August 19, 2004 | Commentary on Department of Homeland Security

Protectionist Politics and Border Security

It's bad enough when politicians undermine free trade with their protectionist inclinations. But now they're endangering national security. And terrorists -- who, ironically, are embracing globalization -- stand to benefit.

Ever since 9/11, terrorists have used jet travel and Internet communications to stitch together a worldwide Murder, Inc. Take the arrest of Abu Hamza al-Masri, a radical cleric in London, and his pending extradition to the United States. The case involves more nationalities than a spaghetti Western, linking Hamza to a murderous Yemini kidnapping, based on evidence collected in Afghanistan, pointing toward a planned terror camp in Oregon.

A conspiracy that can range from the Khyber Pass to the Willamette Valley no longer should come as a surprise. What is a surprise is a parallel story in which U.S. efforts to rapidly erect a defense against these kinds of bad guys are running into petty politics and a protectionist smear campaign.

The story involves the Department of Homeland Security's United States Visitor and Immigrant Status Indicator Technology (US-VISIT), an automated system meant to expedite legitimate travelers while singling out those who intend to do us harm. When completed, it will record visitors through the use of fingerprint scanners and digital photos and will integrate existing databases to push good information across agencies. In this way, it will pick out people who are security risks, while cutting costs and adhering to U.S. privacy laws and policies.

Three high-profile corporate teams bid for the contract. The winning bid went to the Smart Border Alliance, a team led by a company known as Accenture.

But the critics and sore losers aren't giving up. They're attacking Accenture in a desperate bid to force DHS to rescind the contract and give it to one of the losing teams.

Opponents claim Accenture should be disqualified for supposedly being a foreign company. Not just a foreign company, but one that avoids U.S. taxes and is likely to outsource work to foreign and insecure locales! But as the following facts demonstrate, we're in danger of letting loose charges and mindless protectionism undermine our security.

Accenture is a global organization with 90,000 people working in 48 countries. The Department of Homeland Security (DHS) contract was awarded to Accenture LLP, an Illinois company employing more than 25,000 Americans. Political opponents are trying to make something out of the fact that the parent company, Accenture Ltd., is headquartered in Bermuda. Critics imply that this means the company is evading taxes and suffering security lapses.

This is nonsense. All the money Accenture earns from this contract will be subject to U.S. taxes. All the work will be performed in the U.S. under the security rules and strict purview of the DHS. The Bermuda discussion is a red herring. The 29 U.S.-based companies in the Smart Border Alliance will perform the work for DHS, and the IRS will tax all profits these companies make.

Nonetheless, some politicians want to link the DHS contract to the political issue of "corporate inversion" (when U.S. companies choose to re-charter in jurisdictions with better tax law). Even here, the politicians have it wrong. Accenture didn't leave the U.S., because it was never chartered in the U.S. Originally a worldwide partnership, Accenture chose Bermuda when it incorporated because that location was appropriately "neutral" between the heavyweight markets of Europe and North America.

What does this have to do with choosing the best team to improve American border security? Nothing.

If a U.S. company with a parent based in Bermuda is a threat, then should we get the vapors over Rolls Royce, whose biggest customer is the U.S. Air Force? Are we to worry that the Queen's Regiments are secretly undermining the C-130 Hercules or Joint Strike Fighter? What about the Netherlands-based KPMG, which does work with the Pentagon?

Of course, it makes sense to take note of a contractor's location and allegiances. In our rush to protect America, however, we shouldn't allow xenophobia to lead us to spend more than necessary or pick the second-best or third-best alternatives to make our borders secure, merely because the first-pick winner has roots overseas, in a British possession.

If our borders are to be our last -- not our first -- line of defense, we'll need nothing short of the best team available in order to surmount this daunting technological challenge. We shouldn't let terrorists be better at globalization than U.S. business and government.

Daniel J. Mitchell is the McKenna fellow in political economy at  The Heritage Foundation.

About the Author

Daniel J. Mitchell, Ph.D. McKenna Senior Fellow in Political Economy

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