Pre✓: Screening for Opportunities
The Transportation Security Administration (“TSA”) continues to refine its strategy around the Pre? program. Open to all U.S. citizens, Pre? allows approved passengers to move through dedicated checkpoints without needing to remove personal belongings such as shoes, belts, and laptops. The program, which has been praised by the President as a way to enhance the effectiveness of TSA’s airport screening operations, does pose risks related to the accuracy of data collected as a part of the program’s approval process. In an effort to mitigate these risks, TSA began evaluating proposals in the first half of 2013, with the intent to provide a “reliable method that effectively identifies known travelers, based on sound analysis and the application of an algorithm that produces dependable results.” TSA recently entertained a proposal that would expand background checks on passengers to include analyses on their online activity, combing through such items as dating profiles and shopping histories as a part of the process. Although TSA halted further testing on this proposal due to privacy and data reliability concerns, TSA has stated it will continue to field and test solutions as a part of this initiative.
While the approval process behind Pre? is an interesting and controversial discussion topic, what does it mean for Federal contractors? Pre? should provide unique opportunities for companies with high-end analytics and implementation capabilities, as well as those with strategic access to the DHS market. Recent M&A activity within the government technology sector, such as ManTech’s acquisition of Allied Technology Group and BRTRC’s acquisition of SecureForce, demonstrates continued interest among acquirers to strengthen their foothold within DHS, whether by acquiring the in-demand capabilities to execute on DHS requirements, or by acquiring relevant contract vehicles (e.g., EAGLE II). While the specific procurement vehicle and corresponding contracts have yet to be announced for the Pre? program’s approval process, the actions and statements of TSA officials signal their intent on pursuing this initiative further. Moreover, the Pre? initiative is strategically aligned with the broader budget priorities of innovation and efficiency in Federal agencies, which should attract additional funding streams despite a constrained budget environment. All-in-all, companies with the right set of high-end IT capabilities and/or select DHS procurement vehicles should be well-positioned to capitalize on positive trends within this market, both from a funding and M&A perspective.