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US Customs and Border Protection Integrated Fixed Towers Contract Awarded - Frost & Sullivan

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US Customs and Border Protection Integrated Fixed Towers Contract Awarded …

US Customs and Border Protection Integrated Fixed Towers Contract Awarded

Will the New Project Achieve the Ambitious Objectives after 13 Years and $1.4B of Funding?

Frost & Sullivan

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  • 1. US Customs and Border Protection Integrated Fixed Towers Contract Awarded Will the New Project Achieve the Ambitious Objectives after 13 Years and $1.4B of Funding? Yaki Baranes March 2014
  • 2. Contents Introduction ................................................................................................................ 1 Previous Attempts to Secure the United States Southern Border .............................. 1 Conclusions and Recommendations .......................................................................... 5 Legal Disclaimer ......................................................................................................... 8 The Frost & Sullivan Story.......................................................................................... 9 2
  • 3. INTRODUCTION Israel’s Elbit Systems announced on 3rd March that its United States (US) subsidiary ESA (Elbit Systems of America) has won an international bid for an estimated $145M anti-intrusion network to secure Arizona’s southern border with Mexico. Elbit has been selected to overcome 13 years of problems which resulted in $1.4B of wasted funding. As a project integrator, Elbit will deliver an Integrated Fixed Tower (IFT) network over the coming year. The towers will include a range of electro-optical sensors and ground-based radars. The radars will be supplied by Elta Systems Ltd, part of Israel Aerospace Industries (IAI). This project is part of Elbit’s new strategy to enter to new non-defense market segments, such as security, to overcome budget cuts and economic slowdown in core markets. If Elbit deliver this project successfully, it will overcome a long history of difficulties faced by the US Department of Homeland Security (DHS) to secure the US Southern Border in Arizona. Moreover, in this case, Elbit will further establish their capability in the civil security market and take a significant step to realizing their new strategy. PREVIOUS ATTEMPTS TO SECURE THE UNITED STATES SOUTHERN BORDER Part of the DHS Secure Border Initiative (SBI) to secure the Arizona-Mexico border under the SBInet project was cancelled in 2011 after nearly a $1B investment. The SBInet project itself had been launched after two former failures – the Integrated Surveillance Intelligence System (ISIS) project and America’s Shield Initiative (ASI). Both programs were abandoned due to mismanagement and the failure of the security concept and the systems that were chosen to operate it. SBInet was also cancelled after years of technological problems and schedule delays by the prime contractor. The question now is will the new project meet the ambitious objectives after over a decade since launching the initiative and funding over $1.0B already. Project Started Cancelled Budget Spent Integrated Surveillance Intelligence System (ISIS) 1998 2005 (subsumed under ASI) ~$250M 3
  • 4. America's Shield Initiative (ASI) 2003 2005 $180M SBI Net 2006 2011 $1,000M Total $1,430M The concept of all of these programs was generally the same – to use high-end technology to enhance the Border Protection Agency (BPA) agent’s capabilities to detect, evaluate, and respond to illegal border crossings. The project goals also included the aim for technology to reduce the manpower burden involved in securing thousands of miles of the US Sothern border. Previous attempts to complete this initiative involved almost 5 years trying to integrate the solution and to prove that the technological security concept could work. SBInet Timeline – from Launch to Cancellation: 4
  • 5. The main reasons for the failed latest attempt were as follows: 1. Government’s Lack of Focus, Strategy & Indefinite Delivery/Indefinite Quantity (IDIQ) Contract: a. Although the ISIS project was first launched in 1998, it was the terrorist attacks of 9/11 that, followed by a push for immigration reform, provided the catalyst for the government to secure the border. b. Authorities were under immense pressure to show the American public that the government was fulfilling its Homeland Security (HLS) mandates that adequate preparation, critical in a large scale project such as SBInet, was flawed. c. Unlike defense projects, where the client is involved in research and development (R&D) and defining and testing a future solution, vaguely defined objectives left the prime contractor isolated when it came to designing and implementing the solution. d. The IDIQ contract conditions exacerbated the problem of having unclear objectives leaving the prime contractor very few clear project milestones. 2. Poor Measurement of Project Progress and Over-Ambitious Proposals: a. Six months into the project it was clear that technology implementation wasn’t going to plan and not meeting DHS targets but these were not addressed early enough. b. Deadlines were missed due to technical and integration problems but instead of reevaluating its strategy, the client, DHS, started lowering its expectations, for example:  Reducing the geographical footprint for the initial deployment from about 655 miles to about 387 miles  Requiring that the surveillance systems identify at least 49 percent of suspicious border crossings rather than 90 percent as originally planned c. More efficient monitoring of project progress could have prevented huge cost over runs and revived the ailing project. 5
