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Northrop Grumman picks Virginia for corporate headquarters

By Derek Kravitz and Anita Kumar
Washington Post Staff Writers
Wednesday, April 28, 2010; B01

For those at the negotiating table during the 100-day bidding war for Northrop Grumman's new corporate headquarters, one thing was clear from the get-go: This wasn't going to be your normal cross-country move.

Since the day the defense contracting giant publicly announced in January that it was moving its main offices from Los Angeles to the Washington area, county, state and federal government leaders from across the region scrambled to offer the most cash, the best business climate and the most attractive real estate.

Virginia's win, announced Tuesday in a news conference at the defense contractor's offices in Rosslyn, wasn't wholly unexpected given its track record in attracting Fortune 500 companies to its wealthy D.C. suburbs and Northrop's 31,000 workers in the state. But the political stakes were still high, especially for Virginia Gov. Robert F. McDonnell (R), who had campaigned on a platform of adding millions of dollars to a program designed to bring high-profile companies to the state.

Virginia is expected to give Northrop $12 million to $14 million in grants and cash incentives, with the exact amount based on which location the company chooses, said Jay Langston, senior researcher manager at the Virginia Economic Development Partnership. That amount surpasses the $4.6 million given to Hilton Worldwide and $8.5 million given to Science Applications International in recent years. McDonnell said Northrop could bring $30 million to the state in tax revenue over the next decade.

During Tuesday's announcement, McDonnell jokingly referred to the deciding factor in the Northrop discussions being Virginia's top political leader -- himself.

"This is certainly one of the most exciting days and one of the best announcements we've been able to make in a long time," McDonnell said.

The news came after several rocky weeks for McDonnell that included national criticism after he issued a proclamation of Confederate History Month that at first omitted a reference to slavery.

"I think it's an opportunity for a reset, you might say, for McDonnell," Virginia political analyst Robert D. Holsworth said. "Virginia was always the more logical choice for Northrop Grumman, but the stakes got raised tremendously by the events of the last month. This is the best news McDonnell has had, really, since he became governor."

About 300 employees, who McDonnell said earn an average of $200,000 per year, will be involved in the move, a mixture of workers relocating from Los Angeles and new ones hired in Washington. A summer 2011 move-in date has been targeted.

Attention is now being turned to which building, and which Northern Virginia jurisdiction, Northrop will choose.

The choices have been narrowed to the Fairview Park office complex in the redeveloped Merrifield section of Falls Church and an office building on North Glebe Road in Arlington County. Both have enough high-level, class A office space to accommodate hundreds or even thousands of employees; close proximity to Northrop's myriad government clients, including the Pentagon; and visibility in an area where many of its competitors are located.

"If you're trying to shoot for a bull's-eye, both places are the spot," said Antonio J. Calabrese, a land-use lawyer and partner at Cooley Godward Kronish in Reston.

Northrop Grumman Chief Executive Wes Bush said Tuesday that the decision would come down to which building site offered the best "economics," signaling that Arlington and Fairfax had submitted their final incentive packages to the company.

The high-stakes competition was not without its critics. Many local government leaders expressed frustration about the public nature of Northrop's negotiations with neighboring counties, and some resisted the company's efforts to get matching cash incentives. Economic development and political officials in two jurisdictions told The Washington Post that Northrop asked for several perks during preliminary discussions, including reimbursement for moving costs and country-club memberships. The company has denied making those requests. At least one perk was included in Fairfax's final offer, those sources said: a discounted rate for space at a hangar at Dulles International Airport for Northrop's corporate jet.

"Every company is a little different, and this has been different but that's Northrop Grumman's choice," Arlington County Board Chairman Jay Fisette (D) said.

Rep. James P. Moran Jr. (D-Va.), whose congressional district includes both potential locations, said the move was a "big win for the entire state," and Rep. Gerald E. Connolly (D-Va.), a former Fairfax board chairman, said that despite the unorthodox vetting process, a win is still a win.

"I think you have to be flexible, but the results speak for themselves," Connolly said.

The state will provide up to $3 million through the Governor's Opportunity Fund and up to nearly $11 million through the Virginia Economic Development Incentive Grant, Langston said. The money from the Governor's Opportunity Fund is paid to the localities, and then to the companies, and localities must match the state dollar per dollar but it does not necessarily have to be through cash.

Staff writers Dana Hedgpeth and Rosalind S. Helderman contributed to this report.

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