Unisys Corp: A spider in the web of high-tec security, by Eric Töpfer
01 October 2009
This article details the growth and operational practices of the Unisys Corporation, a key player in the global "Homeland Security" market.
Once the fourth largest Pentagon contractor, the Unisys Corporation has become a leading global supplier of “Homeland Security” technology. Its business operations and politics are a telling example of the power of the security-industrial complex.
The study of large European co-operative technical projects in the field of justice and home affairs can yield surprising results. Whether it is the programming of the Prüm-CODIS-interface for the comparison of national DNA databases and their exchange across the Atlantic [1], the upgrade of the Schengen Information System to SIS II and its “synergy” with the Visa Information System [2], the development of the Europol Information System [3], the networking of national vehicle registers in the context of the EUCARIS initiative [4], the standardisation of data exchange between national criminal records [5] or a pre-study for the European Union’s Critical Infrastructure Warning Network [6], one name is always popping up: Unisys, based in Blue Bell, Pennsylvania, says on its website:
Our products and services touch almost every defense and civilian agency....We manage data centers, modernize critical applications, and support the end users of some of the largest public and private entities on earth, while keeping everything safe and secure
Indeed, worldwide more than 1,500 administrative bodies, including 22 of the 25 largest banks, eight of the 10 largest insurance companies and more than 200 airlines, are relying on Unisys’ services and products [8]. With offices in 63 countries on all five continents and 26,000 employees who serve clients in more than 100 countries Unisys is a true multinational. With annual revenue of $5.23 billion (2008) the corporation is not one of the top “global players”, but Unisys is not selling cars or natural resources, rather it makes its profit through IT services and mainframe computers.
From rifle manufacturer to global IT corporation
The history of the company can be traced back to the firm E. Remington & Sons which has manufactured rifles since 1816 and later typewriters and other office equipment. As Remington Rand the company introduced the legendary mainframe computer UNIVAC. In 1955 Remington was swallowed-up by the arms company Sperry which grew through the production of navigation systems and semi-automated weapon systems for the US Navy and Air Force. The company was renamed Sperry Rand Corporation and rapidly developed into one of IBM’s key competitors - in particular by purchasing mainframe computers for the US military, the National Security Agency (NSA), the Atomic Energy Commission, the U.S. Census Bureau, the Internal Revenue Service, large industrial employers and financial institutions and for the booking systems of international airlines. In 1978 Sperry’s top management decided to concentrate on the computer business and in 1986 was taken over by the Burroughs Corporation, a competitor producing calculating machines and computers [9]. The result of this hostile takeover, which was arranged by Burroughs CEO W. Michael Blumenthal (a former US Treasury Secretary), was the creation of “United Information Systems”, the Unisys Corporation which was, at that time, the world’s second largest IT company (after IBM) and the fourth largest arms company in the United States.
Despite this promising start there was crisis four years later when Blumenthal quit and left the corporation. Suffering from the end of the Cold War and cuts in the Pentagon budget, as well as from the overlooked looming triumph of the personal computer, the company suffered losses totalling $2.5 billion between 1989 and 1991 [10]. In addition, the company’s image had been badly damaged by “Operation Ill Wind”, when the FBI and Naval Investigative Service uncovered Unisys’ involvement in the largest corruption scandal in the history of the Pentagon. In the “Iron Triangle”, a network of Pentagon officials, security consultants and arms companies provided retired top military figures with jobs in consulting companies, (“rent-a-general” firms), and over-inflated contracts worth billions of US-Dollars were awarded. In September 1991 Unisys was found guilty of having bribed high-ranking Navy and Air Force officials for contracts for the development of the Aegis anti-missile-system and other projects. They were also found to have made illegal campaign contributions to members of the House Armed Services and Appropriation Committee. The company was forced to pay a record $190 million fine [11]. This verdict sealed the sell-out of Unisys’ arms branch which had started in the late 1980s.
