Homeland security business growing for 2 Calif. drone-makers

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Credit: Customs and Border Protection

A pair of defense firms based in California that specialize in manufacturing pilotless aircraft, also known as drones, are considered rising stars among contractors for the Department of Homeland Security, according to an annual list compiled by trade publishers.

San Diego-based General Atomics Aeronautical Systems has already supplied nine pricey Predator drones to the Department of Homeland Security, but a fleet totaling 24 “unmanned aerial vehicles” is in the works. The company has now built 530 overall, said a company official, many of them used abroad by the U.S. military as part of the global war on terror.

Congress in February ordered federal regulators to move faster in establishing guidelines for the broader use of drones over U.S. skies, and clearer rules are required by the year 2015. Public debate over their usefulness and privacy implications has been occurring ever since.

The attention means vast new opportunities for General Atomics and another company headquartered in Monrovia, Calif., called AeroVironment, that builds much smaller “mini-drones,” which fit a growing demand by emergency responders, firefighters and law enforcement agencies. Local officials want the aircraft and live video provided by them for everything from visualizing disaster areas to sizing up suspects prior to tactical raids.

General Atomics is not publicly traded on Wall Street, so pinning down details of its balance sheet is difficult. However, available public records show the company has enjoyed more than $250 million in contract transactions with the Department of Homeland Security since 2005.       

Over $78 million of that activity occurred last year, nearly double the agreements inked in 2010, records show. A “transaction” can be everything from the purchase of an actual drone to spare parts, operational and maintenance support services, and flight testing.

Predator B unmanned aircraft system in flight. Credit: Customs and Border Protection

AeroVironment, on the other hand, discloses certain activities to Wall Street investors in the form of Securities and Exchange Commission filings. Most of its unmanned aerial systems are still sold to defense agencies like the Army and Marine Corps, the company told [PDF] shareholders last year.

Overall revenue for AeroVironment’s unmanned aircraft business grew by $25.6 million between 2010 and 2011 reaching $249.8 million last fiscal year. Available data show just one U.S. Customs and Border Protection contract signed with AeroVironment in 2008, yet the larger homeland security market and its multitude of various customers holds plenty of promise.

The company unveiled a product specifically targeting local governments in late October known as the Qube, which AeroVironment described as a “rapidly deployable eye in the sky” small enough to fit in a car trunk and easy enough to assemble and fly in less than five minutes.    

“Public safety professionals have been asking for this capability for years,” Chief Operating Officer Tom Herring said in a statement at the time. “They have learned about the effectiveness of our Raven, Wasp and Puma (unmanned aircraft systems) over the battlefield and want a similar capability that is tailored to their mission requirements.”

As for larger, more complex drones, a draft audit obtained by the Los Angeles Times last month showed that keeping them airborne is no small expense for federal taxpayers, and their success in securing the border has so far been mixed. The report revealed that just one hour in the air costs $3,000, an hour of maintenance is necessary for each hour of flight, and the Department of Homeland Security “already owns more drones than it can utilize.”

Drones the department does have flew half the expected hours last year, the paper reported, and a former Air Force official conceded that the modest volume of drug interdictions so far is “not impressive.” But he defended the aircraft as crucial in situations where human pilots risked exposure, like dirty bomb explosions from terrorists or nuclear meltdowns. They’ve already been used in natural disasters.    

Building drones, meanwhile, has benefited two Southern California lawmakers in particular: Congressman Brian Bilbray, R-Carlsbad, and Duncan Hunter, R-Alpine. Almost $200 million in contract work signed with General Atomics by the Department of Homeland Security (and excluding defense contracts) was slated to be performed in their combined districts, records show:

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Both men are members of a unique club on Capitol Hill: the Congressional Unmanned Systems Caucus. It’s chaired by Santa Clarita Republican Buck McKeon.

Privacy and civil liberties groups are pushing back against this growing drone lobby in Washington and have urged the Federal Aviation Administration to consider the extraordinary surveillance and data collection powers afforded the government by drones. They want greater protections put in place for citizens now before the aircraft become an everyday fact of life.

“With special capabilities and enhanced equipment, drones are able to conduct far more detailed surveillance, obtaining high-resolution picture and video, peering inside high-level windows, and through solid barriers, such as fences, trees and even walls,” the Electronic Privacy Information Center wrote [PDF] to regulators this week.

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