Live by the Sword, Die by the Sword

by James A. Bacon

Northern Virginia has long been a leading center of the defense industry, a fact of which I have been aware ever since my dad transitioned out of the Navy  by working briefly for a consulting firm in Crystal City.  In the defense industry, like in any other, it is critical to maintain a close relationship with the customer. Defense contractors figured out decades ago they had to have a physical presence near the Pentagon.

Defense manufacturing is famously scattered across the country, driven not by the conventional metrics of workforce skills, wage levels, cost of real estate and transportation access but by political patronage. But defense headquarters have clustered in the Washington metropolitan area, where executives can easily access the Pentagon, Congress and, increasingly importantly, other defense contractors as partners, vendors and customers. In sum, Northern Virginia has emerged as the dominant defense-industry cluster in the world, a fact of which I was reminded by reading this article in Forbes.

With the exception of Martin Marietta headquartered in Maryland, every major defense contractor worth noting either has a corporate headquarters in Northern Virginia or a large corporate office. Big names include General Dynamics, SAIC, Computer Sciences Corporation, DynCorp, Booz Allen Hamilton, ITT Defense, and the U.S. arm of BAE Systems. Forbes notes that Boeing will move its senior defense executives to Arlington in two years, and it’s conceivable that the rest of the defense headquarters, now in St. Louis, will follow. Now that the defense cluster has achieved critical mass, every player or would-be player needs to move to Northern Virginia just to be where the action is.

Back in the late 1990s when I was publisher of Virginia Business magazine and paid closer attention to such things, I followed with great interest the activities of the Northern Virginia Technology Council and other groups that labored tirelessly to build Northern Virginia into a world-class center of technology innovation. During the Internet boom, for instance, Northern Virginia seemed to be on the verge of developing a self-sustaining cluster of Internet and telecommunications firms. But the Internet bubble burst, MCI went spectacularly bust and AOL, whose dial-up subscription model proved obsolete, moved its headquarters to New York. The region  tried, and failed, to create a venture capital-driven model of growth comparable to Silicon Valley and Boston.

Why, despite its awesomely educated and tech-savvy workforce and its entrepreneurial energy, has NoVa remained an innovation also-ran? What has held it back from making the leap to the big time?

The dominance of the defense industry is the region’s greatest strength and greatest weakness. On the one hand, the military-intelligence-homeland security complex of industries is incredibly information intensive. Consequently, the players in this sector are savvy users of technology. That’s why the concentration of technology skills in Northern Virginia is one of the greatest in the world. On the other hand, the culture of defense procurement is extraordinarily rules driven, and its complexity has only gotten worse every time someone tries to reform it. The procurement process favors incremental innovation over the kind of disruptive innovation that emerges from Silicon Valley.

Northern Virginia’s competitive advantage in defense contracting is difficult to transfer to other industries. Thus, what’s good for defense is not necessarily good for technology companies whose customer isn’t the federal government. The defense-fueled prosperity of Northern Virginia sends rents and other business costs higher, mires the region in traffic jams, and skews technology talent toward systems-integration rather than product development. In effect, I would argue, the defense sector is crowding out small, non-defense technology companies for whom it would be senseless to pay a premium to locate in Northern Virginia.

It’s been invigorating for Virginia to ride the defense boom of the past decade, which has experienced extraordinary growth in spending on defense, intelligence and homeland security. But the nation has reached a tipping point. Defense spending, like all federal spending, will slow — if not go into reverse. The defense sector will experience hard times. The great question is whether, given the fact that the region’s competitive advantage lies in its mastery of the arcane federal procurement process, Northern Virginia can reinvent itself. Let us hope that it can.

Share this article


(comments below)


(comments below)


26 responses to “Live by the Sword, Die by the Sword”

  1. Groveton Avatar

    “The dominance of the defense industry is the region’s greatest strength and greatest weakness.”.


    However, the other centers of technology job creation have something Northern Virginia does not – nearby access to top tier universities offering top tier STEM curricula.

    Silicon Valley has Berkley, Stanford, San Jose State, etc.
    Boston has Harvard, MIT, Boston College, etc
    Austin has the University of Texas.
    New York has Columbia, NYU, etc.

    Northern Virginia has George Mason University.

    In the real world of capital flows, investment, expansion and destruction there are no absolutes except the absolute need for more and more top talent.

    In the fake world of defense contracting a ready supply of uninformed capital comes gushing out of the Pentagon each and every year. Innovation and invention are the by-product of a large, slowly flowing river of money. There are brains but not much guts. Smart people drift into Northern Virginia for steady work with good benefits. They do not come here for the thrill of a wild entrepreneurial ride.