Blumenthal’s successor, James Unruh, ordered cuts in jobs and a strategic reorientation. By 1997 the number of employees had been reduced from 47,000 to 33,000, and the launch of an IT service unit indicated a new business direction. Facing economic crisis in the United States, Unisys aggressively expanded its overseas markets in Europe and Asia from the early 1990s onwards and marketed high-end servers to compensate for its failure in the booming PC business. The company was not simply selling hardware but aimed to “bring together” – in its own advertising words – “services and technologies into solutions” [12]. This means that Unisys develops, implements and manages IT-systems, data centres and administration and enterprise networks around the globe. It offers consulting services for the maintenance and security of IT and delivers hardware through the ClearPath and ES series servers and also develops software and middleware tailored for its clients. To summarise: Unisys offers all that you need for the operation and utilisation of large databases. Although its sales of hardware have reduced significantly – between the mid-1990s and 2009 its share in revenue decreased from 41 to 12 per cent – mainframe computers remain of strategic importance for the company. On the one hand net profit from hardware sales is up to 50 per cent, twice as much as the service segment. On the other, one third of Unisys’ revenue comes from outsourcing services, which means that clients store and process their data “in the cloud” of Unisys data centres. In fact, Unisys “solutions” require problems which have to be processed at large scale.
Broken dreams and fresh air on the morning of 9/11
Despite the changes which Unisys’ executives ordered during the 1990s, success did not materialise. Although Unisys’ stock price rose to almost $500 between 1995 and 1999, revenue stagnated and the balance for the decade was a loss of $672 million. Therefore it had a bumpy landing when the “New Economy” bubble burst at the dawn of the new millennium. By late summer 2001 its stock price had crashed to $80 per share, and its revenue sunk by $900 million compared with 2000. After three successful years the company again ran into deficit [13].
After 11 September 2001 Unisys reacted promptly. In 2002 it added 300 “security experts” to its management team and launched a handful of “Security Centers of Excellence” around the globe [14]. In addition, a “Security Advisory Board” was installed in July 2003. Later it became the “Security Leadership Institute”, “a forum of nationally recognized security experts from business and government that provide insights into emerging security issues and best practices to organizations worldwide”. [15] Among its founding members were former leading figures from the NSA, FBI, US Air Force, Royal Canadian Mounted Police and Interpol [16].
Their efforts proved rewarding: Unisys Corporation became the third largest contractor of the [17] Department of Homeland Security. From 2003 until 2010 the company received $2.41 billion from the DHS [1], among others, for major contracts to develop IT systems for the newly created Transportation Security Agency (TSA) and the DHS itself, for “Operation Safe Commerce” (container security at US seaports), the “United States Visitor and Immigrant Status Indicator Technology” (US-VISIT), the “Registered Travellers” programme, the “Free and Secure Trade” (FAST) project, the “Western Hemisphere Travel Initiative” and the “Automated Targeting System” [19]. In partnership with other high-tech giants such as IBM, Boeing, Cisco, SAIC, AT&T, these projects were not only about the installation of wide-area computer networks and massive databases but smart cards, biometrics and RFID technology for the identification, risk assessment and tracking of persons and goods.
Unisys seemed to be predestined for all of these tasks. Indeed, in the field of RFID the company has been the main partner of the US Army since 1994. Using this technology at 1,700 sites in 31 countries worldwide the army is operating one of the largest RFID-based logistics networks on earth [20]. Unisys was not only exploiting its long-standing role in arming and computerising the US military, it could also refer to many international deals in the area of internal security. In 1988 it sold computers worth US $8.7 million for the operation of a “peoples’ database” by Iraq’s Home Ministry [21]. In the 1990s Unisys pioneered the introduction of biometric smart cards and modernised population registers in Costa Rica [22], Malaysia [23] and South Africa [24]. However, occasionally it seemed that, in the US Homeland Security business supply dictated demand. Three quarters of the overall volume of all DHS contracts were won by Unisys.
