Invasion of the Body Scanners
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Just days after the so-called underwear bomber's alleged attempt to blow up a Detroit-bound airplane on Christmas Day, security-screening companies have been scrambling to get into the body-scanner business.
And while many government security officials were apparently getting serious about new scanning technologies before the incident, the big question is whether such a high-profile security breach will change the tenor of the conversation and bring about change even faster than previously anticipated.
Massachusetts is one of the states leading the charge, with at least three companies poised to see a windfall from public pressure to install advanced passenger-screening systems in airports worldwide.
Even before the Christmas Day attack, the U.S. Transportation Security Administration and other international security groups were piloting so-called full-body scanners, which produce 3-D images of a person and any potential contraband he or she may be carrying. And some expect such a high-profile event to accelerate the TSA’s adoption of the technology; it already plans to install 150 systems this year and has budgeted for an additional 300 to be purchased.
A clear beneficiary of such a move would be L-3 Communications Inc.’s Woburn, Massachusetts-based security and detection systems business unit, which makes a scanner installed in 19 U.S. airports. But a handful of other companies, most of whom make their money in cargo or baggage-screening systems, are hoping to make headway in the market as well.
“Aviation is not really a significant aspect of our business right now, but the aviation market for detections systems is the single-biggest market out there,” said Joe Reiss, vice president of marketing for American Science and Engineering Inc., a maker of security screening systems in Billerica, Massachusetts.
AS&E has developed products for the passenger-screening market for 15 years, but they had a negligible impact on the company’s sales. After the TSA began evaluating the need for advanced screening systems after bombing attacks in Russia in 2004, the company developed a new personnel-screening device. While L-3’s technology, called millimeter-wave scanning, produces an image similar to a fuzzy negative, AS&E’s backscatter imaging system produces a chalk-outline-like image.
The systems went into pilot testing with the TSA in 2007, and Reiss said the results were well received. The agency has yet to purchase any AS&E systems.
“It’s been a slow process,” Reiss said. “The issue isn’t really the technology, the issue for the TSA has been public acceptance.”
The technologies have been opposed by some privacy advocates concerned about the revealing details included in the screens. While both L-3 and AS&E have said publicly their systems blur faces and do not store images, most devices are still only used for people who set off a metal detector or are selected for additional screening.
In December, L-3 received approval from the TSA for its checkpoint screening system to be used in U.S. airports, the conclusion of a two-year pilot process. The company says on its website that it has 200 such systems installed worldwide, including 40 in domestic airports. And while it declined to comment on this story, in an October call with investors, chief financial officer Ralph D'Ambrosio said the company expected delays in ordering such devices.
Reveal Imaging Technologies Inc., a Bedford, Massachusetts-based startup that was founded in 2002 to address the need for new, automated baggage-screening systems after 9/11, is also trying to elbow into the body-scanning market. In October, it received a $3.9 million contract from the Department of Homeland Security to develop and test an automated personnel-inspection system.
“Personnel inspection is one of those things that go hand and glove with what we’re good at: creating technology that moves people more quickly and more securely,” said Michael Ellenbogen, president and CEO of Reveal.
The company has said it plans to use both acoustic and millimeter-wave sensors to detect explosive materials and minimize false alarms.
However, some investors question whether a single terrorism attempt will have a tangible effect on security technology companies.
“While there may well be a need to…install better screening devices to prevent explosives from getting onboard aircraft, we are not going to make a big investment case here,” said Jefferies & Co. analyst Howard Rubel in a note to investors. “A more appropriate act would be a reconsideration of the processes and makeshift screening facilities.”
While neither company would make a direct link between the bombing attempt and sales opportunities, traditionally major changes in security technology come in the wake of major events.
“It highlights the need for improvements to certain aspects of the system, and those changes tend to drive a market,” Ellenbogen said.
Jackie Noblett is a reporter with The Boston Business Journal.
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