brightest cyber technology minds together to develop innovative and relevant technologies that will keep the U.S. and its allies in front of ever-present and increasing threats,” says Chris Marzilli, president, General Dynamics C4 Systems.

Built to serve the unique needs of the DoD and the intelligence community, the center provides a highly secure and flexible environment for customers at the Ft. Meade-based National Security Agency and U.S. Cyber Command as well as federal and civilian industry partners focused on protecting the nation’s intelligence and thwarting threats in cyberspace.

Time To Adapt

“We’re seeing a lot of growth and demand across the board, not just with the DoD, but everyone who’s got information to protect,” Tonui says. “Today that’s just about every area you can imagine — back office, healthcare, biotech, and so on. So we’re taking old strengths in a new direction.”

“The shift in attention over to the Pacific Rim is a reality we’re going to have to face going forward,” Hall says. “Activity in the defense and homeland security industry may be thriving in a different way here than in the past, but even with a rapidly-changing environment, we think our area will remain a vital part of the overall national defense strategy.”

Mark Kleszczewski is president and CEO of GoBusiness Group LLC and a freelance writer on critical business topics. He can be reached at

For complete details on the organizations featured in this article, visit:

Dayton (Ohio) Development Coalition

General Dynamics C4 Systems

Infinity Development Partners

Maryland Department of Business & Economic Development

Milan Commercial Complex – MLAAP

North Coast Marine Manufacturing Alliance

Virginia Beach (Va.) Economic Development

Raising The Tide To Lift All Boats

Despite looming defense budget cuts, communities with strong ties to manufacturing can take advantage of their production heritage in the sector by joining forces and investing in specialized skills training.

One such successful effort is centered around Marinette County in northeast Wisconsin — home to seven marine manufacturing companies, including industry notables Marinette Marine Corp. (MMC), ACE Marine, Bay Shipbuilding Co., Burger Boat Co., Cruiser Yachts, Marquis Yachts, and Palmer Johnson Boats.

An aging workforce and skilled worker shortages in nearly all areas of the industry prompted the companies to join together with Northeast Wisconsin Technical College (NWTC) and two other higher educational institutions to form an industry sector partnership, the North Coast Marine Manufacturing Alliance (NCMMA).

“It is my intent that we will be the ‘great lakes shipbuilding training center,’” said Dr. H. Jeffrey Rafn, president, NWTC, in a public statement. “We stand ready to train the marine manufacturing workforce. Not only incumbent workers, but new workers.”

NWTC together with the Alliance and MMC, celebrated the opening of the NWTC North Coast Marine Manufacturing Training Center back in February. With U.S. Navy contracts to construct multiple Littoral Combat Ships and other modern naval vessels underway, MMC is the first marine manufacturer to utilize the 16,000-square-foot learning facility based in Marinette.

“MMC has a high demand for skilled workers, and we are fortunate to have the opportunity of teaming with NWTC and NCMMA to meet these needs,” says Chuck Goddard, MMC president and CEO.

Through a two-year agreement with the company, NWTC is providing 130,000 hours of training to the MMC’s new hires and incumbent workers, focusing on electricians, ship fitters, welders, and pipefitters. Thanks to the partnership, the facility will be also available to meet the training needs of the region’s other marine manufacturers which collectively employ more than 6,000 people locally.

For complete details, visit

Mark Kleszczewski

Mark Kleszczewski is president and CEO of GoBusiness Group LLC and a freelance writer on critical business topics. He can be reached at

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