To create the right atmosphere for its “solutions” the company has been publishing its Unisys Security Index twice a year since 2006. The Index, allegedly based on the “robust” polling of 8,500 persons in nine countries, invariably reports an increase in the fear of identity theft or the rising acceptance of biometrics [25]. But seemingly more important for the company’s marketing strategy are its personal networks. For instance, on its website the company is presenting Patricia Titus as its “thought leader” for security. Titus, a former Chief Information Security Officer at TSA, Unisys’ largest client among the DHS authorities, is still active in several US government technical advisory boards and is currently in charge of information security at the corporation’s “Federal Systems” unit. As such she is the contact point for the US administration, “capitalizing on her extensive operational and leadership experience“[26]. Another example is Terry Hartmann, who is responsible for Unisys’ Homeland Security strategy, emphasising biometrics and identity management. Before joining Unisys he was an IT manager at the Australian Passport Office and is currently acting as an “expert” for the International Standards Organisation (ISO) and the International Civil Aviation Organisation (ICAO). He is therefore a key player in the global standardisation of biometric passport.[27]
Brussels, biometrics and border control
Sixteen per cent of Unisys’ total revenue comes from contracts with the US federal government, making it the corporation’s largest client [28]. However, since 2001 top management has been keen to expand its internal security business to other industrial nations. In times of economic crisis the public sector represents a solid market segment. In Australia Unisys was contracted in 2006 to work for the Department of Immigration and Citizenship’s “Biometrics for Border Control Programme” [29]. In Canada the company secured contracts for the biometric identification systems of workers at airports and seaports [30].
In Europe Unisys is also promoting its “solutions“. While national governments have protected their home-grown IT-industries [31], EU-bureaucracy is more open to Unisys’ products. In the EU’s voluntary lobby register the corporation uses the name American Electronics Association in Europe [32]. Its Belgian branch is well connected and is located only three minutes walking distance from the central mail centre for the European Commission’s OIB procurement agency [33]. The Brussels office of Unisys has organised workshops on e-procurement, e-borders and e-passports for the Directorate General (DG) Enterprise and Industry [34]; it was invited by DG Justice, Freedom and Security to the first “EU Forum on the Prevention of Organised Crime” [35]; in cooperation with DG Internal Market it developed perspectives for strengthening the European arms industry [36]; and it is supporting all Commission services in developing, managing and maintaining their IT systems on behalf of DG Informatics [37].
Unisys’ central contact person in Brussels is Director Patrice-Emmanuel Schmitz, a lawyer and IT architect who was in charge of the launch of the European Biometric Portal in 2005. On behalf of the European Commission, this website aimed – together with the Trend Report, also written by Schmitz – to serve the European biometric industry as a knowledge platform for the development of the market. Its strategic partner for the project was the European Biometric Forum, the European biometrics industry lobby, of which Unisys is one the 150 member organisations [38]. In April 2006, Unisys eventually inaugurated the “European Biometrics Centre of Excellence” in Brussels, a technology showroom aiming to promote the benefits of “modern identity management solutions” to target groups from private business and public administration [39]. Schmitz is supported by Roberto Tavano, an Italian consultant, who is travelling around the world giving key note speeches at security congresses and trade fairs as Unisys’ “Vice President European Security Programmes”. “In this role”, Tavano writes “I'm shaping the business concepts underpinning our go-to-market models in Border Control, Identity Management and Credentialing and Physical Security spaces. Innovative Registered Traveller scheme formats and Expedited Airline Passenger Clearance processes fall within the solutions portfolio that was developed for world-wide roll-out.” [40]
It became clear that Unisys’ objective was more than simply marketing technology and IT services when Tavano appealed for the outsourcing of collecting and storing biometric identifiers for large-scale systems such as the Visa Information System [41], and Schmitz and his team gave the European Commission a prompt on executive powers for border control teams [42]. Unisys, with its profit-oriented vision of security, aims to install new, semi-private regimes of border management and other forms of control far beyond democratic oversight.
Footnotes
1. EU Council of Ministers: Doc. 8505/09, 15.4.09
2. European Commission: SEC (2005) 1493, 15.11.05
3. EU Council of Ministers: Doc. 11220/97, 17.11.97
4. http://www.unisys.be/eprise/main/admin/country/doc/nl/CS049_07_Eucaris.pdf
5. EU Council of Ministers: Doc. 6598/06, 4.5.06
6. EU Council of Ministers: Doc. 15041/08, 31.10.08
7. http://www.unisys.com/unisys/about/companyprofile.jsp?id=201
8. Pasiuk, L. (ed.): Vault Guide to Top Tech Employers, New York 2005, pp. 231ff.
9. Cf. for the history of Unisys and its mainframe computers among others http://www.unisys.com/unisys/about/company/history.jsp?id=209&pid=201; https://wiki.cc.gatech.edu/folklore/index.php/Main_Page
10. Time, 5.11.90; Time, 28.12.92
11. Time, 4.7.88; Salinger, L.M. (ed.): Encyclopedia of White-Collar & Corporate Crime (Vol. 2), Thousand Oaks 2005, pp. 832f.
