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Civitas Group

Mr. Bob Swindell
President and CEO
Civitas Group Your firm has an interesting blend of high-level Government experience, Wall Street expertise, and technology knowledge. Please give our audience an overview of your background, and the background of other management members and the advisory board.

Mr. Swindell:  Civitas Group brings a multidisciplinary approach to the security market, and this is reflected in the experience and talents of the people who make up our team. We believe that success in the security market is built on an in-depth understanding of multiple, complementary areas, including: government security policy, market dynamics, finance, technology and international security. We service our clients by combining a fundamental emphasis on strategy and transaction experience, policy expertise, and commercial experience.

I spent almost two decades as an investment banker, primarily with Lehman Brothers, where I was a Managing Director, most recently as head of U.S. technology banking. My primary focus was the security, communications and service sectors.

Our Board Members bring unique experience and leadership in the security field to Civitas Group. Led by leading government strategist Charlie Black and former National Security Advisor Sandy Berger, members include former Senator Warren Rudman, former FEMA Director Joe Allbaugh, former director of the National Security Agency General Ken Minihan, and former U.S. Ambassador to Brazil, Anthony Harrington.

Our principals include: Richard Falkenrath, former Deputy Homeland Security Advisor to President Bush and a leading architect of the administration’s post 9/11 security policy; Richard Gordon, a former investment banker with Bear Stearns and naval officer; and Mark Shaheen, a former diplomat and counterterrorism official at the State Department. In particular, the addition of Richard Falkenrath gives the firm a superb ability to assist clients in understanding how the policy process will affect their businesses and build winning strategies accordingly. We expect to add several more senior principals in the coming weeks which will further complement our coverage of the market by bringing additional superior experience from the financial, security and commercial sectors. We believe that our core team, when combined with the experience of our leadership and board members, offers unrivaled depth and expertise in the security market.

Virtually everyone associated with the firm has demonstrated a commitment to government service focused on the security of our country. With our concentration on security technology, we see the work we do at Civitas as a logical extension of that service. Civitas has published FOUR interesting reports during the past year: The FY 2006 Homeland Security Budget Request: Key Implications for the Private Sector (Published February 10, 2005); Sensors and Homeland Security: A Market Assessment (Published February 3, 2005), and The Homeland Security Market (Published June 27, 2004) and Sensors and Homeland Security: A Market Assessment (Published February 2005). Would you kindly summarize for our audience the key findings in each report?

Mr. Swindell: We wrote these reports to be accessible to policy officials, investors, industry officials and the press. I think that their strong analysis and their objectivity have contributed to the immensely positive responses we have received. A common theme that runs through each report is that the broad security market – and by that we mean homeland security and many aspects of the intelligence and defense sectors – is poised for continued, steady growth across a number of key sectors. However, this is a complex market and finding success can be challenging.

I would note four key themes to the reports:
1. The federal budget will likely continue to support robust spending on homeland security, not only in the DHS budget, but in other agencies as well, including DOD, DOE and DOJ.
2. In our Homeland Security Market Report, Civitas identified three generations of technology. It is essential for security providers and investors to understand the dynamics of this construct as it pertains to a particular company. We often see companies and investors betting on technology that sophisticated government and private sector buyers may not want, either because it is too old to be viable, or it simply does not fit with the solutions they desire at this time. Understanding where a given technology fits in this generational continuum is critical to success and must be a central issue in a successful company’s strategy.
3. This is no longer a “product push” market. Buyers, be they in the government or the commercial sector, are increasingly demanding integrated solutions from providers.
4. Emerging security technologies increasingly must have the ability to serve both the government and private sectors. While the government sector is critical for the industry and will drive the broader market, the demand for security technologies in the commercial sector is poised for accelerated growth and will prove to be substantial. Are there any recent Civitas assignments or success stories in the Government and/or enterprise sector that you would like to talk about?

Mr. Swindell: We exercise a great deal of discretion when discussing our clients and our engagements, so I will speak in general terms.

Civitas recently completed the initial phase of a project assessing market opportunities in the infrastructure protection market. In this engagement, we analyzed market dynamics, did a detailed quantitative analysis of market opportunities. We provided a targeted and tailored strategy for our client to build a business unit within the sector based on the market and on the policies that will likely drive spending.

In another engagement, we are working on a long-term strategic project with a major global company. We are focused on creating and capturing opportunities around the global movement of people, cargo and information.

In each of these engagements, we have been able to combine our expert market research capabilities with our in depth knowledge of the policy arena to provide strategic and tactical guidance to clients. Each engagement also has a component of targeted acquisitions, another strength of Civitas Group.

In a third instance, we saw a need for a product and helped bring together a unique group to build the first private initiative focused on a trusted traveler card. That company, Verified Identity Pass (VIP) is a partnership between Civitas Group, Lehman Brothers, Lockheed Martin and Choicepoint. It is an example of how a strategic, private sector partnership can service a need in our national security architecture.

Finally, we have worked closely with investment and private equity firms to provide product due diligence and market analytics around acquisitions in the security space. Civitas has a strategic relationship with Paladin Capital Group. What are the services provided via this partnership?

Mr. Swindell: The relationship between Civitas and Paladin is mutually beneficial. Paladin has superior expertise in evaluating and creating value in companies. At Civitas, we provide strategic guidance related to market growth and target sectors to Paladin’s management team, as well as assistance in growing their portfolio companies. Kindly give us an overview of the Government security initiatives presently underway, such as US-VISIT.

Mr. Swindell: There are numerous government programs of interest to the security community. Allow me to highlight just a few of the. They are noteworthy in my mind not only because of the significant expenditures needed to develop and implement them, but also because they have the ability, through their size and strategic importance, to set de facto standards both in the U.S. and internationally, as other countries follow our lead and attempt to remain compliant with U.S. standards.

The Container Security Initiative (CSI), focuses on pre-screening cargo before it reaches our shores, is intended to have a preventative effect on the use of global shipping operations to smuggle terrorist related items and other contraband into the United States by pushing the initial layer of security to the container’s point of origin. CSI is DHS’s primary program for the screening and inspection of inbound cargo at the port of departure and consists of four core elements:
• Intelligence and automated information to identify and target containers that pose a risk for terrorism
• Pre-screening containers that pose a risk at the port of departure before they arrive at U.S. ports
• Detection technology to quickly pre-screen containers that pose a risk
• Smarter, tamper-evident containers

America’s Shield Initiative (ASI) is designed to build an integrated electronic surveillance system along the northern and southern land borders of the U.S. through the use of sensor and video surveillance equipment. This technology will be targeted against the entry of illegal aliens, terrorists, WMDs, narcotics and other contraband.

US-VISIT is a robust program that is intended to ensure the integrity of the U.S. visa process, and manage information surrounding visitors to the U.S. through a system of improved documents, integrated watchlists and biometrics. Similar programs are underway in Europe and Asia.

The Guardian Program is a $1 billion DOD effort to provide integrated force protection military installation both in the U.S. and abroad. Thank you very much for your time today, Bob. Is there any other subject you would like to talk about?

Mr. Swindell: We remain very positive about this market because the indicators point to continued growth. Companies that are willing to invest in not only the best people and technology, but also in clear, supportable strategies, will continue to build value in this market.

We know this market from many angles and have the ability to build comprehensive and winning strategies that focus on government, the private sector and international markets.


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