CASE STUDY 5.1 Boeing's Virtual Fence On January 14, 2011, Secretary of Homeland Security Initiative Net (SBInet). President Bush in May 2006 Janet Napolitano made it official: The Virtual Fence called SBInet "the most technologically advanced bor- Project was to be officially canceled. In her statement der security initiative in American history." A 28-mile explaining the decision, Napolitano cited the diffi- stretch of desert, centered on Nogales, Texas, was to culty in creating a unified, fully integrated security be the pilot stage in a project that eventually would be system and promised to "pursue a new path forward." used to monitor and control some 6,000 miles of border What was left unsaid were the reasons that led to with both Mexico and Canada. the final decision-principally, struggling with a too- In late 2006, Boeing was selected as the major con- complicated technical system that did not work but was tractor for the SBInet project. Although better known leading to ballooning costs. for their military weapon systems, Boeing's Integrated Illegal crossing into the United States along the Defense Systems Unit was made responsible for overall Mexican border has reached epidemic proportions in coordination of a massive system of towers as well as recent years. Fear of drug smuggling, illegal aliens, listening devices, motion sensors, cameras, and radar to and possible terrorist incursions have made the issue be used to detect and help apprehend illegals crossing of homeland security one of the major "hot buttons" in the border. In fact, the U.S. government chose to out- the political arena, both in Washington, DC, and within source the entire project to private firms; that is, they states located along the southern border as well as those expected that contractors would design the program's in proximity to Canada. The problem is compounded by elements, build them, and then handle full oversight of the sheer sizes of the borders involved. The Mexican/ their own work. U.S. border runs for nearly 2,000 miles, much of it across In a nutshell, the system used a chain of 100-foot- desert wastelands and inhospitable and remote areas. tall towers that each scanned a 360-degree radius Establishing any sort of border security, in the wake of for a distance of 10 miles. Ground radar sensors also the 9/11 attacks, is a national necessity but a daunting attempted to detect footsteps, bicycles, and vehicles. and difficult task. The first $20 million pilot phase, named Project 28 after The Department of Homeland Security (DHS), the length of the part of the desert that it was supposed organized following the attacks on the World Trade to cover, was to be completed by mid-June 2007. Boeing Center towers, is charged with the responsibility of selected more than 100 subcontractors to build various securing all borders and points of illegal entry into components of the system, with its project managers the United States, in cooperation with Customs and maintaining overall control of the development process. Border Protection. As part of its mandate, it has devel Unfortunately, their structure was unwieldy, and the oped plans for creating a more secure and stable border project was further compromised by the sheer number with Mexico to prevent the continuous flow of undocu- of distinct elements and technical systems Boeing was mented immigrants, drugs, and potential terrorists. For attempting to integrate. The technical challenge of inte- the first stage in this process, DHS proposed a project grating systems including watch towers, sensors, radar, to physically and electronically seal the stretch of the and specialized cameras was beyond anything Boeing desert between the United States and Mexico under a had attempted before. The problem was particularly multibillion-dollar contract named the Secure Border noteworthy when we consider that integration, in manyways, was the project. The various technical elements ignore. ..or hide. Critics compared this attitude of easy were difficult but attainable. The challenge for SBInet oversight and loose control to the huge problems that lay in the ability of Boeing to find a means to bring all had plagued Boston's "Big Dig" construction project these new and unproven technologies together under (see Case Study 8.2 in text). one umbrella. So complicated was the challenge, in fact, Admittedly, the problems that sank the SBInet that the virtual fence failed a series of initial tests, sig- project were complicated and came from multiple nificantly delaying the full deployment of Project 28. sources. Besides the technical challenges of manag- Unfortunately, these technical and coordination ing 100 subcontractors, all required to provide criti- problems were never resolved. In the nearly three years cal components that Boeing would integrate, the after original testing was done on one section of the project had effectively shut out most federal agencies fence, SBInet had cost the government $672 million dol- and oversight groups. It was difficult to get accurate lars, with the end nowhere in sight. Although the total project status information given the government's project cost was anticipated at $1.1 billion, congressio decision to "farm out" border security to private nal watchdog groups argued that the final cost of the contractors. As a result, congressional investigators project could soar to over $30 billion. Costs, in fact, were found that Homeland Security officials were simply a sore point with the project from the time it was bid. standing by while Boeing provided information that Originally promising to complete SBInet for $1.1 billion, was "replete with unexplained anomalies, thus ren- Boeing's revised estimates went to $2.5 billion and dering the data unfit for effective contractor man- then, just a few months later, to $8 billion. This rapid agement and oversight." Furthermore, many critics escalation of projected costs finally prompted a congres- questioned the feasibility of the original intent of the sional oversight committee hearing, in which Boeing project itself, wondering about the likelihood of ever endured withering criticism from Representatives who effectively sealing a border that runs through some questioned their motives in asking for more money and of the most inhospitable terrain in North America. time to complete the project. In the meantime, beset by Whether through a combination of poor oversight, continuing problems, Boeing had also revised its esti- over-optimistic scope expectations, or simple inabil- mates for the completion date to 2016, more than seven ity to make this cutting-edge technology work, SBInet years after the date in the original plan. remains an example of a significant program failure at A major concern was Boeing's pyramid-like the taxpayer's expense. management structure that critics said caused confu- sion and a lack of clear responsibility. Worse, it made Questions it easier for hidden costs to be charged to the project. 1. What problems do you see emerging from a Because Boeing embedded multiple subcontracting project such as SBInet where the government layers in the Virtual Fence development, they were allows the contractor to determine scope, man- able to add charges at each level. The larger prob- age all contractor relations, and decide how to lem was the clear conflict of interest that emerged by share project status information with oversight placing Boeing in charge of project oversight, while bodies? allowing them to manage sub-contractors, and moni- 2. Consider the following two arguments: "The fail- tor the progress of the project. Not surprisingly, with ure of SBInet was due to poor scope management" this configuration, little information came to light versus "SBInet failed because of poor oversight about cost overruns or schedule slippages until qual- and project controls." Take one side or the other in ity and overrun problems were simply too large to this argument, and justify your response