12. http://www.unisys.com/unisys/about/ir/detail.jsp?id=10800002&pid=202
13. http://www.unisys.com/unisys/about/ir/detail.jsp?id=10800004&pid=202, and figures taken from Unisys’ Annual Reports 1997 utill 2008: http://www.unisys.com/unisys/about/ir/detail.jsp?id=10016400002&p=10800007
14. Unisys: Annual Report 2002, p. 2. http://www9.unisys.com/common/investors//annuals/2002/2002_AR.pdf
15. Security Leadership Institute: Identity Management Whitepaper, 2005, p10 http://www9.unisys.com/public_sector/insights/insights__compendium/Identity_Management_-A_Business_Imperative_in_Building_a_Trusted_Enterprise.pdf
16.
http://web.archive.org/web/20040608030255/www.unisys.com/services/security/security__advisory__board/index.htm
17. Slogan on the DHS website. http://www.dhs.gov/xopnbiz/
18. In addition, Unisys received in the same period $1.21 billion from the Pentagon, among others for a five-years-contract worth $345 million for the development of IT for the Counterintelligence Field Activity (CIFA), founded in 2002 to integrate all military counterintelligence information. Plus, $210 million from the Department of Justice for e-justice projects but also for jobs fort he F.B.I., the D.E.A. and the US Marshals Service. Own calculations on the basis of figures from http://www.usaspending.gov. Moreover, uncounted contracts for the “law enforcement sector” need to be added, for example, the development of a wide-area CCTV network for the city of Philadelphia.
19. A selection of projects on behalf of the DHS and its agencies can be found at http://www9.unisys.com/public_sector/us__federal/federal__contracts/dhs__eagle/
20. http://www.unisys.com/unisys/news/detail.jsp?id=10600006
21. Wall Street Journal, 24.3.03
22. Unisys: Annual Report 1997, p. 20f. http://www9.unisys.com/common/investors//annuals/1997/1997_AR.pdf
23. http://www.unisys.com/unisys/ri/cs/detail.jsp?id=9500017
24. Unisys: Annual Report 2003, p. 8
http://www9.unisys.com/common/investors//annuals/2003/2003_AR.pdf
25. http://www.unisys.com/unisys/ri/topic/researchtopicdetail.jsp?id=3700005
26. http://unisys.com/unisys/ri/tl/detail.jsp?id=10019800008
27. http://unisys.com/unisys/ri/tl/detail.jsp?id=16500012; http://www.tourhosts.com.au/archive/apec2007/speakers.asp; http://www.policylaundering.org/keyplayers/ICAO-activities.html
28. http://www.unisys.com/unisys/about/ir/detail.jsp?id=10016500032&p=10800002
29. http://www.finanzen.net/nachricht/Unisys-Extends-Relationship-with-Australian-Department-of-Immigration-and-Citizenship-for-Outsourced-Desktop-Services-and-Biometric-and-Identity-Management-Solutions-683044
30. http://www.finanzen.net/nachricht/aktien/Unisys-Selected-by-Canadian-Air-Transport-Security-Authority-for-Canada-Biometric-ID-
31. For example, the German Land of Hesse awarded Siemens a contract for the development of police IT in 1989 despite Unisys making a better offer. Der Spiegel, 25.9.89
32. https://webgate.ec.europa.eu/transparency/regrin/welcome.do
33. The Office for Infrastructure and Logistics in Brussels (OIB) is, among others, responsible “to manage the purchase, rental and maintenance of the movable and immovable property of the Commission“. http://ec.europa.eu/oib/about_en.htm
34. http://ec.europa.eu/idabc/servlets/Doc?id=995
35. http://ec.europa.eu/justice_home/news/information_dossies/forum_crimen/workshop/en/particip3_en.htm
36. http://www.edis.sk/ekes/en_3_final_report.pdf
37. http://www.businesswire.com, 3.8.09
38. http://www.eubiometricsforum.com
39. http://www.allbusiness.com/crime-law/law-biometrics-fingerprinting/10562962-1.html
40. http://www.naymz.com/roberto_tavano_2284472
41. heise.de, 10.6.06
42. European Commission: COM (2006) 401 final, 19.7.06, p.3