Like a lot of big companies that offer contract R&D and specialized services, Columbus, OH-based Battelle has kept an office in San Diego for decades, mostly to manage technical programs and help clients like the U.S. Navy and Marine Corps on special projects.

That started to change, though, just over a year ago when Bhima Vijayendran arrived in San Diego from Malaysia. Vijayendran spent his previous three years leading research at a renewable energy laboratory in Kuala Lampur operated jointly by Battelle and Japan’s Mitsubishi Corp for PETRONAS, Malaysia’s government-owned oil and gas company.

“Until recently, this used to be more of a service office in San Diego,” says Vijayendran, a materials expert recognized for his work in polymers and surface chemistry. “Because of my background and my interests, I’m trying to bring a little bit more of a technology flavor” to Battelle’s San Diego operations.

Among other things, Vijayendran says he’s on the lookout for new business opportunities with local companies, as both an R&D partner and as a potential investor. Aside from managing seven federal research laboratories, Battelle has focused its business in three areas—national security, health and life sciences, and energy and cleantech. These focus areas coincide with some of San Diego’s most-prominent innovation clusters, so it would seem like a business match made in heaven.

Battelle is no ordinary business, however. It is the largest private nonprofit R&D organization in the world, known officially as the Battelle Memorial Institute, doing $6.5 billion in contract research with a global workforce of more than 22,000 employees. When Battelle licenses its technology, sells its stake in a startup, or acquires a new laboratory management contract, Vijayendran says the company donates 25 percent of the proceeds to charitable causes. Past inventions include xerography copier technology (which Battelle sold to Xerox), the scannable universal product code, the compact disc, and fiber optics technologies now owned by JDS Uniphase.

“We strongly believe that we’ve got to do creative work,” Vijayendran says. “We’ve got to make discoveries and inventions, but more importantly, these things have got to … Next Page »

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Last week I headed to the Detroit and Ann Arbor area to make my first visit to one of Xconomy’s newer outposts. I spoke with entrepreneurs and industry veterans, as well as academics and investors looking to jumpstart the region’s innovation engine. Some of what I saw and heard on my trip stood in stark contrast to the Boston technology landscape that I am accustomed to covering—and some was quite familiar. Read on for some of the key insights I took away from the trip.

1) Southeast Michigan lacks a well-connected, grassroots entrepreneurial culture.

It’s not that Detroit is lacking entrepreneurial talent, says Bill Volz, a business professor at Wayne State University and executive director of the Blackstone LaunchPad, an entrepreneurship program founded recently at the school. “The entrepreneurial community here—they don’t know each other at all,” Volz says. “They’re bright people and they’re interesting people. But they don’t know each other.”

It’s one thing that Detroit seems to have in common with Ann Arbor. And formally orchestrated business accelerator programs that put startups together won’t necessarily do the trick if the mindset isn’t there, says serial entrepreneur Dug Song, who’s currently CEO of Scio Security, a stealth-mode security software startup. “We don’t do nearly enough to help connect people here,” he says. “There’s not enough grassroots stuff going on. There need to be more opportunities for serendipity to happen.”

To create such opportunities, Song set up a co-working space in a former brewery building in Ann Arbor, aptly named Tech Brewery, which is now home to mobile app makers, University of Michigan biotech spinouts, cleantech startups, and software developers (including Scio Security). The co-working space is strikingly similar to Polaris Venture Partners’ Dogpatch Labs in Cambridge, MA. Song also favors events like casual hacker meetups where developers can get together without having to push toward a specific business plan. “That’s how companies happen,” he says.

Song says that the disconnectedness in the innovation community is at least in part an inheritance from the institutions that long defined the region, the big three automakers. “It’s the culture coming out of the auto industry: the culture of big, top-down institutions, silos, and big gaps between schools,” he says, pointing to the fact that … Next Page »

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There’s some news on the homeland security front today. Reveal Imaging Technologies, based in Bedford, MA, said it is being acquired by SAIC, the McLean, VA-based government contractor giant also known as Science Applications International Corporation (NYSE: SAI). Financial terms of the deal weren’t released, but the acquisition is expected to close by the end of this month.

Reveal was founded in 2002 in response to the U.S. government’s mandate for aviation security screening after the attacks of September 11, 2001. The company has developed imaging technologies for screening airport baggage and detecting explosives in checked luggage. The technologies are certified by the Transportation Security Administration and are used in domestic airports as well as abroad. Reveal is backed by venture investors including Brown Brothers Harriman, Flybridge Capital Partners, General Catalyst Partners, and Greylock Partners.

