American Science and Engineering, based in Billerica, MA, announced yesterday that it has received a $6.2 million contract from the NATO C3 Agency to deliver its X-ray screening systems for cargo and vehicles to security checkpoints. AS&E’s Z Portal and other inspection technologies compete in the same space as Acton, MA-based Passport Systems.

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Reveal Imaging, a Bedford, MA-based maker of explosives detection devices, said Tuesday that it has collected $20.3 million from a group of investors led by BBH Capital Partners III. The fund, managed by Brown Brothers Harriman of New York, put up $18.75 million, while the rest of the new money came from Reveal’s existing investors, including Waltham, MA-based Greylock Partners, Cambridge, MA-based General Catalyst Partners and Boston-based Flybridge Capital Partners.

Reveal’s luggage-screen systems employ tomography technology similar to a medical CT scan and are used at airports and other high-security facilities. Its machinery can be purchased in the form of stand-alone units or integrated into luggage handling conveyor systems.

Last year Xconomy wrote about a company in a similar niche, Passport Systems. The Acton, MA producer of cargo screening systems raised $7.4 million last November.

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Passport Systems, the Acton, MA-based maker of cargo screening systems profiled here in September, has closed on about $7.4 million of an anticipated $10 million funding round led by angel investors and two local venture funds, according to company COO Bill McLendon. PE Week Wire first reported the milestone this morning.

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The next time you are waiting for your luggage at the airport baggage carousel and marveling at the security challenge posed by those hundreds of bags, consider this: somewhere between 9 and 11 million cargo containers come into the United States through its 361 seaports annually, according to the Department of Homeland Security. That’s roughly 2 billion tons of freight, making up 95 percent of the nation’s overseas trade. Anyway you look at it, port security represents a major vulnerability in the fight against terrorism. And today, some six years after the terrorist attack of September 11, 2001, unlike that airport luggage (as you’ve no doubt heard) only a fraction of the shipping containers entering the United States are fully inspected to make sure they aren’t carrying weapons of mass destruction or other contraband.

That’s where a fast-growing, Acton, MA-based startup called Passport Systems comes in. The company is designing and building new cargo screening detection devices with technology developed at MIT. Its first target: the nation’s seaports. The privately held firm was founded nearly five years ago, in 2002, by a group led by well-known venture capital investor Gordon Baty, a retired director and co-founder of ZeroStage Capital (all told it has raised some $3.4 million in two rounds of venture financing). To date, the firm has also garnered more than $15 million in U.S. government contracts to develop two related detection systems that can automatically determine the “nuclear fingerprint” of a shipping container’s contents within 20 seconds.

The technology won’t be cheap to develop or build. But Passport Systems believes the added security will be well worth the price. The whole reason the firm exists, says Gustavo Bottan, VP for business development, is because its founders, including MIT physicist William Bertozzi, “saw the potential for using new technology to solve a very significant problem.”

Bertozzi’s brainstorm occurred to him in his MIT lab not long after the Lockerbie terrorist explosion of a Pan Am jet in 1988. Bertozzi says the incident spurred him to use his knowledge of nuclear physics to try to combat terrorism. The result was a technique called Nuclear Resonance Fluorescence, or NRF, that uses gamma rays to detect the unique atomic makeup of any cargo materials with atomic weights higher than that of helium. Bertozzi and MIT won two broad patents on all uses of NRF technology, and Passport Systems obtained exclusive rights to the technology.

Bertozzi’s NRF technique capitalizes on the ability of the tiny-wavelength gamma rays in a high-energy photon beam to penetrate the steel walls of the containers, and the fact that the nucleus of every atom, when excited by the rays, displays a unique fingerprint that can be detected by a specially designed spectrometer. As a result, the technique can theoretically tell the difference between even isotopes of the same material, distinguishing, for instance, between depleted uranium (U-238) and the enriched uranium (U-235) capable of being used in a nuclear device. As Bottan explains, this capability can be crucial in limiting false positives. Other sophisticated detectors, he notes, might be able to determine that a container holds a metal with a high atomic number, indicating either nuclear materials or the metals, such as lead and tungsten, that might be used to shield them. “But do you evacuate the port?” he asks. NRF scanning could, in a matter of seconds, determine that a container didn’t just have lead shielding, but that it held enriched uranium. In that case, Bottan says, “you’d have plenty of information right away to know you had a serious problem.”

Currently, Passport Systems is involved in trying to meet last year’s mandate by the U.S. Congress that all incoming cargo to the nation’s seaports be screened for radioactive materials by the year 2011. In the so-called CAARS Program (Cargo Advanced Automated Radiography System), the U.S. Domestic Nuclear Detection Office (DNDO) within the U.S. Department of Homeland Security has awarded more than $1 billion in contracts to three large firms to accomplish the task: New York City-based L-3 Communications Holdings Inc., San Diego-based Science Applications International Corporation (SAIC), and American Science & Engineering Inc. (AS&E) of Billerica, MA. Passport Systems is designing a module for AS&E’s detector system that will automatically sound an alarm when the system detects any nuclear threat, shielded or otherwise. The contracts stipulate that these systems be ready to enter a production phase by mid- to late 2009.

In addition to its work on the CAARS program, though, Passport Systems is working on its own to take full advantage of the company’s patented NRF technology with a system that will allow complete, real-time cargo identification. The graphic shows one conception of the company’s plan in which the shipping containers are driven on trucks through an automated detection system. The firm recently won a U.S. government “proof-of-concept” contract worth a possible $9.8 million for what the government considers a “transformational technology” that will use spectrometers to give inspectors a real-time read-out of the contents of a container or cargo hold. Passport Systems’ 23-person team in Acton is actively at work on the system. Bottan stresses that the technology itself is proven, but the focus now is toward the creation of a prototype that can reliably scan containers fast enough to avoid impeding the flow of cargo.

Adding to the degree of difficulty, the Passport Systems detection system must be safe enough to pose no threat of radiation exposure to operators. According to Bottan, the government requires that any seaport cargo screening system must emit so little residual radiation that a pregnant woman could safely be in the vicinity of the scanner.

Still, Bottan is optimistic. He says Passport Systems is designing its state-of-the-art NRF scanner to ultimately work either as a stand-alone detection system or as an add-on to complement detection systems already in place. And, he says, “We think we’re on track to meet all the government’s requirements.”

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