Spending a half trillion dollars each year, the U.S. federal government is the world's single largest customer. In recent years, Wisconsin's share of all federal work has leapfrogged, jumping from 38th per capita in 2008 to 14th in 2010, according to the Wisconsin Procurement Institute, a Milwaukee nonprofit that helps companies snag federal contracts.

And it’s defense contracts that have led the way for Wisconsin businesses.

Armored truck maker Oshkosh Corporation has driven the increase for the state in federal business. Oshkosh pulled down more than $5 billion in contracts from the U.S. Department of Defense in 2010, making it the country’s fifth-largest recipient of defense contracts, according to Aviation Week.

As a whole, Wisconsin’s defense contractors brought in about $8.5 billion last year, 12th highest in the nation. Other leaders included National Presto Industries, the Eau Claire-based slow cooker and kitchen appliance company that also makes ammunition; GE Healthcare, the Waukesha-based medical device division of General Electric; and Marinette Marine, which won a $376 million contract earlier this year to build combat ships for the Navy.

Homeland security funding well behind defense
But as Wisconsin has surged ahead in defense, its homeland security industry has lagged behind.

Contracting with the U.S. Department of Homeland Security (DHS) totaled $13.6 billion in 2010, according to the Procurement Institute, with only $117 million going to Wisconsin companies; that is less than 1 percent. Of the $576 million DHS spent on research and development in 2010, only about $94,000 was spent here.

Wisconsin is not alone in getting a small piece of the Homeland Security pie as much of the federal defense money is spent in Washington, D.C. and Virginia.

Despite the relatively low numbers, Wisconsin ranked 19th among the states in DHS contracts in 2010. State companies to get DHS contracts include Epic Systems, the Verona-based medical software company; Digital Intelligence, a New Berlin-based supplier of computer forensics training, hardware and software; Magnum Products, a company in Berlin that makes light towers, portable lighting systems often used at constructions sites; and Reconyx, a maker of wildlife and surveillance cameras located near La Crosse.
A new cooperative agreement between the Wisconsin Technology Council and the Monument Capital Group could generate more business for state companies. Monument, a Washington, D.C. private investment firm that specializes in defense and security markets, was founded in 2008 by Douglas Baker and Robert Dunn. Baker is a former member of the U.S. Homeland Security Council, and Dunn is a former manager of the Carlyle Group’s Middle East office. Monument has offices in London, Saudi Arabia, Turkey and India.

Baker says the agreement with the Wisconsin Technology Council reached in September could help Wisconsin tap into the growing international homeland security market. Monument projects are expected to swell to $400 billion by the end of 2013, says Baker, as U.S. allies in Saudi Arabia, Turkey and India could buy Wisconsin-made security products and services.

The Wisconsin agreement is the first Monument has made with a statewide group. Baker says the firm was drawn to the companies here and the technologies that are under development.

Monument typically invests in companies with positive cash flow and helps them to grow “by finding opportunities domestically and in foreign markets.” Finding those opportunities on foreign soil can be labor-intensive, says Baker, but Monument has the experience. “We spend a lot of time in countries in the Middle East.”

It Ain't Easy
Finding work in this country’s national defense and homeland security industries can be tough because of the complex and competitive federal bidding processes.

“It’s time-consuming,” says Andrew Wickstrom, general manager of Henry Wisconsin, a division of Henry Repeating Arms. “I could have someone spend all day looking for things to quote.”

However, Henry Wisconsin, which makes rifle parts and other custom manufacturing, does work in national defense, but only as a second-tier supplier of parts to companies holding federal contracts. Despite the hurdles, Wickstrom says the company has considered going after contracts on its own.

To help companies like Henry Wisconsin, the Procurement Institute operates a free website, www.B2Gconnect.com, designed to make bidding on federal contracts easier.

“It’s amazing how hard it is to get things going,” says Greg Schopp, president of Exec Recruiting, a Johnson Creek firm that recruits for the military, Department of State, Federal Aviation Administration, FDIC and Transportation Security Administration, the last of which is part of DHS.
The defense industry is also influenced by an X-factor: politics. Government spending is unpredictable, but the sector has proven successful for Schopp, who moved into it from the financial services industry around 2008.

Schopp runs Exec Recruiting out of his home in Johnson Creek but also owns phone numbers in Florida, Nebraska and Washington, D.C., hoping to attract prospective job applicants in those areas. “The theory is that candidates are more apt to call back if I have a number in their area,” he says. Jobs advertised by his company in October included Afghanistan Cultural Advisor/Intelligence Analyst, Threat Finance Analyst and Human Terrain Analyst, all Department of Defense jobs.

Cyber-security and cyber-intelligence are hot fields now, adds Schopp. With the rise of smartphones, “There’s a big push in the federal government to protect mobile devices.”

Find a Solution
Aina Vilumsons, director of the Procurement Institute, says the key to snagging contracts “is to identify the need, challenge or problem and be able to offer a real solution within the structure of the federal process.”

One company developing such a solution is Echometrix, a Madison company that is developing software using ultrasound images to determine “the functional status of ligaments, tendons and muscles.” The company hopes the technology will serve as an early warning system for debilitating injuries.

Possible applications are wide-ranging, according to CEO Sam Adams, and the Navy has shown interest. More than any other injury, he says, sprains and strains remove soldiers from the battlefield and training exercises. Under a cooperative research agreement, the Naval Research Center in San Diego is funneling ultrasound images of Marines’ bodies to Echometrix to test the company’s software.

“We’re not focused 100 percent on the military,” Adams says. “We think we can help anyone with a musculoskeletal injury, be that a worker, a soldier or an athlete.”

A grant from the National Science Foundation supported development of the software, which is compatible with all major brands of ultrasound equipment; the agreement with the Navy is supporting testing. According to Adams, the software is unique and no other like it analyzes musculoskeletal scans.

Could a contract follow? “That would be nice,” he says. “We think [the software] is useful to the military, but we don’t have anything locked in.”

Skunkworks
Echometrix initially connected with the Navy through one of the “Resource Rendezvous” conferences held periodically by the Technology Council’s Wisconsin Security Research Consortium, which works to strengthen the connections among academic researchers, the Department of Defense and Wisconsin companies. Representatives from federal agencies such as DHS and the National Security Agency attend the conferences, during which academics and companies present research.

“We call it our ‘Skunkworks Olympics,’” consortium director Jack Heinemann says of the afternoon-long presentations.

The consortium also helps Wisconsin companies acquire confidential, secret or top secret security clearances needed to win some defense contracts. Why the need for secrecy?

“There are things,” says Heinemann, “the government doesn’t want the enemy to know.”

Heinemann seconded Schopp’s assessment of cyber-security as a hot field. “That’s the biggest area we see,” says Heinemann. “It affects all of us, and it affects commerce.”

Another area slated for funding is technology related to the diagnosis or treatment of traumatic brain injuries as suffered by many soldiers in Iraq and Afghanistan, he says. “There’s going to be some funding that goes into that area.”

Heinemann also notes that the Air Force, Navy and USDA have all set aggressive goals to reduce their carbon footprints. Currently, the federal government is a massive consumer of gasoline, but the new goals could mean a boon for biofuels. According to Heinemann, the USDA is interested in funding pilot biodiesel plants.

“We’ve got the capabilities in this state,” he says. Wisconsin already produces ethanol and, “because of our paper industry, we have plants that are able to be converted or have offshoots to produce diesel.”

By Matt Hrodey

Matt Hrodey is a Milwaukee-based writer and editor.

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