When a public company deals with a very private NSA

One of the companies in the Baltimore area that I pay attention to on my tech beat is KEYW Holding Corp., a three-year-old company that's launched itself hard out of the gate with a string of acquisitions and an IPO last fall.

It's a public company in fact. But if you look at its filings with the Securities and Exchange Commission, you'll be hard-pressed to figure out what it does for its federal government clients, namely the National Security Agency.

There are large defense contractors out there -- think Northrop Grumman, Lockheed Martin, General Dynamics -- who do a lot of defense-related work. But you end up getting many glances at the stuff they're doing for -- and selling to -- the government because they'll often work on big projects that are hard to hide, i.e. fighter jets.

But more than half of KEYW's revenues come from the NSA, whose annual budget is classified. The intelligence budget, in general, is hard to wrap your hands around -- and spending on cyber security is generally not quantified. But KEYW needs to do some level of disclosure to appease shareholders and Wall Street analysts, to demonstrate that there is a bonafide market they are pursuing for business. So it's interesting to see how they balance this fine line of disclosure and the need for secrecy. For instance, here's KEYW's review of the national budget for intelligence spending:

The Director of National Intelligence disclosed that the 2010 National Intelligence Program budget was $53.1 billion. The budget for U.S. Air Force Intelligence is not separately reported within the overall Air Force budget, which was $160.5 billion for fiscal year 2010. According to the White House Office of Management and Budget, the fiscal year 2009 budget for information technology, or IT, security spending was approximately $7.3 billion, which represents a 9.8% increase over fiscal year 2008 IT security spending. According to INPUT, a provider of market information for U.S. Government business, the federal cybersecurity market is expected to achieve a 9.1% annual growth rate through 2015. Driving this growth, they cite a 445% increase in cyber threats since 2006 and increased reliance on the internet, networked systems, and connectivity as creating opportunities for cyber attackers to disrupt government operations, as well as U.S. critical infrastructure. Given our relative size to the size of the market, we believe that we have plenty of room to grow.

My favorite part of KEYW's annual report is when they try to give shareholders a look into a positive outcome for some of the work they're doing -- a case study, essentially -- without actually telling you anything specific about their work. Here's how they describe their "Encounter" program:

So, yes, KEYW is a fascinating little company that offers a rare look into how a publicly traded company can try to tap capital markets (which value a fair amount of disclosure) while also trying to satisfy their main top-secret client.