Companies repackage products as devices for anti-terrorism use

WASHINGTON - A year ago, the Navy gave Anthony Mulligan's company a small grant to build a cheap aerial drone for whale-watching. The idea was to make sure marine mammals weren't around during sonar tests.

Then came Sept. 11. And, with the help of an Arizona congressman, Mulligan transformed the drone into a potential weapon in the new war on terrorism.

The congressman arranged for Mulligan to testify at a House hearing, where he talked about flying entire squadrons of whale-watching drones to spy on enemy territory or loading one with a pound of C-4 explosives and ramming it, kamikaze-style, into an enemy target.

Though the drone had only been tested for whale watching off the Hawaiian coast, Mulligan's company won the support of key Capitol Hill politicians, a new $500,000 grant to ramp up his drone production and the prospect for $5 million more to mass produce it.

"I think the Navy is interested in buying tens of thousands of them," Mulligan said.

Mulligan's drone is one of hundreds of products being repackaged as counter-terrorism devices and pitched to the federal government, makeovers inspired by billions of dollars in new defense and homeland security spending. Federal agencies have been papered with proposals. More than 12,500 applications have flooded one little-known agency that specializes in funding counter-terrorism research - more than 10 times the usual traffic.

With competition fierce, companies with products in the pipeline and political patrons on the Hill have an advantage in lining up federal grants and contracts. Mulligan was among a select group invited to showcase its products at the House Military Research and Development Subcommittee hearing in March. Subcommittee aides said the hearing was designed to bring in small, innovative manufacturers who lack the clout and political war chests of America's multinational defense contractors.

One executive had artificial blood, not yet approved by the federal government, that he said could save lives on the battlefield or in terrorist attacks. A cargo inspection machine, previously rejected by government agencies as too big, costly and slow, got a second look as an anti-terrorism device.

"It's just a market moving to serve a need," said Richard Hollis, another hearing participant, who is developing a radiation protection drug for the military with technology that originally targeted AIDS and hepatitis. "When there is a need, the beauty of our system is that companies will move to fill that need."

When Congress throws billions of dollars at a new effort like homeland security, the response from America's revenue-seeking marketplace is predictable, said John Pike of globalsecurity.org, an independent defense policy group in Washington.

"No leap of the imagination is required to guess the result," he said. "For Congress, that's like hanging out a sign that says, `Free money.' "

Patriotism motivates

Mulligan, however, said he's driven by patriotism rather than profit.

"In reality," he said, "if these drones get the bad guys, it would be worth the entire company."

In the fall of 2000, Mulligan recalled, a scientist at the U.S. Naval Weapons Center had asked if his company could develop an unmanned craft for counter-terrorism -- "to fly around a Navy ship and prevent a USS Cole-type disaster," Mulligan said, citing the October 2000 terrorist bombing of the American warship in Yemen.

But there was no money to fund it.

"Before 9-11, there wasn't that much interest in counter-terrorism, even within the military," Mulligan said.