WASHINGTON – Maryland reaped a larger share off defense contracts than most states during the surge in military spending last year that followed the 9/11 terrorist attacks and the war in Afghanistan.
Defense contracts grew by about 20 percent nationwide, but Maryland contracts went up more than 30 percent, from $4.97 billion in fiscal 2001 to $6.5 billion in fiscal 2002, according to a Capital News Service analysis of Defense Department procurement contracts for those years.
Maryland had the fourth-largest dollar increase in the country, trailing only Texas, Virginia and Arizona last year.
The surge in defense spending has given a much-needed boost to the state, economists say.
“With the economy dragging, there need to be other industries to lead it forward . . . defense contracting, is pushing the economy ahead,” said Anirban Basu, CEO of Optimal Solutions Group, an economic consulting firm in Baltimore.
Timing and technology are big reasons Maryland has done better than other states, experts say.
“Our defense industry is more along the lines of research, development, testing and evaluation,” said Vernon Thompson, deputy secretary of Maryland’s Department of Business and Economic Development. “That is our major strength, our intellectual capital.”
And that is what’s popular in defense these days, said Christopher Hellman, an analyst at the Center for Defense Information, a Washington think tank.
“There’s an increasing emphasis on data management,” he said. “The Pentagon is buying fewer weapons systems, but the weapons and the military are getting more sophisticated.”
That trend seems to have played out in defense contracts last year, when Maryland moved up in the ranks to become the sixth-richest state in defense dollars. In doing so, it surpassed Georgia and Missouri, where defense contracts are mostly in manufacturing.
Within Maryland, some counties got more than others from the surge in defense spending.
Montgomery County did not see the biggest year-to-year increase, but continued to receive the most in defense contracts with $1.3 billion in 2002, an increase of $157 million from the year before.
“Montgomery County has the third-largest concentration of biotech companies in country,” said Joe Shapiro, spokesman for the county’s Department of Economic Development. “Between the anthrax scare and the chemical weapons, our research has been sped up and better financed by the government.”
While the national economy slumped last year, Montgomery County added 2,100 jobs, Shapiro said.
Technology spending also helped Prince George’s County, whose increase of $416 million was highest in the state. The increase pushed defense contracts in that county to $1 billion in 2002.
Anne Arundel, the state’s third-biggest recipient of defense dollars, saw a $267 million increase, bumping its defense contract total to $882 million in 2002. The boost seemed natural to officials in the county, which is home to the National Security Agency, Fort Meade and the Naval Academy.
“We’ve been a hotbed for information and security, so we just jumped on this whole trend of homeland security,” said Robert McGlotten Jr., senior vice president of the county’s business development group.
But economists say the build-up in military spending has probably had the biggest impact in St. Mary’s County. Its boom began in 1997 when the Pentagon’s base realignment closed military facilities across the country, and sent more than 5,000 new jobs to the Patuxent River Naval Air Station in the process.
Today, military bases are directly or indirectly responsible for 80 percent of the county’s economic activity, according to the Tri-County Council for Southern Maryland.
“If you drove down the county 10 years ago, you would be driving on a single lane each way with a couple of stores and then you hit the Patuxent River,” said Thompson of the Department of Business and Economic Development.
“If you ride down there today, you have construction going on everywhere, a three-lane highway going in both directions, and you have every major defense contractor you can think of in those huge buildings,” he said.
And the economic future looks bright for St. Mary’s County and Maryland, at least in defense funds. The Pentagon said this year that it expects its budget to go up by $119 billion in the next six years. Much of that money could go to Maryland, say local economists.
The state is well positioned for another surge in defense dollars because of location and because of familiarity, Basu said.
“Federal procurement officers know our companies. Many of the companies already have security clearances. And we produce the type of technology now needed,” he said.