For some firms, security work was a pronounced niche long before 9/11. "We've been a firm in this area for 15 years," says George Anastos, executive vice president of Springfield, Va.-based Versar Inc.'s AEC group. The firm has worked extensively for military and federal clients whose security consciousness was raised long before last year. It continues as a major player in anthrax decontamination and has developed other strengths. "We manufacture suits that federal first responders use," he says.
RTKL Associates, Baltimore, also has had a steady stable of federal clients, such as the Defense Intelligence Agency, with "high-end security design issues," says David V. Thompson, vice president. "Most business development then was nonexistent. It was all word of mouth," he says. "Three years ago, we put our experience in a format to use for marketing, but it went to a limited audience."
Other firms also slowly began touting their security capabilities as events such as the 2000 attack on the U.S.S. Cole in Yemen and suicide bombings in Israel presaged the U.S. terror events. Black & Veatch, Kansas City, already was including security considerations in its consulting work on an Israeli water treatment plant, says Allen Rose, vice president of its special projects group. Private-sector clients in the U.S. also were requiring engineered protections for everything from proprietary research at universities to newborn infants at hospitals, says Alan Wong, Omaha-based HDR's national client service manager for security.
But 9/11 was the watershed event that unleashed security as an identifiable need and marketable niche. AEC firms with security-related capabilities scattered through their organizations needed to determine just where the expertise resided and how to approach clients. "After the initial shock, we held a meeting to see who knew what about security," says Bill Wallace, global program manager for security at CH2M Hill, Denver. "We then started thinking about what sort of effort to make. We didn't know then it would turn into a market." HDR also convened a "strategic planning session, to ask ourselves how the events of 9/11 might impact our industry and our business," says Wong. "How do you approach an opportunity driven by a national crisis? But clients were also saying they could not afford to have facilities compromised. We had to share what we know."
For many firms, the security push was deja vu of Y2K. Carter & Burgess, Fort Worth, found that a Y2K global airport tracking tool it developed in 1999 for American Airlines, but never used, came in handy after 9/11. "It brought a lot of practices and processes together," says Eric Dillinger, vice president and national director of facilities management.
Rumors in fall 2001 of hundreds of millions of dollars in immediate federal outlays to fortify infrastructure security got the attention of many AEC firms, but the reality since then has been something else. Airport enhancements have been moving fastest, but spending in other infrastructure areas has mostly been on low-tech "gates and guards," industry sources say.
But new federal deadlines and funding for "vulnerability assessments" on large water systems and dams is starting a wave of AEC competitive activity (see p. 12). While assessment jobs generally are less lucrative, upfront work, firms say some owners are going beyond the basics. Denver's water utility is spending at least $500 million for upgrades that will include security fixes, says Ed Wetzel, vice president of Montgomery Watson Harza, Broomfield, Colo., which was shortlisted for the hotly-competed job. URS Corp., San Francisco, is focusing on state and local entities, which also are self-funding risk assessments or getting help from the Federal Emergency Management Agency, says Clay Baldwin, senior vice president. States also are moving to require assessments of facilities, such as powerplants in New York and chemical plants in New Jersey, executives say.
With client interest and peer competition growing, some industry firms are organizing security capabilities into distinct units and increasing marketing budgets. "We've set out security as its own service area," says B&V's Rose. "It goes after specific clients for specific security services."
URS Security Group was formed last April to link security capabilities that its parent has gained through numerous acquisitions, says Baldwin. "The group is still a bit fractured, but we have about 200 people actively working on security projects," he says, adding that he will be meeting this week with officials at URS' latest purchase, EG&G Federal Services Inc., to determine what security offerings it may have. Versar has made a "major investment in expanding marketing and has doubled the revenue base in the last year," claims Anastos.
More firms are adding "RAM-W" and "hardening" to their lexicon of services and are developing new security-only marketing materials, particularly at key shows such as the Society of American Military Engineers and American Water Works Association.
