Israel’s Elbit Wins U.S. Border Work After Boeing Dumped

The U.S. bypassed some of its biggest contractors and turned to an Israeli company for help securing its borders.

Elbit Systems Ltd. (ESLT) won a $145 million contract for border-surveillance technology, the Department of Homeland Security announced today on a federal website. The program may eventually reach $1 billion if legislation to rewrite U.S. immigration laws passes Congress and helps fund the project’s expansion in the Southwest, said Brian Friel, a Bloomberg Industries analyst.

The defense electronics company beat some of the top U.S. government contractors, including Lockheed Martin (LMT) Corp., General Dynamics Corp. (GD) and Raytheon Co. (RTN), Friel said. The department stopped funding for the original border-surveillance system, led by Boeing Co. (BA), after delays and technical issues.

“It is odd to go offshore for this work, but in extraordinary circumstances, one really wants to employ the best,” said Mark Amtower, a partner at Amtower & Co., a government contracting consulting firm in Clarksville, Maryland.

A company with a track record of doing this work in Israel is “liable to be much further advanced in this particular arena,” Amtower said.

Elbit, based in Haifa, has provided a border-control system to the Israeli police force to assist with security at the country’s air, sea and land entry points, according to the company’s website.

Equipment Malfunctions

The Homeland Security contract calls for the company to deliver surveillance equipment, such as radars and cameras, mounted on fixed towers to help agents detect and track “items of interest” along the border, according to information posted on a federal government website for contractors.

The equipment initially will be deployed in Arizona. Additional details will be available in “coming months,” Michael Friel, a spokesman for Homeland Security’s U.S. Customs and Border Protection, said in an e-mail.

In January 2011, the department announced it was terminating Boeing’s Secure Border Initiative Network, a system of cameras, radars and sensors, following delays, equipment malfunctions and difficulties in deciding where to place towers on environmentally sensitive land.

It “cannot meet its original objective of providing a single, integrated border security technology solution,” then-Homeland Secretary Janet Napolitano said in a statement at the time.

‘Extremely Disappointed’

Boeing, based in Chicago, got about $1.4 billion in orders since 2006 for the defunct project, according to data compiled by Bloomberg.

“The Boeing team is extremely disappointed by today’s announcement,” Laurie Allison, a spokeswoman for the No. 2 U.S. government contractor, said in an e-mailed statement. She didn’t answer an e-mailed question about whether the company would protest the decision.

Steve Field, a spokesman for Bethesda, Maryland-based Lockheed Martin, confirmed the company bid on the project and that it was “disappointed with the award decision.”

Lockheed, the top federal contractor, will “seek an opportunity to understand” the agency’s decision, he said in an e-mail.

Carol Smith, a General Dynamics spokeswoman, said the Falls Church, Virginia-based company had no comment on Elbit’s award or whether it had bid on the work.

Shari Clarkson, a marketing and communications manager for Elbit’s U.S. office in Fort Worth, Texas, didn’t provide a comment.

To contact the reporter on this story: Kathleen Miller in Washington at kmiller01@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net

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