The Bedford firm will join SAIC’s Security and Transportation Technology Business Unit, which is part of the company’s Infrastructure, Energy, Health and Product Solutions Group led by Joe Craver. (Craver’s group also includes R.W. Beck, the Seattle-based consulting firm focused on energy and water management, which SAIC acquired a year ago.) The acquisition of Reveal looks like it will strengthen SAIC in terms of homeland security technologies. SAIC has about 45,000 employees and had revenues of $10.8 billion in its most recent fiscal year.

“SAIC’s world class technical expertise and R&D focus greatly expand our ability to provide leading edge detection solutions for our aviation and facility security customers,” said Michael Ellenbogen, president and CEO of Reveal, in a company statement.

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Chemically fueled improvised explosive devices (IEDs) are one of the deadliest hazards to soldiers in Iraq and Afghanistan, and incidents like the Oklahoma City bombing and the Sarin gas attack in Tokyo have demonstrated that civilians, too, can be the targets of chemicals and explosives. Now two organizations with Massachusetts roots are collaborating to offer a tool to protect professionals trying to identify explosives and other hazardous and toxic substances.

The Wilmington, MA-based Ahura sensor division of Thermo Fisher Scientific and the mobile robot division of QinetiQ North America, acquired in 2004 from Waltham, MA-based Foster-Miller, are equipping QinetiQ’s Talon robots with a powerful chemical detector. Ahura developed the laser-based instrument, called “FirstDefender RMX,” as a handheld device, and appropriately enough, the Talon robot carries the sensor on its gripper arm.

Sold to military organizations, bomb squads, police, hazmat specialists, and fire departments, the robot-sensor combination can quickly identify suspicious chemicals from a library of more than 10,000 substances, including explosives, toxic industrial materials, and chemical-warfare agents, according to the companies.

Foster-Miller introduced the Talon in 2000. The model, which carries the FirstDefender RMX, costs about $100,000, with options such as a gas and radiation detector kit adding to the cost; the Ahura sensor package costs an additional $50,000 to $65,000.

But despite the serious price tag, demand for the combined product is strong, especially because of the growing IED threat, says Duane Sword, vice president of marketing and international sales at Thermo Fisher Scientific. The total cost of $200,000 to $250,000 for a FirstDefender-equipped Talon is “a small price to pay for saving just one soldier from getting injured or worse,” Sword says.

The companies won’t talk much about exactly who buys the robots. These are sensitive devices, not sold to suspicious customers or countries.

Ahura’s FirstDefender sensor proved itself in the field last Christmas Day, when it was used by the Warren, MI, fire department at Detroit’s Metropolitan Airport to confirm that the substance that the notorious “underwear bomber” had attempted to ignite on Northwest Airlines Flight 253 was a chemical called PETN.

Founded in 2002, Ahura specializes in the development of rugged, ultra-compact, field-enabled optical systems for the immediate identification and verification of liquid and solid chemicals. Using a “point and shoot” laser, the FirstDefender RMX system can identify chemicals through sealed glass or plastic containers, protecting personnel from exposure to harmful substances. If you can see the substance with your eyes, Sword says, the instrument can identify it.

To develop its technology, Ahura raised venture funding totaling $29.5 million from venture capital firms that include Arch Venture Partners, Castile Ventures, Fuse Capital and … Next Page »

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The robotics industry in Southeast Michigan is attempting to turn the automotive slump into an opportunity to branch off into…well, automotive.

But where once the automotive market for robotics meant industrial-strength assembly-line work, the opportunity lies now in robotic systems that can be embedded in military and civilian vehicles. Such a shift entails a change in thinking. But it’s not so big of a change that existing-or, make that, surviving-robotics companies cannot hope to make the transition.

Those who are pushing for this transition say that it simply makes sense for a region that has a great deal of underused talent in engineering and robotics, along with excess manufacturing capabilities that can be adapted to new uses. Put all the pieces all together and aim them at an opportunity that is growing, such as the automated systems and sensors market, and Southeast Michigan could become a center for world-class automotive robotics innovation.

Leading the charge into this new robotics world is Col. James Braden, director of the Michigan Economic Development Corp.’s Defense Contract Coordination Center. He is gathering together representatives from industry, academia, and government, steering them toward a new Michigan Automotive Robotics Cluster (MARC) initiative.

