August 24, 2015

Nimble MetroWest firms help power military innovation

Casey White works in the laboratory at Reactive Innovations, a Westford firm specializing in research and development of chemical-based systems for the military.
Dan Carr of Reactive Innovations
Bonnie Biocchi, the outgoing president and CEO of the MetroWest Chamber of Commerce

If you're a typical MetroWest resident or business owner, you may not have heard of Security Engineered Machinery Co. in Westborough. Vice President Michael Paciello says that doesn't bother him at all.

"Not many people have," Paciello said. "But if you work for the federal government in the intelligence agencies, our brand and our product and services (are) comparable to IBM."

SEM sells products that most of us don't have a use for: devices to crush, shred or break hard drives and paper and anything else that might have a scrap of recoverable data on it. When the National Security Agency announced new guidelines for destroying solid-state hard drives — they have to be ground into particles of no more than 2 millimeters — SEM came up with a tool that could do it.

"Our main focus is selling to the government or those companies that are essentially extensions of the government," Paciello said.

When we think about the defense sector's impact on the region's economy, we often picture the big guys like Raytheon. But smaller companies such as SEM, which has about 45 employees, are scattered all around MetroWest and the I-495 corridor, selling niche products to the Raytheons of the world, and directly to government defense agencies.

"There's all kinds of different parts to the puzzle," said Bonnie Biocchi, the outgoing president and CEO of the MetroWest Chamber of Commerce. "Those larger entities are great promoters of new technology, which encourages more innovation and research and development from those smaller companies that are on the cutting edge."

A sector snapshot

A 2012 report written by the UMass Donahue Institute for the Defense Technology Initiative — an organization created by the Massachusetts High Technology Institute to support opportunities in the sector — found that almost 2,500 Massachusetts companies do work for the Department of Defense (DOD) or Department of Homeland Security. These companies, which supported more than 130,000 jobs, won $13.9 billion in contracts from the two government agencies in 2011.

One major Massachusetts customer within the DOD is Hanscom Air Force Base in Bedford. Hanscom spokesman Charles Paone said private companies provide three types of support for the base: basic support such as construction and trash hauling, specialized expertise provided by contractors who work alongside Hanscom employees, and development contracts for military projects.

Within that last category — the production of military equipment — Paone said most contracts go to big players like Raytheon or Lockheed Martin. But he said that's not always the case. In fact, he said, Hanscom has been working to expand the list of contractors it works with and add smaller businesses to the list. That's because a larger, healthier ecosystem of companies means more competition and more new ideas.

"We are definitely looking to tap into the innovation economy that small businesses are often setting the pace for," he said.

Meanwhile, right in the heart of MetroWest, Natick Soldier Systems Center is even more focused on supporting new technical innovations. Spokesman David Accetta said the Center not only contracts with small companies working on new technologies but also offers assistance to startups with promising ideas and works collaboratively with them. Among a long list of cutting-edge technologies it's buying from Massachusetts companies are anti-fog devices for goggles, wind energy systems for base camps, and antimicrobial coatings for medical shelters.

"We do a lot of technology transfer both ways: inside the gate-out and out-in," Accetta said.

There's an old stereotype of military contracts as a boondoggle for well-connected private companies, but John McDonald, CEO of JEM Electronics Inc. in Franklin said that's not at all what he sees when he does business with the DOD.

"The days of the $250 hammer are over," he said. "The procurement specialists that we've dealt with at the government have all been good negotiators."

JEM sells cable products and electromechanical assemblies to customers in various industries, and McDonald said defense contracts probably make up 10 to 15 percent of his business. He said working in the sector, both with large defense contractors and directly with government agencies, isn't as difficult as some small business owners think. When JEM first got into the defense world, he said, it spent thousands of dollars to get a GSA contract, a tool used to simplify contracting with the government. Afterwards, he realized they probably shouldn't have bothered.

"It basically meant nothing," he said.

DOD boosting underdogs?

McDonald said the government agencies and defense contractors he works with are interested in doing business with companies that get certain preferences under federal rules: small companies and those owned by minorities, women, and veterans. But he said the main thing they're looking for is what every customer wants: good products at competitive prices.

FishEye Software Inc. in Maynard fills another specific niche for military customers. With complex equipment like radar systems or power generators generating streams of data, the company's technology helps analyze the information in real time and provide useable information to the people who need it.

FishEye spokesman John Crowley said that, in addition to selling to both commercial and military customers, it works with the DOD's Small Business Innovative Research (SBIR) program and won a government grant to help patent its technology.

"SBIR is very helpful in supporting the development of leading edge technology where the government is seeking solutions and where large defense contractors are looking for a market edge that their research and development investments won't fund," Crowley said in an email.

Another small business working on new ideas for the military is Reactive Innovations LLC, a Westford firm with just seven full-time employees. Founder and President Michael Kimble said the company specializes in research and development of chemical-based systems. Kimble said its recent and current projects for defense agencies include a way of cleaning biomass gas for use as fuel, traps to look for insects carrying disease, and a method to concentrate oxygen for medical purposes.

Unlike huge defense contractors that are best suited to fulfilling contracts for proven technology worth hundreds of millions of dollars, Kimble said Reactive can take a shot at a brand new solution to a problem that may or may not work out. With dozens or hundreds of companies like it working on the same problems, the military is more likely to end up with something really groundbreaking and effective.

"We get to push the envelop with new technology development," he said. "It may not solve a particular immediate problem for the military, but it gives people a foundation to build upon."

Civilian trickle-down

Ultimately, those new technologies often find their way into civilian life as well. Biocchi, the MetroWest chamber president,noted that many mainstream products like exercise gear that wicks away moisture were developed through military initiatives to help servicemen and women in the field.

"Everybody likes to have clothing that wicks away sweat," she said.

At SEM, Mike Paciello said that's just the process that's happening now with the company's data security offerings. Five to eight years ago, he said, 95 percent of the company's business came — directly or indirectly — from the government. Now it's only about 80 percent. The growing slice of the pie comes from big commercial players in industries like finance and health care that want to have military-level security standards to protect information. They're buying SEM devices to shred misprinted credit cards or zap reams of patient data beyond the best hacker's reconstruction abilities.

"With all the recent breaches of privacy, they too now are making information security an important component of their business," Paciello said.

The technology that lets them do that—and other innovations that let them do all sorts of other things they might never have figured out on their own—is made possible by the constant collaboration between the military and a huge array of little businesses churning out new ideas.


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