Raytheon Markets Maritime Defense System

Dec. 28--PORTSMOUTH, R.I. -- The cargo ship bears the name Osama. It's been registered in Syria. And it's steaming toward Los Angeles.

That's the mock scenario playing out on a bank of giant plasma screens lined up for a demo here at Raytheon Co.'s Naval Integration Center on Narragansett Bay. The vessel has been tagged as suspicious based on data culled from shipping records. Raytheon engineers are using software to track its course. And they're combing databases tracing its history, ownership, and sister ships heading for US waters.

"We're pulling the needles out of the haystack to find people who might represent a threat to the United States," said John C. Rienzo, chief engineer for Project Athena, the maritime defense system Raytheon has begun marketing to Pentagon and port officials.

Athena is part of a larger push by Raytheon, the nation's fifth-largest military contractor, into homeland security. With the growth in spending expected to slow in the second half of this decade at the Department of Defense, its top customer, executives of the Waltham company have set their sights on capturing more business from the Department of Homeland Security and other agencies that fund new programs protecting air and sea ports, borders, railroads, and highways.

But the company's homeland security revenue is still tiny compared to its defense revenue. And Raytheon is playing catch-up to other contractors who have moved faster to retool existing programs to address homeland security requirements. "It's a potentially profitable area for them, and one that won't be shrinking," said Paul Nisbet, analyst for JSA Research in Newport, R.I. "But they need to land a big contract, because the defense budget should be flattening."

Project Athena, which seeks to foil both terrorists and drug traffickers, was deployed for a 45-day field demonstration at the Port of Buffalo this fall. Raytheon is now using feedback from the US Northern Command on the Buffalo trial to refine the system's "anomaly detection and response" capabilities as it prepares for deployments at two other US ports this winter and spring. Thus far, Raytheon has won $8.5 million in contracts from the Pentagon's Counter-Narcoterrorism Technology Program Office for Athena, but it's positioning itself to compete for much larger orders when the opportunity arises.

At the same time, Raytheon is readying a bid next month for a contract estimated to be worth up to $50 million to supply technology for the Homeland Security agency's Advanced Spectroscopic Program that seeks to scan cargo trucks for radioactive materials. The company's homeland security programs, bringing in $67.9 million last year, still represent only a small fraction of the more than $20 billion Raytheon rings up in annual revenue. But expanding the homeland security business has been identified as a priority for the company.

"We see this as a potential game changer," said Dan Smith, president of Raytheon's Integrated Defense Systems unit in Tewksbury, which oversees Project Athena and the truck-scanning program. Smith said the Athena system could be valuable in helping to secure American harbors, like Boston, that are visited by liquified natural gas tankers.

In building a homeland security franchise, Raytheon will be vying with some familiar rivals. Lockheed Martin Corp., the largest US military contractor, jumped to a headstart by modifying its Deepwater program, a joint venture with Northrop Grumman Corp. formed in the 1990s to help modernize Coast Guard ships and aircraft. After the Sept. 11, 2001, terror attacks, Lockheed and Northrop refocused part of their efforts on new homeland security missions like coastal protection.

Tapping the homeland security market has been complicated for all contractors by squabbling among government agencies over funding responsibilities, making it hard to plan their programs.

"The 'who pays' issue hasn't been resolved," noted Mary Anne Sudol, defense and aerospace analyst for the New York brokerage Caris & Co. "There's been a lot of tugging between the federal, state, and local governments, and the independent port authorities. Ports say it's a federal mandate, but the Homeland Security department says the responsibility rests with the port authorities. As a general proposition, this is slowing down the progress on many of these projects."

In this uncertain environment, Raytheon is limiting its own up-front investments and capitalizing on its existing capabilities. To track container ships and protect coastal installations, the company can draw on communications and command-and-control technologies it already has developed for programs like the Navy's DD(X) destroyer and the Army's JLENS system to fend off cruise missiles attacks. While Raytheon has acquired simulation software for Project Athena, the heart of the Athena system uses sensors, cameras, radars, public databases, and satellite imagery originally rolled out for military programs.

"We've taken things we've learned in other programs and applied it to maritime domain awareness," said Scott, the Project Athena program manager and Raytheon director of maritime domain awareness programs. "We call it actionable intelligence. It's not just finding a dot on the map. It's understanding which of the dots on the map is displaying some kind of suspicious behavior."

Project Athena is a networked system that can be installed at shore sites or quickly assembled at remote command posts. It integrates information from a variety of sensors and data banks to track container and tanker ships and other maritime activity. Software programs crawl through thousands of online shipping records to identify suspicious ships based on their ownership, history, registration, or destination. Once they are identified, Athena operators can track targeted ships through aerial or satellite surveillance and alert defense authorities to a potential threat.

As it expands, the system will also track activity in and around coastal airports and in air space over the ocean, working on the premise that a hijacked plane could attack an oil tanker, or a terrorist on a ship could launch a shoulder-fired missile at a passenger jet. Similarly, alternating between wide-area views and zooming in on specific targets, it will seek to keep tabs on smaller boats, coastal industrial plants, rail installations, and ground vehicles traveling on roads near ports.

Raytheon executives demonstrated the system for Rhode Island political leaders last month, stressing their expertise in networking electronics systems and integrating surveillance with intelligence. Governor Don Carcieri, senators Jack Reed and Lincoln Chafee, and congressmen Patrick Kennedy and Jim Langevin were among those gathering here to mark the opening of the Athena Fusion Center.

Political clout may become increasingly important for Raytheon as homeland security budgets grow and the company vies for bigger contracts with rivals such as Lockheed Martin, which also is pursuing a role as systems integrator.

Shawn D. James, vice president for maritime security and domain awareness at Lockheed Martin, acknowledges "there will be room for many different vendors and technologies" in protecting the homeland. "How you put them together will be key," James said, citing the need to build a national architecture enabling Pentagon and Homeland Security officials to share information.

While Raytheon has yet to crack the top 10 list of contractors for the Homeland Security department -- it ranked a distant 37th in fiscal 2004, the most recent year for figures were published -- Homeland Security officials welcome the company stepping up to the plate.

"Technology and the use of technology are going to be the most important tools we have in securing a range of areas, from the aviation domain to trucking to cargo shipping," said Brian J. Doyle, deputy press secretary for the Homeland Security department in Washington.

(Boston Globe, The (KRT) -- 12/29/05)

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