But don’t let the fact that there is already an acronym for it fool you. The “cluster” is really mainly an idea that Braden is trying to turn into reality by pulling together interested companies and going for funding—and that’s as far as it’s gone right now.

The germ of this idea came from a July 2009 visit from Karen Mills, an administrator for the U.S. Small Business Administration, which is encouraging regional technology cluster initiatives across the country. She met with the local chapter of the Association for Unmanned Vehicle Systems International (AUVSI), along with area representatives of the automotive tier supply chain. Historically, Mills told the group, the robotics industry has been being driven chiefly by military needs. A big opportunity, she said, lay in transferring more of that capability to civilian use.

Braden wants to take Mills’ idea a bit further, saying that it is important to think about developing both military and civilian applications simultaneously. Robotics companies should not forego the short-term opportunity to sell to the military, he says, but they should also think about how to apply military technology to much broader commercial opportunities, such as the emergency first-responder and homeland security markets.

For example, Braden says, mobile military robots designed to find roadside bombs … Next Page »

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Something strange has been happening over at Adaptive Materials, a fuel cell developer based in Ann Arbor, MI. During the past few months, as everybody talks about how to get things moving forward in Southeast Michigan, Adaptive has been, well, actually moving forward.

A contract worth a few million from the Department of Defense here, an award worth another few million from the Air Force there, and more money to develop a product for the recreational vehicle market.

And then there’s the company’s recent resume-gathering blitz, hiring nine new engineers. That’s news in these parts (the company received an amazing 7,100 resumes for those nine plum jobs). So, I decided to find out what kind of magic is going on over at Adaptive Materials. I talked to Michelle Crumm, co-founder and chief business officer, and found out that there is no magic happening there at all. The success is the result of a decade of old-fashioned hard work and building of relationships.

Crumm also tells me that Adaptive just might be a victim of its own success now. The company made a decision 10 years ago not to seek angel or venture capital funding. She did not think it was right to use what she calls OPM (Other People’s Money) to fund a “wild and crazy idea.” A decade later, it’s no longer a wild and crazy idea. It’s a business getting ready to move from manufacturing a few hundred units to thousands. And the company could really use some non-government funding at this point. Trouble is, they’re just not wild and crazy enough to attract VC-style investors.

I’ll let Crumm explain what she means in her own words. Here’s an edited transcript of my recent talk with Crumm. Below is Part 1. We’ll run Part 2 later in the week.

Xconomy: First, let’s talk about your company, then we can broaden the conversation a little bit. Can you tell me the “elevator pitch” version of what your company does?

Michelle Crumm: Adaptive Materials started 10 years ago, and we’ve been focused on solid oxide fuel cells development. So, we’re an alternative energy development company. Our focus is portable power. In our early stage, we were primarily focused on military portable power for soldiers. Early successes in those programs, in the early 2000s, led us to getting to other power ranges—enough to power robots and airplanes.

So we provide [products] to “eyes-in-the-sky.” They get more power  when they’re flying unmanned aerial vehicles and longer duration capabilities when they have robots in the field. So, to protect them from IEDs [Improvised Explosive Devices], they can send robots out. About 12 hours is our most recent demonstration. So, about 10X longer mission for a robot in the field than a battery.

X: Is that being used in the field now?

MC: We have a small number of units out in different locations throughout the world for unmanned aerial vehicles and unmanned ground vehicles.

X: From what I’ve heard, there’s more of an emphasis on small, portable robotics in Afghanistan because of the mountainous terrain.

MC: Exactly. That’s been significant, just the change between the two wars. There’s definitely … Next Page »

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1. Reinforce success — Our research and development ranks second in the nation behind Delaware, in part because of the massive amount of research done by the auto industry. In spite of the current problems, this research has allowed Detroit to lead the auto industry for almost 100 years. A great deal of this research has application in non-automotive sectors. We need to access it.

2. Focus on our strengths — Detroit is on the border of another country and 20% of the world’s fresh water. By focusing on its unique location and assets, it has an opportunity to become a leader in certain business areas such as water purification and use technology, homeland security, and international trade, including logistics.

3. Develop a package of support systems for new entrepreneurs that can be scaled and replicated throughout the region — Throughout the world there is recognition that business incubators can dramatically improve the chances of new business success. We need to figure out the right combination of services—and the ways in which those services can be delivered to the maximum number of pre-qualified potential entrepreneurs.