    Why not?

    The foot soldiers of technology entrepreneurship are 22 – 28 year old programmers and engineers. They are what make Facebook Facebook. They make Google Google.

    And they don’t exist at any scale in Northern Virginia.

  2. I have a somewhat different view.

    For one, I think the US defense industry/infrastructure is the number 1 fostering agent of technology – from micro-computers to the internet to GPS to satellite technology. There is a significant synergistic relationship between DOD and private technology with DARPA taking the lead on technologies that are still too new for private market use… but they feed that pipeline.

    Second, DOD has hundreds of weapon system and logistics platforms most all of them headquartered in and around NoVa.

    You still have to have program managers …and the various administrative corporate management no matter how much the program downsizes in the field – or even if that program goes away – there are numerous other similar jobs available in the NoVa area.

    I agree about the lack of top tier STEM universities but there are at least half a dozen excellent ones within a 500 mile radius and many people who end up at DOD – start with internships..then go away to the STEM college of their choice and then return with their degree-in-hand to go to work building drones or satellite computer networks, or whatever.

    More likely Hampton Roads and place like A.P. Hill in Caroline County or other BRAC-vulnerable geographies are more at risk than NoVa.

    but make no mistake – the private sector did not R&D stuff like drones… the military did – like many other cutting edge technologies that the private sector simply does not have the capital to devote to it.

    My guess is if we cut DOD 25%… NoVa will see 5% and Hampton Roads 15%.

  3. Peter Galuszka Avatar
    Peter Galuszka

    While Groveton is right that NOVA doesn’t have a big time tech university, LarryG is right that NOVA really doesn’t need to have one with its proximity to DC.

    Not having a tech university is a bigger challenge in Richmond where VCU struggles to improve but just isn’t in the same league as MIT, Berkeley or even Duke, NC State or Chapel Hill.

    Although significant downsizing is due in the defense sector and that will impact NOVA-land, the effects are likely to be mitigated by the fact that many of the defense contractors are computer based firms. As such, they will continue to get defense dollars as DOD puts more emphasis on cyberwarfare and control systems for aerial drones as opposed to manned aircraft and the like.

    It may be too soon to write the place off.


  4. it’s way too soon to write it off and Peter hit the nail on the head.

    Here’s the reality. DOD can hire two or three contractors for what it costs for one DOD employee.

    so would you like to guess how DOD will “downsize”?

  5. the other thing to recognize is that DOD technology is an OPPORTUNITY for NoVa and the private sector to use that relationship to LEVERAGE the area into a technology region beyond just DOD.

    Whose responsibility if that? Surely not the “clown show” in Richmond, eh?

    Is that a NoVa leadership issue?

  6. Groveton Avatar

    In a state that sucks on Dillon’s Rule like a pacifier, all responsibility must accrue to the politburo in Richmond.

    Why doesn’t Richmond have a top tier technology university? Because the politburo won’t force VA Tech into a sensible multi-campus configuration. Most states with successful public university programs operate a system of universities. Not Virginia. We have isolated, independent, semi-autonomous schools operating without any visible state-wide rhyme or reason.

    But, of course, that would require the Clown Show in Richmond to actually take responsibility for higher education in the state instead of leaving the matter to the egomaniacs who run the various institutions.

    So, we have three centers of commerce without one top STEM school among them. And Jim Bacon wonders what will happen when the federal funding is cut.

    The state will just suck out loud, Jimbo, that’s what will happen.

  7. Groveton Avatar

    Why doesn’t the “creative class” want to live in Northern Virginia. Well, the disgraceful traffic problems are one reason. Fairfax County should take responsibility for its own roads some will harumph.

    Here’s an interesting article …

    “But Fairfax officials say they can’t afford to control their own roads until the state rewrites a funding formula that classifies most of the county as suburban or rural, giving it fewer tax dollars to patch roads. Arlington receives about $16,000 per lane mile per year, while Fairfax gets around $6,000 per lane mile, according to Cook.”.


    The Clown Show in Richmond classified Fairfax County as rural?

    I seem to recall that Henrico County gets around $9000 per lane mile. Meanwhile, Henrico has a density of 1,291 per sq mi. Fairfax, apparently, gets $6,000 per lane mile with a density of 2,738 per sq mi.

    Gee, I wonder why the roads around here suck so much.

