ContractorsBudget cuts force military contractors to look inward for business

Published 10 November 2011

With U.S. military operations overseas drawing down and the U.S. defense budget likely to shrink , contractors are increasingly looking to domestic markets for their products

UAVs will see increased service on police patrol // Source:

With U.S. military operations overseas drawing down and the U.S. defense budget likely to shrink, contractors are increasingly turning to domestic markets for profits.

Since 9/11 there has been explosive growth in the defense contracting industry, driven in large part by the wars in Iraq and Afghanistan. Government contractors have made significant profits providing products and services ranging from unmanned aerial vehicles (UAVs) to biometric devices [AA1] and the Integrated Building Interior Surveillance System (IBISS), which can sketch an image of the interior of a building from the outside.

But given the current fiscal climate on the Hill with lawmakers struggling to reduce the deficit and cut spending, this economic boom for defense contractors may be coming to an end as legislators are likely to slash the size and number of federal contracts.

One proposal calls for cutting nearly $1 trillion from the U.S. defense budget over the next ten years.

Testifying before the Senate, Defense Secretary Leon Panetta likened such reductions to “shooting ourselves in the head.”

Meanwhile, during a recent symposium sponsored by the U.S. Geospatial Intelligence Foundation, Director of National Intelligence James Clapper remarked, “We are all going to have to share in the pain.”

Defense companies will increasingly be forced to look beyond the U.S. government for contracts and many of them are eyeing the domsetic market. Due to the sensitive nature of military products,[AA2]  sales to foreign sources must be approved by the federal government leaving state and local governments as the most accessible choice.

Gulu Gambhir, the chief technology officer at SAIC, which created the IBISS system, believes that his company is well positioned to expand its business outside the federal government. “A number of our influential products have dual-use capability to locations and missions adjacent to our primary overseas ISR (Intelligence, Surveillance, and Reconnaissance) mission. One such example is local law enforcement, emergency first responders, and border protection.” 

The use of military-grade technology within U.S. borders is not new. For the last several years, U.S. Customs and Border Protection has monitored the southern border using Predator drones, the unmanned aerial vehicle known more for their role in targeting al Qaeda and Taliban militants in Pakistan than spotting illegal immigrants.

Veterans with firsthand knowledge of  the effectiveness of drones are increasingly calling for their use by local police departments.    

State and local governments have already begun to utilize a number of products originally developed for military use. Arizona’s Maricopa County Sheriff’s Office, for instance, uses facial recognition software, originally developed to track insurgents, to process 9,000 digital mug shots a month. Some police departments are also using wireless fingerprint scanners designed to register residents in Iraqi neighborhoods to check motorists’ identities.

The increasing use of domestic use of military surveillance technology has raised some difficult legal and ethical questions. According to Jay Stanley, a senior analyst with the ACLU and the author of a forthcoming study on the use of surveillance drones in U.S. cities, the unregulated use of drones “leaves the gates wide open for a dramatic increase in surveillance of American life.”

Legal restrictions, such as the Supreme Court’s prohibition on the use of thermal imaging without a warrant, would require police to take extra precautions when using systems such as the IBISS.

This issue will become more important as military technology is being adopted by law enforcement. In time of budget cuts, law enforcement turns to technology to augment capabilities with fewer resources. As defense contractors push into local markets, military technology may soon become ubiquitous in law enforcement.