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Forbes Raves About ‘Virginia Mecca’ of Defense Contractors

Forbes.com recently sought out to answer why northern Virginia has become the mecca for military contractors.

The publication identifies the 1991 migration of General Dynamics from St. Louis to Falls Church, Va., as the start of a domino effect that has seen the majority of the 20 largest U.S. military contractors centralizing in the area.

Then company Chairman William Anders cited a relatively obvious motivation, the need to be close to the customer, in this case the Pentagon, headquarters of the Defense Department. But contractors have credited numerous other advantages they say separate the Old Dominion state from the pack.

Virginia is ranked the number one state to do business in, according to CNBC,  and its six percent corporate tax rate hasn’t budged since 1972 . Proximity to the Pentagon and its defense-inclined political culture compare favorably to more progressive Maryland and Washington, D.C.

Here is a list of key contractors who moved to the area and how they have fared since.

DynCorp – Previously: Irving, Texas. Now: Falls Church, Va.

Result: Forbes said the 2006 move has helped propel DynCorp up the charts. The professional services contractor ranked ninth in 2010 Pentagon contracts won with more than $2 billion in awards.

Computer Sciences Corp. – Previously: El Segundo, Calif. Now: Falls Church, Va.

Result: Forbes thought the 2008 move was overdue, as the majority of CSC’s employees were already working in Virginia. CSC has continued to grow and generated close to $3.5 billion in sales in 2010.

BAE Systems – Previously: York, Pa. Now: Arlington, Va.

Result: The British contractor moved its U.S. headquarters and ground operations to Arlington in 2008 and has earned a solid return on the investment. North American CEO Linda Hudson has spearheaded growth at the new location, and the northern Virginia office now is responsible for half of company revenue.

SAIC – Previously: San Diego. Now: Tysons Corner, Va.

Result: When CEO Walt Havenstein assumed SAIC’s top position in 2009, he quickly pushed to relocate to northern Virginia. The SAIC buildings stand on the highest point in Fairfax County and the company brought in more than $5 billion in government contracts in 2010.

Northrop Grumman – Previously: Los Angeles. Now: Tysons Corner, Va.

Result: Forbes said CEO Wes Bush‘s “final decision was driven largely by facility considerations, proximity to our customers, and overall economics.” Bush also said the 2010 move was necessary to interact with customers who previously were 3, 000 miles away.

Experts predict contracting in northern Virginia,  principally the Tysons Corner area, will continue to grow. That’s where ITT‘s upcoming defense spinoff ITT Exelis will invest $5 million to establish its headquarters,  and in a few years Boeing will move senior executives into a complex in Arlington.

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