    Live by the nanny state, die by the nanny state. And this nanny state is poised to commit suicide.

  8. Groveton Avatar

    As an aside, has anybody wondered about Detroit. All of those high technology scientists and engineers who used to be employed by the automotive sector…

    What happened when the automotive sector struggled? Did those scientists and engineers retool and stay in Detroit? Or, did they run like scalded dogs?

    Cars have always been buit in Detroit. There is still an automotive industry in Detroit.

    But Detroit has fone from 1M residents in 1950 to 500K today. It went from the economic engine of Michigan a few decades ago to the economic drain today.

    Detroit was a “one trick” pony which couldn’t adjust to a slowdown in its one trick.

    Now, they can’t keep the streetlights on in what increasingly sounds like a second world or third world city …

    What manner of arrogance convinces Virginians that they will do any better?

  9. Virginia won’t do any better than Michigan unless we get our act together pronto.

  10. I believe that all counties would receive the SAME road funding if they take over their roads.

    If someone knows that is not the case – then provide some evidence – and if so I would end up agreeing that no counties is going to do what Arlington and Henrico did without equal treatment.

  11. The “clown show” in Virginia has put the Center for Innovative Technology in NoVa so it’s not like they are totally asleep at the switch on this issue.

    And to be sure – you would expect the business leaders in Northern Va to take the lead in developing it as a technology center – not Richmond no more than you would expect many great urban areas to expect their state legislators to do that.

    If the leaders of NoVa want a STEM university in that region – I’m quite sure that Va would give them an assist if they requested it.

    In Fact, Virginia Tech ..IS IN Northern Va:

  12. I hesitate to comment, but Groveton’s remarks are very interesting.

    They are interesting because I can’t fully agree or disagree with them. Some of the lines I agree with most I am simply not going to connect myself to on the web.

    One of the few things I thought was noteworthy of the 2005 higher ed restructuring act was this. It 0nly took 398 years to actually put stated goals and and intent for higher education into state code. Prior to that there was nothing. One of things that the regions Groveton cites as successful is that they have strong system-level governance or strong private research institutions. Virginia has neither of those – save the VCCS.

    Now, I don’t want to suggest SCHEV or some other entity should become a governing board as opposed to its role as a coordinating board, but this is a real difference. It takes vision and passion (and a lot of ego) to push a system of institutions toward a specific goal.

    Also it takes something in law or constitution to set a direction. In 2004 I read all the state constitutions for what they had to say about higher education….Virginia has about the fewest words and the weakest guidance. SCHEV also looked at this issue in 2002 and reached the conclusion that we did not have a the critical combination of research institutions and population in the right proximity to each other for Silicon Valley or RTI to happen in Virginia. Nor was their appetite to fund such.

    Nor is there now.

  13. Groveton Avatar

    “If someone knows that is not the case – then provide some evidence – and if so I would end up agreeing that no counties is going to do what Arlington and Henrico did without equal treatment.”.

    Arlington gets more than Henrico today. Why would things suddenly equalize?

  14. Groveton Avatar

    “In Fact, Virginia Tech ..IS IN Northern Va:“.

    Been there. Seen that. In person and on the web. UVA and VT share a small three story building. VT grants no undergraduate degrees from there. UVA grants one in Interdisciplinary Studies.

    They do grant graduate degrees which is better than the way they originally started.

    George Washington University has a bigger and better presence in Northern Virginia despite having their main campus in DC …

    Note that they also have a Hampton Roads campus.

    How ironic. A private university based in Washington, DC is doing more for Northern Virginia and Tidewater than the General Assembly – managed schools of higher education.

    Don’t know what to say here LarryG … Virginia is asleep at the wheel on this one. Tod is right – we have neither the right mixture of higher ed and population to make an RTI or Silicon Valley nor the gumption to do anything about it.

    Might be time to start playing taps for the Old Dominion’s status as a leader of the new south. Might be too late. I guess North Carolina has been running away with that title for a while now. Followed by Georgia. With South Carolina named Most Improved.

    I guess we’re still ahead of Mississippi.


    For now.

  15. re: south Carolina

    ironically – South Carolina is about the most Home Rule State in the Union yet I’m pretty sure that we don’t want to use them as a model for economic success.

    re: Arlington vs Henrico vs Fairfax reimbursement rates.

    that’s interesting. I think if that is true – it’s a big problem for ANY urbanized county that has a lot of modern arterial roads signed as 600 series secondary roads.