Others are hiring former top officials from federal agencies to launch security programs and impress clients. "We were getting calls from headhunters pitching experts," says C&B's Dillinger. "Companies that have them covet them. They're a calling card." CH2M Hill prominently displays a roster of "security experts" in its "comprehensive security solutions" packet. They include Jeffery Peacock, a 30-year CIA veteran who ran bureaus in the Middle East and Doss Von Brandenstein, former vice commander of the Air Force Security Forces Center.
URS recently hired Michael Burton, the former New York City building official who managed the cleanup at the World Trade Center site and who was ENR's Award of Excellence winner for 2002. But URS's Baldwin would not reveal the names or affiliation of two other executives "from the federal side" who will be joining the firm, possibly as early as next month.
While secrecy forced by competitive forces and client mandates leaves some details of the industry's security projects vague, firms no longer are shy about promoting capabilities. CH2M Hill joined hundreds of major security service firms and small gadgeteers for the first time to exhibit at this year's American Society for Industrial Security convention in Philadelphia, a mega-show in the security business that just happened to fall over the 9/11 anniversary.
The firm also anted up to co-sponsor a keynote address, which allowed it to leave, on more than 2,500 attendee chairs, a press release announcing its new "GeoProtect" security software. As a new exhibitor, CH2M Hill was relegated to the exhibit hall's lower level, but Peacock says the investment "went over well" and attracted interest in CH2M Hill from security firms seeking entree into municipal markets through risk assessments.
With the market so fast paced and firms needing or offering specialized capabilities, alliances are de rigeur for many companies. C&B is part of a group called SecureTeam that focuses on the aviation market with members that include PriceWaterhouseCoopers and Siemens. "We are strategically partnering in ways that make sense," says Dillinger.
MWH in April signed a "strategic alliance" agreement with SAIC Corp., San Diego, to join forces on assessment and infrastructure work. But Wetzel emphasizes that concern by both firms over terrorism exclusions in insurance limits certain jobs to the U.S. only.
URS has no formal alliances, but has teamed with defense contractors such as Raytheon Corp., Waltham, Mass., and Northrup Grumman, Los Angeles, on some deals. "We don't want to be locked into one firm," Baldwin says.
Others are hooking up with boutique vendors to gain specialized expertise. HDR is on a team led by Westin Engineering Inc., a water system technology firm in Sacramento and Dallas, that last week won a contract to set up the Water Information Sharing and Analysis Center, a water system security clearinghouse.
RTKL aligns with firms to gain expertise as needed in areas such as blast security, traffic management and chemical-biological hazards, says Thompson. Versar's Anastos says it is getting more alliance requests from industry firms on federal and military contracts.
Public-sector owners are more clearly committed to making security considerations mandatory in AEC procurement. "It's part of the selection criteria for design firms to have on board someone with an understanding of security," says Robert Hixon, head of engineering and construction for the U.S. General Services Administration.
But private owners are less enthusiastic. "The lack of guidance could slow private-sector response and investment. Owners don't know the rules yet," says Frank Coffman, senior vice president at Holmes & Narver, Orange, Calif. "They don't even know who to ask because agencies don't know yet if they are responsible." Some owners are fighting possible new security requirements from Congress. A plan to have the U.S. Environmental Protection Agency oversee refinery security is strongly opposed. "It is overly prescriptive in an area in which EPA has no expertise," says Michael Shanahan, a spokesman for the American Petroleum Institute.
Uncertainties in federal funding and the economy will cloud some security niches. Small water systems serving 50,000 persons are supposed to have risk assessments done by December 2003, "but there's very little activity," says MWH's Wetzel, adding that the firm is not planning to be as aggressive in that sector.
But other industry firms believe the overall market is here to stay. HDR has seen 500% growth in security revenue in the last year, says Wong. Its Center of Excellence for Security has doubled in size. "We see this so-called market evolving over the next five years," he says. "We don't believe it has peaked because there is a tremendous amount of research out there to develop more effective technologies."
Others see a more fundamental impact. "We have to look at things holistically, not just from a security standpoint," says RTKL's Thompson. Adds CH2M Hill's Wallace: "How big the market will be is the wrong question. Over time, this will change the way we do infrastructure."