4. Alter the culture within universities — Universities, particularly research departments, have to be recognized for the value they bring through the transfer of intellectual property to locally established companies. Tech transfer departments have to become entrepreneurial in their approach to speeding technology from the lab to the marketplace.

5. Identify early stage finance for startups — Without early-stage financing new business activity will not happen. We need dedicated funds that make bets on early-stage enterprises and move companies to the point where they can qualify for more traditional financial support from venture capitalists, angel investors, and banks.

[Editor's note: To help launch Xconomy Detroit, we've queried our network of Xconomists and other innovation leaders around the country for their list of the most important things that entrepreneurs and innovators in Michigan can do to reinvigorate their regional economy.]

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It was a busy week for local technology news.

—Two teams from San Diego and a third from Northern California demonstrated their development of advanced chemical sensor prototypes that are tiny enough to be found inside ordinary cell phones. The U.S. Department of Homeland Security is funding the Cell-All program, with a goal of basically creating an anti-terrorism app for cell phones that would enable authorities to crowd-source chemical detection.

—MaxLinear has filed for its initial public stock offering. The Carlsbad, CA-based fabless chipmaker, which specializes in designing semiconductor-based television receivers, intends to raise about $100 million through its IPO. The market may be de-frosting a bit, with 47 IPOs so far in 2009, compared with 45 last year, and 272 in 2007.

—ProQuo, a San Diego-based Web 2.0 company that was founded in 2007, was quietly shut down after taking in a total of $15 million in venture capital from Menlo Park, CA-based Draper Fisher Jurvetson and San Diego-based Mission Ventures. ProQuo was never able to validate its business model; its website offered consumers a way to remove their names from mass-mailing lists for free, and the company planned to sell its optimized lists back to mass marketing companies.

—San Diego’s wireless industry group, CommNexus, celebrated the opening of EvoNexus, its free high-tech incubator, by announcing the selection of three more startup companies: EcoATM, MicroPower Technologies, and TetraVue. CommNexus CEO Rory Moore says EvoNexus is believed to be the first incubator that is completely free for startups—that is, it doesn’t even require an equity stake in participating companies, as most incubuators do.

—Jitterbug, the San Diego wireless provider that puts an emphasis on simplicity, has acquired MobiWatch, a Waltham, MA-based startup developing mobile personal emergency response services. A regulatory filing shows that Jitterbug’s parent, GreatCall, provided 630,000 shares of common stock to MobiWatch and its shareholders in a deal valued at $107,100.

—San Diego-based Networkfleet is using its technology to help companies that operate fleets of vehicles go green by monitoring engine emissions and ensuring that vehicles are operating efficiently. Co-founder Diego Borrego told me the company also expects to be a player as consolidations sweep through the fleet tracking industry.

—EcoDog, a Vista, CA, cleantech startup that has developed a device that helps homeowners sniff out savings in their electric utility bill, was named best of show at GadgetFest, the annual fall competition sponsored by CommNexus, the San Diego wireless industry group. EcoDog founding CEO Ron Pitt won over the crowd when he declared, “My product is the only product up here tonight that saves you more money than it costs.”

—San Diego-based cleantech startup EESG is looking to raise $1.2 million to expand the 10-employee company’s sales staff, purchase inventory, and ramp up public relations and marketing. The company’s founders told me they have raised about half so far, including $300,000 from Longboard Capital Advisors, a green investment firm based in Santa Monica, CA.

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[Updated at 4:45 pm 11/2/09 to clarify size of NASA Ames sensing device] The U.S. Department of Homeland Security has taken the wraps off a program to develop miniaturized sensor technologies for detecting deadly chemicals—sensors tiny enough to be installed inside ordinary cell phones.

DHS officials meeting in San Diego last week say they have provided total funding of roughly $3 million over the past year for what they call their “Cell-All” program. The funding went to three different R&D groups—including two teams based in San Diego—who successfully demonstrated their prototypes Oct. 27 at San Diego State University’s Regional Technology Center for about 40 government and industry representatives. Among other things, the center serves as a technology clearinghouse and homeland security test bed for public safety agencies in the region.

