After building a business defending high-ranking officials in Iraq, Blackwater USA executives think the future may be hovering above the battlefield.
The North Carolina company is developing an airship -- think Goodyear blimp -- loaded with sensors and surveillance cameras that can quickly relay information about the ground below to clients miles away. "If bad guys are setting up IEDs on the side of the road, we can see real-time what's going on," said Chris Taylor, Blackwater's vice president for strategic initiatives, referring to improvised explosive devices, which have proved deadly against U.S. troops in Iraq.
The company's first airship should be ready by the end of the year, he said, though it doesn't have any customers lined up.
Blackwater's move is only the most dramatic of the diversification plans private security companies are undertaking. The industry grew rapidly when the government and corporations paid hundreds of millions of dollars for armed guards after Sept. 11, 2001, and the invasion of Iraq. Private guards' unprecedented numbers in Iraq have raised questions about how they should interact with the military and prompted calls for more regulation of the industry.
Now many industry insiders reason that demand for private security in Iraq will begin to decline, and they want to expand beyond just toting guns.
Herndon-based Triple Canopy Inc., which has about 1,000 employees in Iraq and won part of a State Department contract last year to guard high-risk embassies, has branched out from government work and begun advising commercial clients about potential threats to their office buildings.
Nevada-based Special Operations Consulting LLC, founded in 2003, initially built a 100-acre training facility to use for its growing ranks of Iraq-bound guards but began opening it up to competitors that needed sniper training required by the Department of State, as well as U.S. and foreign units in need of the specialized training.
Olive Group FZ LLC, a United Arab Emirates-based company with a new office in the District, is selling global positioning systems to clients that want to guard their employees against kidnappings.
Some boutique security providers are even buying interest in body armor makers, said Doug Brooks, president of International Peace Operations Association, a trade group for the industry.
Most of the private security companies are privately held, though DynCorp International LLC, owned by Veritas Capital Fund LP, is planning to sell stock to the public. DynCorp, which has provided security to Afghan President Hamid Karzai, received about 37 percent of its $1.9 billion in revenue in fiscal 2005 from operations in Iraq and Afghanistan.
Blackwater, which also makes targets for gun ranges and runs a construction company, has been around since 1997. It didn't become a national name until 2004, when four of its employees were ambushed and brutally killed in Iraq. Now it is entering the crowded field of unmanned aerial vehicles.
The U.S. military already has 1,000 drones patrolling the skies of Iraq, some armed with missiles, said Kathy Ellwood, an analyst for Frost & Sullivan Inc., a research group. But airships are a burgeoning market, she said. As the price of unmanned drones, which range in size from a large textbook to a small plane, continues to rise, some military experts see airships as a cheap alternative, she said.
Blackwater's 120-foot-long airship could be deployed quickly and stay in the air for four days, while most unmanned drones can last up to only 16 hours, Taylor said. "Because of our experience in Afghanistan and Iraq, we realize the value" of having a better view of the battlefield, he said. "It offers an opportunity to see down the road a little further and around the next bend."
Triple Canopy, formed in 2003 by military veterans, has made several changes in recent months. It named a new president, Roger A. Young, a former senior executive at Maximus Inc., and established a strategic advisory board, which includes Catherine Yoran, a former assistant general counsel at the CIA. It also unveiled a new strategic plan, which includes expanding its training facility in West Virginia, traditionally used for its own employees.
There has been increasing demand for special training for local law enforcement, said Lee Van Arsdale, chief executive of Triple Canopy. "The first responder has to think in such broader terms now -- you're talking about response to a chemical attack, high explosives, the prevention-and-detection aspect," he said. The firm also acquired a training company in Texas for potential clients in the Midwest and is looking for a facility on the West Coast.
Triple Canopy has also begun offering vulnerability assessments to commercial companies, he said. And by 2008, the company forecasts, 30 percent of its revenue will be from commercial business, Van Arsdale added, compared with less than 5 percent now.
"We have been wildly successful with what we have done in Iraq, but that is a completely dynamic environment, and we're not going to pin our company's future on always having a lot of work in Iraq," he said. "It would be foolish of us to be a one-dimension company."
Olive Group has begun selling GPS it initially developed to track employees and equipment because of demand among clients that wanted to defend employees against kidnappings, said Christopher St. George, the company's managing director.
Founded by four former members of the British army in 2003, Olive has about $100 million a year in revenue, he said. It recently set up a North American business unit with a D.C. office and bought the Tactical Explosive Entry School. That company's 700 acres of farmland in Arkansas will be the site of Olive's new training center for law enforcement, military officials, nongovernmental organizations and corporations. The center will include an urban village based on Middle Eastern architecture, including an open market, government buildings and a school.
"If or when the bubble in Iraq bursts, we would feel comfortable and have a number of other service offerings," St. George said.
- 174 War & Disaster Profiteers Campaign