- The Washington Times - Thursday, December 5, 2002

The federal government has re-emerged as the engine of growth for the Washington-area economy, with a new study showing that federal spending and contracts account for one-third of the region's output.
The study, commissioned by the National Capital Planning Commission and scheduled for release today, found that while federal jobs locally shrank to 329,000 in the last decade, jobs among private contractors and those that depend on them doubled to 621,000. Together, the jobs created directly or indirectly by the government accounted for nearly one-third of regional employment.
The federal trend toward contracting out, which began with the downsizing of the Defense Department in the late 1980s, promises to only accelerate under the administration of President Bush, who recently announced plans to privatize as much as half of the remaining jobs in the federal work force.
If the administration makes good on its promises, the Washington region appears likely to benefit disproportionately from the new private-sector jobs, as it has attracted far more contract work than any other metropolitan area, according to the study.
Procurement spending in the region exploded by 359 percent between 1983 and 2001, while in the next closest jurisdiction Los Angeles contracting shrank by 27.5 percent, the study found.
The last year covered by the study was 2000, so it does not shed any light on spending trends since the September 11 terrorist attacks, which some local officials feared would permanently diminish Washington's appeal as a place to do business both for the government and private firms.
But the study's authors said they have seen no evidence of a disruption in the trend toward awarding a disproportionate share of contracts to companies in Virginia, Maryland and the District since the terrorist attacks.
Much of the increased spending approved in the wake of the terrorist attacks has been in areas where Washington firms provide considerable expertise defense, intelligence and security, economists note.
"We're doing well, and we want to continue that," said Arrington Dixon, chairman of the planning commission task force that commissioned the study by George Mason University economist Stephen S. Fuller.
Northern Virginia, with its concentration of defense and intelligence agencies, enjoyed 60 percent of the surge in local contract work during the 1990s, far outpacing the 15.4 percent share in Maryland and 24.6 percent share in the District, the study found.
About $1 billion of contracts from the Defense Department and six other agencies Treasury, Justice, Commerce, Health and Human Services, NASA and the General Services Administration accounted for more than 84 percent of D.C.- area procurement spending in 2000, the study said.
Each dollar of federal spending produces about $1.80 of economic activity locally, according to Mr. Fuller. That means that the $28.4 billion in local spending in 2000 actually generated $51.2 billion in activity and supported 621,600 jobs, he said.
Mr. Dixon called the relatively small increase in contracts in the District "troubling," since the city has strived to attract and retain federal procurement dollars and facilities.
None of the urban zones within the District designated for favorable treatment by the federal government includes companies doing contract work, he said.
"We're getting very little of the work. We need to do better," he said.

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