While implementing such technology is still years away, DHS officials say the concept would make it possible to deploy millions of chemical sensors in the pockets, purses, and belt holsters of cell phone users throughout the United States. Their goal is to integrate miniaturized “sniffer” technology with the mobile handset’s operating system so that a sensor that detects certain volatile chemical compounds would trigger a warning alarm on the user’s phone. At the same time, data about the chemical would be transmitted to first responders and federal emergency operations centers.

“It’s almost like crowd-sourcing the chemical detection problem,” said Stephen Dennis, who is overseeing the Cell-All program for the DHS Science and Technology Directorate in Washington D.C.

Whether a cell phone owner would still be alive after his phone helped to detect, say, a nerve gas attack is another question. But the arguments cut both ways. Japanese emergency services and hospitals were heavily criticized for their slow and uncoordinated response to the 1995 gas attack in Tokyo’s subways. Doctors at many hospitals did not realize they were dealing with cases of sarin nerve gas poisoning until a professor at Shinshu University’s school of medicine recognized the symptoms from television news accounts and mobilized a team to send diagnosis and treatment information by fax. The sarin killed 12 people and sickened thousands.

If such cell phone sensor technology is eventually deployed, Dennis emphasized the system would use an “opt-in” network that would require each cell phone user to activate the sensor in their handset. “We’re very mindful of privacy issues,” Dennis said. “Even though it’s very early in development, we want to send the message that people will control whether or not they want this technology.”

It stands to reason, though, that enough people would participate so that conceivably hundreds, or even thousands, of sensor-equipped cell phones would be present at any given time in shopping malls, airports, public transit systems, and other places where people congregate.

“Instead of large stationary [sensor] systems, you’d have numerous, ubiquitous sensors throughout a region,” Dennis said. “Putting the sensors where people are is a big goal.”

The sensor technology under … Next Page »

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San Diego is a major border city, tourism destination, and convention hotspot, so it should come as no surprise that the U.S. State Department recognizes 25 consular representatives of foreign governments in this area. But with a handful of exceptions, nearly all of them are honorary positions with no regular office hours.

Among the exceptions is the Canadian consulate, which operates with an unusually narrow focus on San Diego’s science and technology innovation scene, according to Sean Barr, who is Canada’s current consul here. Barr says that makes the consulate’s five-person staff in San Diego unusual even compared with Canada’s embassy in Washington D.C., and its consulates general, which provide full diplomatic and consular services in major U.S. cities, including Boston and Seattle.

Barr says the Canadian government made a commitment five years ago when it established the San Diego consulate, which does not provide diplomatic or full consular services. “We are the only full-time consulate presence in San Diego focused on science and technology,” Barr says. “So the Canadian government has sort of recognized that the opportunities here are significant enough to warrant a full-time presence that’s focused on the life sciences and biotechnology, cleantech, ITC (Information Technology and Communications), and defense and homeland security.”

Such opportunities have resulted in a number of cross-border collaborations between San Diego companies and Canadian firms, and Barr listed a number of examples:

—Gen-Probe, a San Diego medical diagnostics company, has been collaborating with Quebec-based DiagnoCure to develop a better method to screen for prostate cancer.

—San Diego’s Isis Pharmaceuticals, which has been developing drugs based on its RNA anti-sense technologies, has been working with OncoGenex Technologies of Vancouver, BC, on an experimental drug for prostate cancer. OncoGenex specializes in developing compounds that inhibit the production of proteins that promote resistance to drug treatments.

—San Diego-based Illumina is working with researchers at Montreal’s McGill University, Genome Quebec, and Genome Canada to create a special map of human genes. The map will serve as an important resource for researchers trying to identify genes that affect health and disease, and genetic responses to drugs and environmental factors.

—-Cubic Security Systems, a unit of San Diego-based Cubic Corp., intends to integrate radiological detection technology developed by Mobile Detect Inc. (MDI) of Ottawa, ON, under a purchasing, support and licensing agreement. Barr says MDI’s technology, which is capable of distinguishing between illicit radioactive agents and nuclear medicines, is intended for use in scanning systems Cubic has been developing for the transportation industry.

—ISE Corporation, a San Diego-based maker of hybrid electric drive systems and components for buses, trucks, and other heavy-duty vehicles, is working with New Flyer Industries, a bus manufacturer based in Winnipeg, Manitoba, and Ballard Power Systems of suburban Vancouver BC to deliver 20 fuel-efficient buses for use during the Winter Olympic Games that begin Feb. 12 in Vancouver.

