It did, but not in the way he expected.
The Army accelerated CyTerra's contract for a new radar-based land mine detector for use in Afghanistan, but to Fine's astonishment, research grants for homeland security projects dried up.
Congress is spending money on innovations in security equipment and plans to spend more. But for now, Fine says, everything is in flux. The government is so preoccupied with rushing existing technology into service that it hasn't gotten around to doling out dollars for projects that could pay off down the road.
"Our whole business model was to use the federal government as our venture partner, taking very high risks on some new technology," said Fine, whose company is a spin-off of the research arm of Thermo Electron Corp. "But there's almost no government money in any security area, almost a contradiction of what one would expect."
CyTerra's story complicates the conventional wisdom in which new, post-Sept. 11 priorities offered big opportunities for well-positioned companies. Those opportunities are real, but so are some unexpected challenges that came with them.
Of the 12,500 responses the Pentagon received to its Oct. 23 call for private companies and academics to develop anti-terrorism technology, just nine have been funded for a total of $9 million, said Pentagon spokesman Lt. Col. Rivers Johnson.
At the Transportation Security Administration's Atlantic City, N.J. research laboratory, director Susan Hallowell acknowledges "triage" has been a higher priority than funding long-term research.
"Clearly this year was one where we had to go in and do what we had to do," she said.
In a way, CyTerra is right where Fine expected it to be before the attacks.
The accelerated Army contract and the drop-off in grants basically canceled each other out. Revenue is expected to be between $18 million and $20 million, about what Fine anticipated. Employment, as he'd planned, doubled to about 30 workers since 2000.
But CyTerra is a very different company, and Fine is doing the last thing in the world he expected to be doing after Sept. 11: seeking private venture capital to finish projects.
Those projects include devices that could detect explosives on people or biochemical agents in the air, warning of an attack before victims appear in hospitals.
"If Sept. 11 hadn't happened, we'd be going on our way merrily doing a lot more development than we're doing right now," Fine said with a shrug.
CyTerra isn't the only company disappointed by the dearth of security spending.
Few firms -- especially small ones -- have landed contracts that weren't in existence before Sept. 11. Recent government buys have been for stopgap systems, like airport baggage scanners.
Analysts say adjusting government spending takes time -- years usually. Besides winning Congress' budget authority, agencies try to avoid "panic buying" of inappropriate systems that don't mesh with existing equipment.
Even then, analysts expect most federal dollars to flow to large defense contractors with knowledge of the labyrinthine rigors of government contracting, such as Boeing, Lockheed Martin, Raytheon, General Dynamics and SAIC.
Smaller companies like CyTerra are better off piggybacking on a project headed by a large conglomerate than trying to divine Congressional spending logic, said Paul Nisbet, an aerospace analyst with JSA Research in Newport, R.I.
"It's a very tricky game, not one you learn overnight," Nisbet said.
Next month, Congress is expected to fund a record level of federal research and development grants -- as much as $116 billion. But Congress and the White House haven't agreed on how to divide that money among agencies.
The Senate wants to create a new research agency for homeland security, modeled on the Pentagon's Defense Advanced Research Projects Agency. Its portfolio would include a $200 million technology "acceleration" fund.
Hallowell, whose lab was taken over by the Transportation Security Administration from the Federal Aviation Administration, got $50 million last year plus $20 million from the Defense Department. This year it has put in for $130 million, money she says "will certainly take care of a lot of CyTerras of the world."
She said TSA is eager to focus on the longer-term projects.
"This is definitely on the radar screen," she said. "We know we have to implement now, but we also know we can't eat our seed corn."
Despite matchmaking events such as the Senate's Small Business Homeland Security Expo in Washington last month, getting such funds from Washington into pipelines in high-tech hubs like the Boston suburb of Waltham hasn't proved easy.
Continued funding delays could squander the talents of small U.S. technology companies in favor of nimble foreign competitors, says Chris Anderson, president of the Massachusetts High Technology Council.
Shortly after the September attacks, CyTerra wrote some detailed homeland security proposals and mailed them to government officials.
Finally, after receiving no response, Fine called, only to learn the proposals had been destroyed by mail shredders during the anthrax scare.
It was frustratingly representative of his experience in the last year.
"It's a very different world," Fine said.
Copyright 2002. Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
