Strategic Opportunities in Border Security: An Analysis of the Homeland Security Budget
The Department of Homeland Security (“DHS”) has remained a budget priority in recent years, with total budget authority growing from $47.5 billion in GFY 2008 to $60.7 billion in GFY 2014, and projected to reach $60.9 billion in the GFY 2015. While an analysis of department-level budget data demonstrates DHS as a priority market, the Department has a number of components, directorates, and offices each with their respective funding trends and priority level. Thus, it is helpful to take the analysis a step further, and determine the specific areas driving its funding growth. Of the eight DHS organizations with historical budget authority over $1.0 billion, only three – U.S. Customs and Border Protection (“CBP”), U.S. Secret Service (“USSS”), and National Protection and Programs Directorate (“NPPD”) – are projected to experience consistent year-over-year growth from GFY 2013 – GFY 2015. Examining these three organizations further, CBP is not only the largest, with GFY 2013 budget authority of $11.7 billion, it is also projected to realize the most growth, with a Compound Annual Growth Rate (“CAGR”) of 5.6% from GFY 2013 – GFY 2015. Thus, while other DHS organizations have experienced funding increases in recent years, CBP’s size and consistent growth rate demonstrate its prominence within the Department.
In addition to gross increases in budget authority, CBP has secured a growing percentage of the overall DHS budget, increasing from 19.8% in GFY 2013 to 20.5% in GFY 2014, and it is projected to reach 21.5% in GFY 2015. Additionally, the technology-focused components of CBP’s budget have become an increasingly important part of CBP’s broader strategic initiatives in areas such as border surveillance, personnel tracking, and data collection. The portion of CBP’s budget dedicated to Border Security, Fencing, Infrastructure, and Technology received $307.5 million in funding in GFY 2013, $351.5 million in GFY 2014, and is projected to receive $362.5 million in GFY 2015. With greater funding to modernize systems and procure advanced technologies, CBP would be better positioned to fulfill initiatives such as Remote Video Surveillance Systems (“RVSS”), a command and control program designed to more accurately identify threats, or National Border Geo-Intelligence Strategy, a geospatial tracking system designed to better understand border traffic patterns and inform decision makers on the deployment of CBP personnel and equipment. Further highlighting its focus on advanced technologies, CBP recently awarded Elbit Systems the Integrated Fixed Tower contract, which is designed to deploy advanced sensor and motion video technology to monitor activity along the southwestern U.S. border. The $145.3 million award is funded through appropriations to the Border Security, Fencing, Infrastructure, and Technology portion of CBP’s budget. As CBP continues to focus its funding growth on technology-enabled solutions to achieve mission requirements, government technology contractors with high-end capabilities in areas such as surveillance, analytics, and mobility should have the requisite capabilities to address this well-funded market. Additionally, as buyers look to align their respective capabilities with broader budget priorities, contractors serving CBP could become attractive targets, leading to heightened M&A activity in this space over the near-term.
Note: All figures from GFY 2008 – GFY 2014 represent enacted funding levels; all GFY 2015 figures represent funding levels in the President’s GFY 2015 Budget
Source: Department of Homeland Security