Barr says the consulate cannot claim credit for all these collaborations, but he says, “It is our role to make those matches and to facilitate those relationships.”

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In financial results issued late yesterday, San Diego defense contractor SAIC attributed its increased second-quarter revenue and earnings to “recent wins in defense logistics, information technology, and cyber-security,” among other things.

That last part about cyber security may be an understatement, based on a conversation I had last night with Alan Paller.

As a founder and director of research at the SANS (SysAdmin, Audit, Network, Security) Institute, a cooperative computer security organization in the Washington, D.C. area, Paller has a front-row view of the relentless electronic attacks besieging the nation’s computer infrastructure. He gains much of his insights through his work with SANS, which conducts research and training for system administrators, and oversees the Internet Storm Center, a volunteer Internet security monitoring organization. In the 20 years since the institute was founded, Paller also has developed an extensive network of professional connections in network security both in and out of government.

Alan Paller

As Paller told me last night, Internet attacks on government computer networks have become a constant threat, an intense storm that’s not just rattling windows and doors, but also breaking into sensitive government computer systems that store data about U.S. technology. It is a warning he often makes. Yet one reason why SAIC is becoming so crucial stems from testimony he delivered just five months ago to the U.S. Senate Committee on Homeland Security and Government Affairs. In his presentation, Paller emphasizes two new realities about the nation’s cyber-infrastructure:

—Computer attacks by hackers, nation states (e.g. China), organized crime in Eastern Europe, and even terrorist groups have more deeply penetrated U.S. civilian government agencies and the critical national infrastructure computer networks (e.g. computers that control power grids) than has been publicly disclosed.

—The attackers are improving their techniques far faster than the U.S. government has been improving its defenses. In other words, the threat is increasing at an accelerating rate.

Paller contends that SAIC, with its institutional expertise in IT systems integration for U.S. intelligence and defense agencies, is way ahead of other defense contractors because “a lot of the guys with security clearances don’t have the necessary skills.” His insights helped give … Next Page »

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In 1994, the Pentagon awarded a contract to develop a new type of unmanned aircraft to a three-year-old company in San Diego. The idea behind the Advanced Concept Technology Demonstration was to build a more robust version of a drone that a former Israeli aircraft designer had developed in the 1980s. The result was the Predator, an unmanned surveillance aircraft that has become a mainstay of U.S. military forces, and which is renowned for its role in Iraq and Afghanistan.

San Diego’s General Atomics Aeronautical Systems has been steadily expanding the aircraft’s capabilities ever since, and the Predator’s role has grown from the CIA and U.S. Air Force, to include the Navy and Army. The private company embarked on a new course, though, on Sept. 1, 2005, when the U.S. Department of Homeland Security selected the Predator for a new role—as a robot on air patrol above the borders of the United States itself.

Until now, the CBP mission has focused on the U.S. border with Mexico and in the Caribbean. The agency flies Predators from a base in Sierra Vista, AZ, where it maintains four of the unmanned aircraft. But the mission entered a new phase in recent weeks, as CBP gears up to begin Predator air patrols along the North Dakota border with Canada.

A border patrol Predator

“This is a first deployment to get the lay of the land and see how well it operates,” said CBP Air and Marine Assistant Commissioner Michael Kostelnik, a retired Air Force major general. He says pilots who fly the aircraft remotely from a new CBP unmanned aircraft operations center in Grand Forks, ND, will have to gain experience, for example, landing a Predator on icy, windswept runways in winter.

Kostelnik told me it’s also trickier for a Predator pilot to detect ice building up on the aircraft’s wings, because they’re not in the cockpit. He says one of the pilots in Arizona who flew a Predator into Hurricane Gustav in September realized ice was building up … Next Page »

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Michael Jones has an unusual perspective on the defense industry for a guy who oversees a non-profit industry group for San Diego’s defense and homeland security companies.

While the defense industry abounds with examples of advanced technologies, “big defense companies are not doing innovation,” says Jones, chairman and CEO of The Security Network. “They’ll even tell you that they’re not really innovators. What they want to do are big projects that combine technologies. They’re essentially big systems integrators.”

So where does innovation come from in the defense industry?

