Companies Clamber for Homeland Security Cash

With peace on earth looking like a pipe dream, American companies are scrambling to capitalize on an estimated $38 billion of government money earmarked for homeland security next year.

Many sectors -- especially security, software and defense -- stand to benefit. From smaller firms, such as Identix (IDNX Quote), a maker of facial-recognition and fingerprint technology, to giants like Oracle (ORCL Quote), scads of companies are strategizing about spending.

The funding may end up being a boon for smaller companies in particular. A provision in the homeland security legislation requires government agencies to find small businesses and new market entrants to help fulfill contracting requests from the private sector.

President Bush in November signed the legislation that would create a new Homeland Security Department, bringing 22 government agencies, including the Immigration and Naturalization Service, Secret Service, Customs Service and Federal Emergency Management Agency, under one umbrella.

The plan, which hasn't yet received full Congressional approval, includes $38 billion for 2003 to combat bioterrorism, secure U.S. borders, improve information-sharing technology within the government and support first responders, such as firefighters, police and emergency medical teams.

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Identix, for one, is looking to take advantage of the government's initiative to make the nation's borders more secure. The company is aiming to win contracts to implement its biometric offerings -- either fingerprint or face-recognition technology -- on U.S. passports and visas.

In November, the Defense Department selected Identix and defense contractor Northrop Grumman (NOC Quote) for a second round of testing of its fingerprint technology for an identification card that would allow active-duty military personnel access to buildings and controlled spaces.

Oracle, meanwhile, has testified four times on Capitol Hill since the Sept. 11 attacks about the importance of security technology. Its ties to government go back to its founding 25 years ago, when it set up its first database program for the Central Intelligence Agency. Now, the company is looking to provide software and database solutions for the Homeland Security Department.

"Many of the systems that support border control and transportation systems already run on top of Oracle," said Steven Perkins, senior vice president of Oracle Homeland Security Solutions.