Maryland sees its moment in cybersecurity


William Arbaugh, president of Five Directions, says Maryland is creating a start-up-friendly environment. (Jeffrey MacMillan/For Capital Business)
July 3, 2011

As Fort Meade increasingly becomes a stronghold for federal cybersecurity, Maryland officials and business advocates are trying to take advantage of what they see as a critical opportunity for the state to own one of the most-watched industries.

Between the near-daily news of cyber attacks on some of the country’s most well-known companies and organizations and the Pentagon’s focus on building up its cybersecurity resources, the market for providing the associated products and services has received plenty of attention.

Well-known contractors have flocked to Fort Meade — home to the new U.S. Cyber Command as well as the National Security Agency and the Defense Information Systems Agency — and defense firms have been buying smaller cyber-focused entities to bolster their resumes.

For Maryland officials and backers, the moment looks right for the state to not only become the home base of a potentially very lucrative industry but also to take on rival Northern Virginia.

Known for its dot-com success — and subsequent collapse — and for the numerous IT-focused contractors lining the Tysons Corner and Dulles corridors, Northern Virginia has long dominated the IT field, particularly in the defense sector. Maryland, on the other hand, has been more focused on biotechnology.

But the state now says it has the resources to be the cybersecurity epicenter. Besides Fort Meade, the state is also home to the Gaithersburg-based National Institute of Standards and Technology, which sets federal cyber standards. Baltimore-Washington International Marshall Airport also isn’t far from Fort Meade.

“If we screw this up, we’ve got a problem,” said Larry Letow, chairman of the Tech Council of Maryland’s board of directors and a founder of Maryland Cyber Investment Partners, which funds cybersecurity businesses. “We have everything that we need to take advantage of this.”

State and local officials are vowing that they won’t let the moment pass them by. Maryland Gov. Martin O’Malley (D) issued a report called CyberMaryland early last year that set a state agenda for creating a cyber epicenter. Since then, state officials have zeroed in on particular areas of focus, including cultivating a skilled workforce and making sure companies outside the state are aware of Maryland’s resources.

“We really want to pitch our state as a very robust environment for this industry,” said Ursula Powidzki, a program director in Maryland’s Department of Business and Economic Development. “We’d like to be the Silicon Valley of cyber on the East Coast, so I think the focus is really, how do we make sure that the Maryland cyber industry is as entrepreneurial as possible, is as welcoming an environment as possible.”

The state has had no trouble attracting well-known contractors — many of whom are based in Northern Virginia. McLean-based Science Applications International Corp., for instance, has touted the cyber center it built near Fort Meade, while Northrop Grumman — soon to be based in Falls Church — has established a cybersecurity incubator program with the University of Maryland, Baltimore County, whose campus is 10 miles from Fort Meade.

As the state tries to attract newer, less-mature companies as well as commercial companies that want to grow into federal work, officials say initiatives like Invest Maryland, a state program meant to generate capital for Maryland-based companies, could also be useful.

“It’s not just talk. There are actually things going on in Maryland to support the industry,” said Renee M. Winsky, chief executive of the Tech Council of Maryland. “We don’t want to lose the foothold that we have.”

Ellen Hemmerly is trying to bring the pieces together as executive director of bwtech@UMBC, a research and technology park on UMBC’s campus that is home to incubator and entrepreneurial training programs.

The incubator started in 1989 with a focus on life sciences but saw an increased emphasis on dot-com companies in the early 2000s. Now, cyber companies are springing up; the campus is home to more than 20.

Five Directions, a cybersecurity start-up founded by William Arbaugh, is one of them. Arbaugh, who spent time at the Pentagon and the National Security Agency, sold his first company to Microsoft in 2008. Now using bwtech’s provided office space to host Five Directions, he said Maryland is increasingly developing an environment that supports start-ups.

Eric Jan started his Columbia-based cybersecurity company SecureTech in 2005. He said his Maryland location has been critical to helping his company make partnerships with major contractors and win business at cyber-focused agencies.

“There are a lot of people fishing in the same pond, so you really need to be close to the customer [and] have a really good relationship with them,” he said. “I think that’s a lot easier when you’re across the street, rather than an hour away.”

Virginia officials dispute Maryland’s role as a leader. Virginia Secretary of Technology Jim Duffey reeled off a long list of Virginia-based cybersecurity assets — from the CIA to the Pentagon to the Defense Advanced Research Projects Agency.

“Certainly I think Virginia is a major player, if not the major player in the region,” he said. “I think our assets and infrastructure and data kind of speak for themselves.”

But, he said, it’s more productive to consider the D.C. metropolitan area as a single region, poised to benefit from increased cybersecurity spending.

Bobbie Kilberg, president and chief executive of the Northern Virginia Technology Council, added to the list of Virginia assets its numerous data centers along with Fort Belvoir and the Department of Homeland Security’s National Cybersecurity and Communications Integration Center.

“There’s a difference between marketing and doing,” Kilberg said. “We produce in Virginia, and we have the track record to back ourselves up.”

Still, Maryland officials and business leaders are hoping the cybersecurity market gives the state’s business community and tax revenue a boost.

“You have to invest in it to have the benefit,” Letow said. “If we do, then by far we will see an incredible amount of tax revenue, an incredible amount of success.”

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