In San Diego , a lot of it comes through the small companies that belong to The Security Network. The organization, formed in 2004, coordinates the interests of government and law enforcement agencies, defense companies, university laboratories and other interest groups in the San Diego region. Sometimes that involves sponsoring events, such as the one-day forum held last week on “Maritime Law Enforcement and Security.” Sometimes that involves identifying and developing new technologies sought by Gary Wang, the chief technology officer at SPAWAR, the Navy’s San Diego-based Space and Naval Warfare Systems Command.

SPAWAR is a major Navy acquisition arm with more than 7,500 employees that awards billions of dollars in contracts each year—primarily to advance developments in C4ISR, a military acronym for command, control, communications, computers, intelligence, surveillance and reconnaissance.

So how does The Security Network work with Wang, who oversees SPAWAR’s science and technology labs on Point Loma?

“The world that the DoD (Department of Defense) and defense contractors live in is very insular,” Jones says. “So (Wang) is interested in finding new technologies so the government doesn’t waste a lot of time and money trying to develop something that already exists. Because if you’re a big contractor like Lockheed Martin, you don’t care if the technology the government wants already exists somewhere else. You want the government to pay you to develop the technology yourself.”

So The Security Network serves an important role, Jones says. “We try to find innovative, … Next Page »

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No Honor Among Internet Thieves

Even phishers—people who fake legitimate-seeming sites to trick people out of their financial information—are subject to phishing attacks, according to the Wall Street Journal. Apparently more seasoned scam artists are targeting newbie hackers and stealing the same credit card numbers they steal. For instance, they’ll sell would-be criminals software to set up a fake bank website, and then get their own copy of all the information the website collects.

Homeland Security Chief Talks of Cyber Threats

Fearing online attacks that could compromise intelligence information or shut down utilities, the government is taking an increased interest in cybersecurity, head of Homeland Security Michael Chertoff says. Wired has a long and varied interview with Chertoff that also touches on the issue, currently percolating in the blogosphere, of border guards seizing laptops from travelers.

Group Promotes Cybersecurity for Next President

A private organization is looking for ways the government can make cyberspace more secure. The Commission on Cyber Security for the 44th Presidency, a group organized by a Washington think tank, is working on recommendations it can make to the next president. CNET News reports that four members of the commission discussed some of their work at the Black Hat security conference in Las Vegas this week.

Ethanol Demand May Pose Health Risk

In a somewhat round-about way, the increasing demand for ethanol from corn may be leading to an increased risk of lead poisoning in children, some researchers warn. An article in the American Chemical Society’s journal Environmental Science and Technology points out that ethanol demand, as well as increasing demands for food from emerging economies, are driving the demand for phosphates used in fertilizers. Those same phosphates are added to water supplies to prevent lead pipes from corroding, and a shortage could mean more of the metal in drinking water, where it can harm children’s cognitive development.

California Company Captures Carbon for Concrete

A California company, Calera, has developed a process in which it captures the carbon dioxide emitted by a natural-gas-burning power plant, pumps it through seawater, and produces the materials needed to make cement. Normally the process of making cement releases at least a ton of carbon dioxide for every ton of cement, but the company says it captures half a ton of C02 for each ton of cement it makes, according to Scientific American. Since cement and its sister material, concrete, are widely used in buildings all over the world, such a change could have a significant impact on global warming.

UN Wants to Tighten Carbon Offset Rules

The United Nations wants to make sure its system of trading carbon credits actually results in a reduction of the greenhouse gas. Under the UN’s Clean Development Mechanism, companies can buy the right to emit more carbon into the atmosphere by purchasing carbon offsets, which fund projects that reduce carbon emissions elsewhere. The International Herald Tribune reports that the UN wants to make sure any reductions are a direct result of the purchasing system, and aren’t just from projects that would have gone ahead without the incentive.

Computer Giants Have Their Heads in the Cloud

The current high-tech flavor of the month is cloud computing, in which applications and computing power run on remote machines that don’t necessarily belong to the user, saving time and expense. Technology Review tells us that Intel, Yahoo, and HP, along with research groups in Illinois, Germany, and Singapore, have formed a cloud computing initiative. The aim is to develop an Internet-based infrastructure that is stable enough to host companies’ more critical data processing tasks.

IKEA to Offer Cleantech Products

It’s not just bookcases and build-it-yourself credenzas for Swedish furniture store IKEA anymore. As the Cleantech Group reports, IKEA plans to invest in clean energy startups over the next five years to the tune of 50 million euros (about $77 million). Its goal is to eventually start selling cleantech technology, including smart meters and solar panels, in its stores. No word on whether solar panel installation requires more than that little wrench thingie.

