The U.S. government plans to spend $345 million next year to verify identities amid missed deadlines on security goals and continued concerns over terrorism, according to a report, a spending boon that could trickle down to startups.
Spending is expected to grow 6.2 percent annually to about $439 million in 2012, according to Input, a Reston, Virginia-based research firm.
Not only could it generate revenue for security startups but it could also spur interest of government contractors in buying startups in areas such as smart cards, biometrics, RFID, and speech recognition.
The government is so behind on a Bush administration plan to upgrade secured access to federal facilities that it will need immense help catching up, according to Chris Campbell, the author of the report.
The Input report, published on Thursday, said the government cannot handle the array of required technologies and services, giving Microsoft, EDS, BearingPoint, and Johnson Controls a chance to benefit.
“All of the big guys like the systems integrators will be involved and they will be looking for small specialized firms as subcontractors or even acquisition targets,” Mr. Campbell said.
The government’s recent interest in RFID spurred a number of acquisitions, according to Mr. Campbell, and the same is likely to happen as the government embarks on upgrading its own physical security.
The Bush administration issued a directive in 2004 to get rid of outdated and inadequate security governing ID checking at government agencies and departments. The deadlines set were quite ambitious and the agencies will not make the first deadline, which comes at the end of this month.
With the pressure on, the government is more likely to outsource huge chunks of these projects to vendors, the report said.
“The government is always grappling with funding and personnel issues and that gets hammered down more as you get into critical issues like IT security,” Mr. Campbell said.