News & Events

The Intelligence – Privacy Paradox: An Opportunity for Federal Contractors


In President Obama’s speech on NSA surveillance on January 17th, the President told the audience that “in our rush to respond to a very real and novel set of threats, the risk of government overreach, the possibility that we lose some of our core liberties in pursuit of security also became more pronounced.”  The President’s speech underscores the new paradox emerging in intelligence policy: how does the U.S. strike the correct balance between securing its citizens and protecting their privacy?  The Department of Homeland Security (“DHS”) believes it has found part of the answer.  The DHS has designed a solution in which large troves of data are gathered from across the department’s different IT silos, translated into a common format so it can be centrally stored, and coded in order to control access to those DHS employees with proper credentials and clearances.  With the newly proposed framework, DHS could enhance the usefulness of collected data by centralizing its location with a common format, while reducing privacy violations through the process of coding and cross-referencing it with employee clearances and credentials.  While DHS believes it has found a significant part of the answer to the intelligence – privacy paradox, the program is still in its initial phases, and the department is seeking to engage industry early in the process to assist in the program’s design, development, and implementation.

The proposed DHS intelligence framework could provide a significant opportunity for contractors looking to serve this high-priority market.  Successful implementation of the proposed framework will require a broad spectrum of IT services, including infrastructure consolidation, terminology coding, security, and testing and evaluation.  As intelligence gathering and the accompanying privacy concerns become a greater policy priority, we may see two significant trends emerge in the government solutions M&A market.  First, companies holding DHS contract vehicles may receive greater attention from potential acquirers, as those vehicles may provide access to highly coveted intelligence work within DHS.  Secondly, to the extent acquirers already have access to the appropriate contracting avenues, companies with capabilities particularly relevant to data collection and access control, such as infrastructure consolidation and terminology coding, offer the opportunity to expand the acquirer’s footprint within DHS and the broader intelligence community.  These trends may provide a catalyst for increased M&A activity in the DHS market over the near term, and companies with both the right portfolio of services and / or access to strategic contract vehicles would be well-positioned to capitalize on these trends.