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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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At QD Vision in Watertown, MA, engineers are building on nanoscale “quantum dot” technology pioneered at MIT to create a new generation of light-emitting devices (LEDs) that could eventually be used in video displays with brighter colors, blacker blacks, and far higher energy efficiency. And gradually the company has been showing up on the radar screens of outside supporters and investors— including In-Q-Tel, the venture wing of the U.S. intelligence community, which announced a strategic investment in QD Vision yesterday.

The amount of the investment wasn’t disclosed, but QD Vision says that it brings the total government funding it’s won in the last year to $5 million. The company also has funding from the National Institute of Standards and Technology’s Advanced Technology Program and the Air Force Office of Scientific Research.

QD Vision doesn’t yet have a commercial product, but if its development efforts are successful, it could find itself at the center of a revolution in display technology. Current liquid crystal displays (LCDs) are illuminated by electricity-thirsty fluorescent backlights and produce muddy, impure shades of red, green, and blue. By contrast, QD Vision’s “quantum dots”—tiny semiconductor crystals only a few nanometers in diameter—produce highly pure colors when stimulated by electrons, and require much less electricity in order to glow brightly.

The four-year-old company’s main backers to date have been Highland Capital Partners and North Bridge Venture Partners, which provided initial venture support, as well as a $7 million Series B round last year. Accompanying the strategic investment by In-Q-Tel was a “technology advancement agreement,” which amounts to a longer-term promise that the organization will help QD Vision get its technology off the ground and adapt it for the specific needs of users in the intelligence community.

Exactly what those needs might be, no one is saying. But it’s not hard to imagine how brighter, crisper, less energy-hogging LED-based displays might be useful in IT-driven intelligence-gathering and command-and-control applications. “The fact that they excel on color purity and brightness combined with efficiency is what’s rare” about QD Vision, says Donald Tighte, In-Q-Tel’s vice president of external affairs. “A lot of solutions in the display marketplace hit two of those three—for example, you can get greater brightness in your laptop screen but you pay a premium in terms of the power drain on your battery. But [this technology] combines excellence in visibility, purity, brightness, and energy efficiency. It’s one of the things that has us excited about the company’s commercial applications and also, we hope, it’s applications within the intelligence community.”

The QD vision deal is only In-Q-Tel’s second investment in the Boston area since the organization set up a local office in Waltham, late last year. The first was in Cambridge, MA-based CoreStreet, which is developing smart-card-based access systems for secure buildings. But even before it had a local office, In-Q-Tel was an active investor in Boston-area technology firms with intelligence-related technologies, including Basis Technology, BBN Technologies, Ember, Endeca, Metacarta, Polychromix, Sionex, Spotfire, Streambase, and Traction Software.

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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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The U.S. Department of Homeland Security isn’t exactly known for innovation—and, in the past, that has held true even for its Science & Technology Directorate, the research and development arm of DHS that’s meant to serve as its innovation engine. But The Honorable Jay Cohen, Under Secretary of Science and Technology for DHS, has made it part of his mission to change that image and transform his directorate. He will be joining me for an up-close-and-personal conversation at our upcoming Xconomy Forum on March 5: Homeland Security and the Innovation Community. Cohen has also graciously agreed to sit down for lunch with attendees after our chat, making this a rare opportunity for local innovators to meet the Under Secretary face to face.

I think it’s safe to predict that you never have engaged with and been entertained by a member of the DHS hierarchy the way you will with Cohen. If you have ever doubted that the federal government has room for wild card, out-of-the-box thinking and colorful characters, he might force you to rethink that view.

I’ve known the Under Secretary, a retired U.S. Navy admiral, for close to a decade, since his days as Chief of Naval Research and director of the Office of Naval Research. He spent some six years at ONR instituting many of the same types of changes he’s trying to bring to DHS. At the Forum, I’ll be talking with Cohen about his efforts to revitalize the directorate through a series of programs and initiatives designed to connect “customers” in the U.S. government with entrepreneurs, companies, and other innovators, as well as with the first responder community.

Draper Laboratory in Cambridge, MA, is hosting the event, which is by invitation only and limited to 50 guests. All the particulars, as well as instructions for requesting an invitation, can be found here. I encourage you to sign up soon—chances to meet folks like Cohen are few and far between.

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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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