Ready to Tap Explosive Market

Every day, thousands of pieces of luggage--suitcases, duffels, boxes, cassette recorders--pass through the terminals at New York’s John F. Kennedy International Airport. And, now more than ever, airline passengers are aware that any one of those items could harbor their worst nightmare: a hidden bomb.

But, when San Diego-based Science Applications International Corp. unveils its explosives detection system at the busy airport next month, the company could revolutionize air safety and help calm passengers’ nerves.

New York’s Kennedy Airport will be the first terminal to receive a detection unit under a new Federal Aviation Administration mandate that takes effect in September requiring airlines to install explosive detection systems (EDS), such as the one manufactured by SAIC, at about 40 “high-risk” U. S. and foreign airports. Gatwick Airport near London should be equipped with detectors soon, too.

Over the next decade, the FAA could require that as many as 1,250 of the bomb detection units be installed at U. S. and international airports to safeguard passenger safety, a policy that would create a huge market for SAIC and others. An FAA ruling that is expected out next month will detail how many EDS units are to be required.

SAIC’s machine, a conveyor belt system that weighs about 20,000 pounds, is 6 feet tall, 13 feet and 7 1/2 feet wide. It is the only FAA-approved detector now available. But industry analysts say the mandate will spur other manufacturers to develop competing models for a share of what may become a billion-dollar market.

“There’s been interest in EDS for quite some time, but Flight 103 was the real catalyst,” said John Murphy, a research analyst at Drexel Burnham Lambert in New York, referring to the Pan Am jet obliterated last December over Lockerbie, Scotland by a terrorist’s plastic explosive, killing all 259 passengers aboard.

“That’s what caused the public outcry, what got the politicians moving. That’s what forced FAA to come out with this ruling,” Murphy said.

There are now only two major contenders for EDS business, Murphy said, referring to SAIC and Thermedics, a Woburn, Mass.-based manufacturer that is selling a detection unit that has yet to receive FAA approval. Company officials said last week that the FAA is evaluating their product.

As many as a dozen other companies might enter the EDS market in the next couple of years, industry analysts say. Besides SAIC, two other San Diego companies, GAMMA--METRICS and Titan Corp., possess technology applicable for EDS systems. But both are awaiting next month’s FAA ruling that will detail EDS requirements before embarking on product development.

It appears then that SAIC will be the first to reap the riches of the EDS market with its thermal neutron analysis bomb detection systems that will sell for nearly $1 million each. SAIC officials say the detectors, which have been in development since 1985, are worth every penny.

“The current X-ray machines are good to detect metal objects and some explosives, but it only outlines the shape of objects in two dimensions,” said Tsahi Gozani, SAIC’s vice president and chief scientist based in Santa Clara. “You’re relying on the operator to spot a suspicious device. If it’s well concealed in a cluttered suitcase, it can get by undetected.”

‘Signature’ Rays

The thermal neutron analysis detector, on the other hand, is an automated system that does not rely on human judgment. The detector’s conveyor belt sends luggage through a field of thermal neutrons. Each item examined emits gamma rays as it passes through this field. Commercial and military explosives all contain nitrogenous material, which, when bathed through thermal neutrons, emit unique “signature” gamma rays.

Such “fingerprints” inform the detector that a potential explosive has been spotted, setting off an alarm.

Another selling point is that the system can effectively detect a variety of bombs, including extremely potent plastic explosives such as Semtex, which normally escape detection by conventional X-ray machines and bomb-sniffing dogs. Authorities have determined that Semtex was the culprit that brought down Pan Am Flight 103.

“Even if you have a good, attentive X-ray operator, plastic explosives can be shaped or molded to look innocuous,” Gozani said. “In such cases, it’s practically impossible to detect them.”

Recently, SAIC tested its detector by screening 40,000 pieces of luggage at Los Angeles International and San Francisco International, Gozani said. Some of the bags contained simulated explosives. The test proved the detector to be 95% effective. From 2% to 5% of bags inspected, which contained harmless items such as heavy wool coats, also set off alarms, Gozani said. Heavy wool coats or other items that contain high concentrations of nitrogenous material can trigger the detector, too, he added.

During the test, the machine processed 10 pieces of luggage a minute--a tad slower than traditional X-ray systems that scan 15 pieces a minute.

The machine can be made 100% effective, but the increased sensitivity could send the number of false readings up to 15% to 20%, Gozani said.

Residual Radiation?

Some critics have raised concern that SAIC’s device generates harmful residual radiation, but company officials insist that it doesn’t.

“We’ve invested a lot of effort on that, and it’s been studied to death,” said Gozani about the detector’s radiation emission. “The radiation is absolutely minimal. There is no danger.” The U.S. Nuclear Regulatory Commission and the state Office of Radiological Health has determined that the machine does not generate harmful levels of radiation.

Initially, SAIC was using thermal neutron analysis technology in its coal analyzer, which was also developed by Gozani in 1980. The analyzer detected sulfur emission from coal for pollution control systems. After the success of the coal analyzer, SAIC scientists were brainstorming about other uses for the technology, when they learned that the FAA was soliciting manufacturers to build explosive detection systems. In 1985, the FAA awarded a contract to SAIC. Since then, the government has provided $12 million to SAIC for research and development of the thermal neutron analysis detector.

Thus far, the FAA has purchased six detection systems, and the agency has an option to purchase four more.

SAIC officials say the FAA’s upcoming ruling in September could create a much larger market. “By early next year we’ll be able to produce 50 to 100 units a year, and more, if there’s a greater demand,” said Chuck Nichols, SAIC’s vice president.

