Surge of cybersecurity bureaucracies sparks lucrative opportunities for industry.

• Author: Erwin, Sandra I.
• Position: HOMELAND DEFENSE

* A cybersecurity gold rush is under way amid widespread confusion about how the federal government will oversee efforts to protect the nation's computer networks. A flurry of new legislation has compounded the chaos as companies try to sort out what products and services various agencies will be acquiring.

An onslaught of proposed new laws and the creation of additional bureaucracies, such as the White House cybersecurity coordinator's office and U.S. Cyber Command, have set in motion an industry scramble. Contractors are trying to make sense of the morphing regulatory and business landscape as they seek to tap into an $80 billion a year information-technology funding pool that, unlike other portions of the national-security budget, is expected to grow over the next five years.

Cybersecurity has been a significant source of business for the IT industry for many years--particularly from the Defense Department. But companies are forecasting growth in the coming years not just in military contracts but also in work with civilian agencies. Much of the legislation now moving through Capitol Hill will expand the role of the Department of Homeland Security in cyberwarfare, which should fuel contracting opportunities. The explosion of Web 2.0, cloud computing, social media and other Internet-based technologies has triggered a demand for encryption and firewall systems to shield government networks from intruders. As fears escalate, the industry is unleashing waves of new products and services that are now being marketed outside the traditional circle of military customers.

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Reports of security incidents at federal agencies increased by more than 400 percent between 2006 and 2009, according to the Government Accountability Office.

In addition to benefiting from a greater demand for cybersecurity products, the industry projects its business will expand because there will be more agencies involved, often with overlapping functions. Cyberwarfare programs at the Defense Department are spread throughout the military services, several agencies and major commands. Internal competition is expected to intensify among organizations that don't want to relinquish their turf. Another key advantage for the industry is that the government heavily relies on the private sector for technical expertise. The White House has launched a new initiative to speed up the hiring of in-house talent, but such programs could take years to achieve tangible results.

The U.S. government has a "desperate...