The metropolitan Washington region is reaping the rewards of Uncle Sam's procurement spending, with last year marking the highest growth rate of federal contract dollars in the area since the Beltway Bandit days of the 1980s.
That's according to a new economic study by George Mason University's Center for Regional Analysis. In fiscal year 2003, the federal government spent roughly $42 billion on goods and services in the capital region, a 17 percent climb -- or $6.1 billion -- from fiscal 2002, The Washington Post explained in its coverage of the study.
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The increase is the "highest percentage rise since the Reagan-era defense buildup in 1985. Much of the higher spending appears to be largely linked to the war in Iraq and fighting terrorism; the Defense Department accounted for $2.6 billion of the increase, and other security-related agencies were high on the list," the Post said. Following behind the Pentagon were the General Services Administration, the Department of Health and Human Services and the Department of Homeland Security, which ranked 2nd, 3rd and 4th respectively in spending in the region, according to the report.
All that spending has created "tens of thousands of jobs and increasing economic growth disproportionately in Northern Virginia," the Post said, while the AP noted that "Northern Virginia received a disproportionately larger share of the money, thanks to its position as the backbone of the region's network of defense contractors." According to the Post, federal spending in Northern Virginia grew nearly 27 percent in 2003 compared with 2002 spending levels. In suburban Maryland, spending increased nearly 12 percent to $8.89 billion.
"For a while it has looked like procurement was driving growth in the Washington area
economy," Stephen S. Fuller, the George Mason public policy professor in charge of the study, told the Post. "Now we know it."
In general, federal spending has become more concentrated in the D.C. region, which "is receiving an increasing slice of the federal pie. In 1980, the area received 4 percent of federal procurement dollars. In 2003, the figure was 15 percent," the AP said.
The $6.1 billion Washington area procurement hike "explains why our region held up so well while other metros continued to struggle. That level of procurement increase in FY 2003 generated the need for 42,500 net new jobs in the region," the report concluded.
And the high times aren't likely to end soon for the Washington region. The study said: "It is likely that the share of the national federal procurement market captured by businesses located in the Washington region will continue to grow due to the type of services sought by the government and the unique capabilities of contractors found here. This bodes extremely well for the future economic prospects of the region."
More from George Mason's Fuller, as quoted by GovExec.com: "Jumps in fiscal 2003 can be attributed partly to homeland security spending and to a desire to contract with service providers, including technology companies, closer to agency headquarters, Fuller said. Growth in Washington-area contracting likely will slow in the coming years as the rest of the economy accelerates, but will not disappear, Fuller said."
GovExec.com provided a PDF version of it for download.
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