Whether such a demand materializes depends greatly on the type of ruling the FAA issues next month. The ruling will dictate how many U.S. and international airports will be required to use the bomb detection units, how many flights would have to employ them and what the timetable would be for installation.

On July 6, the FAA issued a draft of the ruling that would require screening of checked baggage for U. S. international flights departing from 40 “high-risk” domestic and foreign airports. By 1999, the FAA wants checked baggage for all U. S. international flights to be examined, which would require about 400 EDS units costing more than $450 million.

The FAA is considering three alternatives, but, under congressional order, must decide which option to choose by Aug. 29, said John Leyden, FAA spokesman. The most stringent option would require the installation of 1,250 units to screen checked baggage for domestic and international flights at 427 U. S. and 95 foreign airports. It would cost more than $1 billion.

The third and least costly alternative, which would require 270 units by 1999 at a cost of $300 million, is the version backed by the airline industry. The Air Transportation Assn., the Washington-based trade group for major U.S. airlines, advocates screening checked baggage for international flights at selected airports only when there is a threat of a terrorist attack, said association spokesman Tim Neale.

The airline industry is lobbying against the more costly EDS alternatives because its member carriers, and not the government, would probably be stuck with the hefty installation bill, Neale said.

“The purpose of the EDS is to protect American lives overseas. Therefore, we feel that it is a legitimate public expenditure,” Neale said. “We are a surrogate target. The government is the true target. Why should we have to pay for it?”

Although the industry acknowledges the SAIC detector’s ability, the association has been reluctant to accept it because it has yet to be proven in a prolonged operational setting.

“It’s a very valuable new tool,” Neale said. “But it hasn’t really been tested in an operational setting. For example, it could take an awfully long time if you get a lot of false alarms, and you can imagine what kind of delays that could cause.

“On top of that, the device is very large and very heavy,” Neale said. “We’re limited as to where we can put them. In many cases, we’ll have to build a special shed for them. The carriers are still trying to figure out how they’re going to integrate it into their systems.”

Airline industry officials say they are hoping competing companies enter the EDS market and develop smaller, lighter and less-expensive detectors.

Meanwhile, analysts and manufacturers have taken ringside seats to see how the transportation association fares in its fight to water down the FAA ruling.

“The resistance from the airlines is very vociferous, which will force the FAA to pass the ruling in the least-stringent way--at least that’s my assessment,” said Mike Carstens, a research analyst at Tucker Anthony, an investment brokerage firm in New York. “But such requirements for EDS systems will become more and more stringent. Over the next two years, it’s going to become a significant market.”

Whatever form it takes, the FAA ruling will increase demand for a variety of explosive detection systems, including portable units for carry-on luggage, said Tina Rizopoulos, a senior research analyst at Paine Webber in New York. “It puts pressure on the air transportation industry,” Rizopoulos said.

Thermedics, an EDS manufacturer, in Woburn, Mass., is banking on just such a demand.

“The device is effective in what it does, but it’s not going to help you check carry-on baggage or the passengers themselves,” said John Wood, Thermedics’ president, of the thermal neutron analysis device. Thermedics has spent about $15 million to produce its EGIS portable detector, which is expected to receive final approval this fall from the State Department. The State Department tapped Thermedics to develop such a device to check cars, packages and personnel at U. S. embassies following the 1983 bombing of the U. S. embassy and Marine compound in Beirut, Lebanon. The FAA is also evaluating the EGIS for use in airport terminals.

The EGIS detector, a hand-held 10-pound scanner, is swept over an item for 15 seconds to collect an air sample. Then, the collector is plugged into a computer, which analyzes the air sample in 30 seconds. If no explosive material is detected, a green light on the computer is lit. But, if an explosive is found, a red light is lit, and the type and size of the explosive appears on a computer readout.

“It’s extremely user-friendly,” Wood said. The extremely sensitive device can detect telltale materials in quantities as scarce as one part per 100 trillion, he added.

Although at this time, the EGIS is too slow to effectively scan checked baggage, Wood says it can be used to screen carry-on baggage. Such a role could be of great importance, considering that six of the last 15 attempted or actual airline bombings have occurred in aircraft cabins because the explosive was smuggled aboard on the passenger or in carry-on luggage.

The device would help avoid a complete ban of lap-top computers, portable radios and other electronic devices that the government is considering imposing, Wood added. Experts say the plastic explosive used to destroy Pan Am Flight 103 was concealed in a portable cassette player.

“We realize the current ruling doesn’t immediately affect us, since the FAA is looking for a conveyor-belt system that can screen checked baggage,” Wood said. “But we’re hoping that the FAA will approve a number of different systems. No single detection system used alone is going to work.”

Thermedics plans to manufacture 34 units by the end of the year, and, starting in 1990, expects to produce 10 units a month. Each unit costs $125,000.

Other San Diego companies are pondering the EDS market as well.

“At this time, we’re not making an announcement on whether or when a product like that might be forthcoming,” said Gene Ray, president of Titan Corp., a San Diego-based, high-technology defense electronics firm. For the last couple of years, Titan has been working on a “super X-ray machine” to detect buried mines.

“We have been developing our technology for other purposes, but we believe this can be adapted very nicely for such a program,” Ray said. “Our technology will be able to detect plastic explosives as well.”

Like SAIC, GAMMA-METRICS, the San Diego manufacturer of industrial instrumentation and controls, has long been using thermal neutron technology. The company has been using the same technology for industrial applications, primarily for pollution-control systems, said Ernesto Corte, GAMMA-METRICS’ president.