ARMS MANUFACTURER BAE Systems is set to acquire a massive portfolio of British civil IT contracts in a move that signifies how the "war on terror" has justified the military industry's advance on civilian concerns.

UK, US and EU policy has encouraged military firms to get into civil security in defiance of US President Dwight David Eisenhower's warning in 1961 not to let the powerful military industry have any influence over civil affairs.

Their justification is that the boundary between internal and external security is being eroded. That is, the theatre of war is no longer lined up on a battle field: new technologies combined with vast global inequalities of wealth, environmental catastrophes, and instability in the middle East and Africa have increased the probability that terrorists and organised criminals will try to undermine rich Western states from within.

BAE said today it had offered £0.54 billion for the purchase of all shares belonging to Detica, a UK firm with a vast array of civilian IT contracts with the police, local government, banking, telecoms, transport and health sectors.

It is unprecedented for a military firm to get such a strong presence in civilian affairs. Alexander Garton, who advised BAE on the acquisition for RBS Hoare Govett, said this was, "the one and only" deal of this type to have been brokered in the UK. He compared BAE plus Detica with Raytheon, a US military firm that has gained a strong foothold in homeland security. Raytheon also leads the consortium of suppliers building the UK's eBorder fortress, which includes Detica.

EU governments have encouraged such deals because they fear that US military firms were getting a competitive advantage over their own arms industries because of the vast amount of money they were earning from contracts for homeland security. The US Department of Homeland Security has been spending $0.8 billion a year on technology to monitor for civilians for security threats.

European governments have stressed how combining their spending on military and civil security tech is vital for their economic competitiveness.

"Competitiveness of markets makes Eisenhower's fears less relevant today," said John Reid, the UK's then home secretary, before a surveillance industry conference in 2006.

BAE's purchase of Detica is just the sort of combination that has been hoped for. Detica advises UK local government authorities on IT systems development. It is one of just nine firms certified to supply "Multi-Disciplinary Consultancy " services for public sector customers under the Office of Government Commerce's Catalyst framework contract.

Detica's Streamshield communications monitoring systems (40Gbit/s carrier-class, deep packet inspection) are used by telcos including BT, 02 and TalkTalk to filter internet content, catch spammers and watch for suspicious behaviour patterns.

Detica has an £18.1 million contract to supply London's Metropolitan Police with handheld computers and supporting systems for the next five years. It has a £25 million contract with the Home Office to supply part of the Eborders system that will monitor civilian travellers.

Detica also operates a system for AutoTrader that checks cars for buyers using intelligence gathered from the DVLA, the Association of British Insurers, the Police National Computer and third-party insurers, financiers and vehicle valuers.

"Many of the UK's largest banking and insurance companies, as well as leading Government, law enforcement and telecommunications organisations," use Detica's Netreveal system, said the firm, "to detect and investigate organised fraud", says the firm's publicity materials.

RBS Insurance has employed Detica's Netreveal to look for fraudulent activity. The UK Insurance Fraud Bureau uses the same system, while The Financial Services Authority, UK's banking watchdog, has agreed to use Detica i nformation intelligence systems to analyse financial transactions for things like "market abuse and insider trading". Detica's Market Surveillance Accelerator allows financial institutions to do the same by monitoring their own transactions.

Detica's area of expertise is social network analysis, which involves surveilling vast numbers of civilians and analysing links between people, organisations and data, and patterns of behaviour that might indicate suspicious behaviour.

Tom Black, Detica's CEO, told a UK homeland security conference early this month that its systems did not infringe citizens' privacy because they did not look for specific people, but for patterns of suspicious behaviour.

BAE has already been building a civil security arm, which manages civil CCTV networks and supplies intelligent CCTV monitoring and control systems for local authorities. The INQUIRER also understands this business involves the provision of CCTV systems covering the UK's transport network but was unable to find anyone at BAE or Detica to confirm this today.

Detica also developed the transport information website of Transport for London and supplies capital systems to Lloyd's of London.

BAE said in a statement today that it its civil security business wasn't growing fast enough so it had given it a boost with an acquisition.

"The proposed acquisition of Detica is consistent with BAE Systems’ strategic objective to establish security businesses in its home markets," said the statement.

"BAE Systems has identified National Security and Resilience* as an evolving and growing sector benefiting from increasing priority government attention and expects the accessible NS&R sector in the UK to double to over £3 billion by 2011," it said.

"While BAE Systems has been developing plans for substantial organic investment to pursue growth NS&R opportunities, the proposed acquisition of Detica provides an economically attractive and accelerated implementation of its strategy to address these growth opportunities," it added.

BAE said it hoped to complete the acquisition by the end of the year. Detica said it would advise shareholders to accept the offer which was a 70 per cent premium on its average share price for the last six months. Garton said the market average premium was 35 per cent. µ

* National Security & Resilience is the UK euphemism for homeland security, which is the US euphemism for mass civil surveillance