By Kafia A. Hosh and V. Dion Haynes
Washington Post Staff Writers
Friday, September 25, 2009
Defense contractor Science Applications International Corp. said Thursday it will move its headquarters from San Diego to Tysons Corner, where 17,000 of its workers already are based, becoming the latest of several major companies to relocate to the Washington region in the past two years.
SAIC, the area's fourth-largest private employer, said it wanted to be closer to its biggest client, the federal government. But the move also is expected to benefit Virginia, which has shed 114,200 jobs over the past year, and add momentum to the D.C. region's efforts to position itself as a mecca for corporate headquarters.
Gov. Timothy M. Kaine (D) said the state is offering SAIC $7 million in incentives to relocate plus paying Fairfax County $1.5 million to help with road and infrastructure improvements to accommodate the company. For now, SAIC said it will move about 100 people from the West Coast and hire 1,100 people in the science, engineering and technology fields, with more hires to come later.
"We hope to grow between 9 and 12 percent a year, and that means our employee base grows," Arnold L. Punaro, an SAIC executive vice president, said in an interview following a news conference in the building near Leesburg Pike that will serve as headquarters.
SAIC provides information technology consulting to a variety of federal agencies. Its work includes analyzing data for unmanned aerial vehicles flying over combat zones, developing new energy sources, providing security at major waterways in the United States and upgrading Army weaponry.
The 40-year-old company, long a high-profile player in the contracting industry, joins CSC, Volkswagen of America and Hilton Hotels in recently establishing corporate headquarters in the area.
Over the past few years, SAIC has gone through some major changes, shifting from an employee-owned to a publicly traded company in October 2006 and replacing its chief executive in June with the head of rival BAE Systems. Now it is grappling with the possibility that the Obama administration could cut back contracting work.
With the prospect of competition for government work intensifying, analysts said it makes sense for SAIC, which reported more than $10 billion in revenue last year, to be located in the Washington region.
"I would think their logistics business would get cut, but their high-end [information technology] work is probably fine," said Alex P. Hamilton, an analyst at New York-based investment banking firm Jesup & Lamont. "They're in a good position if Defense Department budgets get cut, but there's more haze on the horizon."
The move "is good for business. San Diego is a lot farther," said Joseph A. Vafi, managing director of equity research at Jefferies. "The clients like [the contractors] to be closer rather than farther away."
Economic development officials and labor experts said they think the move could have broad implications for the region, which experienced a net loss of 50,000 jobs during the past year.
Besides hiring more than 1,000 workers, company officials said they intend to spend $25 million to redevelop buildings on their 18-acre campus, build a bridge to connect it with a planned Silver Line Metro station, and purchase furniture and computer equipment.
"Northern Virginia lost 13,000 jobs [during the past year, and the hiring] will be a help," said Don Lillywhite, research director at the Virginia Employment Commission. He added that SAIC could draw subcontractors and other related businesses to the area.
With the government playing a stronger role in business and the economy, officials at the organizations that market the region nationally say they think more companies will be drawn here.
"This sends a message to other CEOs of multinational companies, validating this as the place to be for corporate headquarters," said Matt Erskine, executive director of the Greater Washington Initiative.