  • 6. 3. A Lack of Experience in High End Border Control Technology: a. The prime contractor presented the DHS a theoretical high-end solution that included ground based radars, UAVs, long-range cameras and other remote surveillance systems. Deploying surveillance technology along the border was intended to enable law enforcement to better monitor activity and in general to collect more intelligence using technology rather than people b. The integration showed little proof that high-end technology was indeed a force multiplier and more effective than current border patrol solutions c. Although law enforcement agencies expressed eagerness to have improved methods of communication and technology such as GPS systems to improve efficiency, they did not view technology as being the primary solution to border issues d. As the project progressed it became very clear that there is a need for elements of high-end technology particularly at points of entry, but complete operational control by technology was seemingly overly ambitious e. After SBInet was finally cancelled, it was declared by Homeland Security Secretary Janet Napolitano, that the attempted solution “does not meet current standards for viability and cost effectiveness” Conclusions and Recommendations Frost & Sullivan’s recommendations to the industry to achieve success with this new project, based on the previous problems faced, are as follows: 1. Security Concept: From the initial announcements it appears that the new contract is presenting a similar concept to the last project with a high-end, integrated solution that relies on sensors to improve operational performance while reducing the number of boots and vehicles on ground. The previous attempt failed to show how the concept would be effectively implemented, resulting in no change to the manpower needed to secure the border and highly-advanced command and control centers which are not being effectively used. The lesson to learn is that the use of advanced technology is crucial to address complex challenges, but that technology alone is not the whole answer. 2. Budget and Funding: Like the current contract, SBInet and the other previous attempts started with small budget allocations to be followed by further funding once initial targets were met. In reality, the project integrator 6
  • 7. had to request funding to support ongoing work without clear objectives being met. The new project will have to strictly adhere to planned expenditure and system deployment, making sure that the budget and project timeline is appropriately aligned to clear implementation phases. 3. Successful Experience in Border Security Projects: In terms of experience, the new contractor has proven experience that many defense and security integrators have previously struggled with in regards to implementing complex civil projects. Leveraging their high-end capability developed in the defense market and delivering successful projects nondefense clients is a vital capability. Such operational experience may allow the new contract to be delivered, overcoming historical issues and bringing the advanced solutions to bear as envisioned by DHS. 7
  • 8. Legal Disclaimer Quantitative market information is based primarily on interviews and therefore is subject to fluctuation. Frost & Sullivan is not responsible for incorrect information supplied to us by manufacturers or users. Our research services are limited publications containing valuable market information provided to a select group of customers. Our customers acknowledge, when ordering, subscribing or downloading, that Frost & Sullivan research services are for customers’ internal use and not for general publication or disclosure to third parties. No part of this research service may be given, lent, resold, or disclosed to noncustomers without written permission. Furthermore, no part may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the permission of the publisher. For information regarding permission, write to: Frost & Sullivan 331 E. Evelyn Ave., Suite 100 Mountain View, CA 94041 © 2014 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan. 8
  • 9. The Frost & Sullivan Story Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation, and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages over 50 years of experience in partnering with Global 1,000 companies, emerging businesses and the investment community from more than 40 offices on six continents. Frost & Sullivan helps our clients “Accelerate Growth” by: Delivering the broadest industry and market coverage of any research and consulting firm globally, 10 industries, 35 sectors and 300 markets – ensuring our clients not only understand their industry challenges and opportunity but growth opportunities in aligned industries and an understanding of competitive pressures from previously unknown sources, Providing a 360 degree perspective – integrating 7 critical research perspectives to significantly enhance the accuracy of our clients decision-making and lowering the risk of implementing growth strategies with poor return, Leveraging our extensive contacts within chemicals and materials value chain, including manufacturers, distributors, end-users and other industry experts, Ensuring our clients maintain a perspective of opportunities and threats globally through our 1,800 analysts in our 40 offices – making sure our clients receive global coverage and perspective based on regional expertise, Researching and documenting best practices globally – ensuring our clients leverage proven best practice answers to tough business challenges for successful growth, and 9
  • 10. Partnering with our clients team, in addition to delivering our best practices research and experience, to ensure success. 10

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