    VDOT should be willing to turn over – at the least – the amount they current spend in operations and maintenance – as a switch-over point.

    if they are not willing to do that – then obviously Fairfax has precious little incentive.

    on that point – I might be convinced that some ‘clowns’ at the state level are running loose…

  16. In defense, secrecy rules rule. It’s an enforced mindset that counters innovation and initiative. Those traits are reserved for isolated facilities like Skunk Works.

  17. Groveton Avatar


    I would be very careful about disrespecting South Carolina’s recent economic development efforts. Greenville, in particular, should be at the top of the “visit list” for Virginia’s General Assembly.

    Greenville has a metropolitan population of approximately 600,000. Greenville was once described as “The Textile Capital of the World”. Needless to say, that moniker outlived its economic usefulness some time ago.

    Under home rule, the good people of Greenville had to take stock of what assets they had and how they might use those assets. Unlike coastal South Carolina, there are no sandy beaches or palm trees in Greenville. However, just over 30 miles down the road there is something – Clemson University.

    But Greenville needed work. So, unlike the nanny state of Virginia, the folks in Greenville got to work …

    Here’s how it looks to me (from casual conversations with people) …

    Revitalize downtown …

    Visual art … check
    Dance and Theater … check
    Music … check
    New minor league ballpark … check

    Satellite campus of Clemson in Greenville … check.
    Find a focus, precision manufacturing in transportation … check.
    Upgrade Greenville – Spartanburg Airport … check.

    Attract employers …

    Michelin … check
    BMW … check
    Lockheed – Martin … check
    3M … check
    Honeywell … check
    Catepillar … check

    Now, let’s compare Greenville to Roanoke, Va. Roanoke is a mid sized metropolitan area, Virginia Tech is about 40 miles down the road…

    Median income for a household … Greenville – $33,144, Roanoke-$30,719
    Median income, family …Greenville – $44,185, Roanoke – $37,826
    Per capita income … Greenville – $23,242, Roanoke – $18,486
    Poverty rate, families … Greenville – 12.2%, Roanoke – 12.9%

    LarryG – aggregating anything because it exists inside the historical accident of Virginia’s state boundaries is a hoax. Just like assuming Virginia’s success is occasioned by the Clown Show in Richmond rather than the river of federal money that runs through NoVa and Tidewater is a hoax.

    It becomes a cruel hoax when you look at how too many people in Virginia actually live. Take away the few high income counties and you are increasingly left with the state that time forgot. The Clown Show’s central planning has not helped those who need help in Virginia. However, local autonomy has helped the good people of Greenville, SC.

    The Greenville story certainly needs more research. However, based on initial first hand experience – it looks damn impressive. The kind of thing that the politburo in Richmond would never and could never pull off.

  18. SC has made impressive gains in attracting manufacturing but I would not call it Silicon Valley II.

    It also has an import port with impressive container stats.

    Columbia, which I visited recently is a vibrant place that attracts younger people but the racial divide is readily apparent.

    Much of the new manufacturing was attracted with sweet deals and if that is the standard by which to judge Va’s lower success… at attracting manufacturing then I’d agree.

    but I’d also point out that having world class STEM institutions at the same time much of ROVA’s K-12 academic is not particularly good – also says something about our State and our commitment to higher academic aspirations.

    but I digress… Groveton made good points…

  19. Andrea Epps Avatar
    Andrea Epps

    “I would argue, the defense sector is crowding out small, non-defense technology companies for whom it would be senseless to pay a premium to locate in Northern Virginia.”

    Well Jim, you might be the only person who appreciates this thought, but they are welcome to come to Richmond!!:)

  20. Andrea Epps Avatar
    Andrea Epps

    Because my comment preceded my reading the others, I will add that I totally agree with Groveton about the clown show in Richmond, and I also defer to his knowledge of the subject.
    I was simply wondering, because Richmond is trying to re-brand itself as a solid spot for entrepreneurs and R/D, why we don’t do whatever is necessary to attract these companies?
    I’m going to be EXTREMELY p***ed if I have to move to NOVA just to find a job.
    If we need to restructure the schools, so be it. But I must say I really believe education alone isn’t as important as real world experience.

  21. Andrea Epps Avatar
    Andrea Epps

    Oh, BTW
    The Richmond Think Tank group (business,civic, local govt leaders) took their annual trip last year (I think) to Charlotte and the Research Triangle. They go someplace with progressive ideas for three days every year. Jim probably posted on it, but maybe we can encourage this group to bypass the clown show, or motivate it? Maybe wishful thinking, but what the heck?

  22. