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Washington Business Journal: Cargo Holds

Original article from Washington Business Journal, March 8, 2013

Cargo holds: Federal about-face leaves startup Decision Sciences to refocus

Decision Sciences International Corp. was formed specifically to respond to a post-9/11 requirement for more effective screening of inbound cargo for nuclear materials. Now, as the Department of Homeland Security drags its feet, the Chantilly-based startup is forced to focus on alternative streams of revenue while lobbying the government to comply with the law.

The story of Decision Sciences’ formation is one that in theory should be held up by the government as a perfect example of public-private partnership: The company launched with help from private investors to develop a new technology that would solve a government problem on its own dime.

But instead, DHS Secretary Janet Napolitano deferred from 2012 to 2014 implementation of a technology that could screen for nuclear material in all cargo leaving foreign ports for the U.S. and played down the need for compliance in public statements. In so doing, she all but forced Decision Sciences to adjust its business strategy.

“It’s important for government to encourage and foster this sort of development. It saves the taxpayer a ton of money and gets stuff to market a heck of a lot faster” than the alternative of developing new products through federal research funds, said Stan Sloane, CEO of Decision Sciences.

But now the company is at a crossroads.

“The whole reason for the investment and development of the technology was to enable compliance with the law,” which was passed to thwart potential terrorist attacks, Sloane added. “If you take the law away, we’d be impacted. So would all the other people that provide equipment” to support compliance, like certain types of X-ray and radio-detection systems.

Decision Sciences did win a $2.7 million contract with DHS’ Domestic Nuclear Detection Office in September to test its Multi-Mode Passive Detection System, which can identify nuclear material even when heavily shielded by metal.

The company also won contracts in August with the Defense Department for $400,000 to support testing for explosives and in January with National Security Technologies, which runs the Nevada National Security Site for the Energy Department, to perform further testing of the detection system.

But none of these wins brings any guarantees of system purchases the way a regulation, in theory, would.

“We’re in good shape in terms of funding for now, and because we’ve made such progress, I don’t believe we’ll have issues raising more money,” Sloane said. “But we’d like to do that through revenue,” rather than private equity investment.

The more immediate market for the system is contraband detection. It could produce sales before any DHS cargo objective.

“The law is important to us, but we’re working on other things,” said Sloane, who joined Decision Sciences as CEO in August 2011, after serving as chief executive of Fairfax-based SRA International Inc. “This is a startup. You have to do a lot yourself. You don’t have a big bureaucracy around to help. But that to me is part of what’s so interesting. It’s an opportunity to do something transformational. And I can tell you, regardless of the DHS regulation, we intend to be a long-term player in applied physics.”

How it works

Product name: Multi-Mode Passive Detection System.

History: Originally invented by scientists at the Los Alamos National Laboratory in New Mexico, then taken private by investors who bought the licensing for further development.

Function: Detects shielded or unshielded nuclear threats.

Science: Simply put, a muon is an unstable subatomic particle with a long life and the ability to penetrate metals and concrete. The system filters muons from all directions into cargo passing through a scanner and tracks how the particles react upon penetration to determine whether nuclear materials are present.

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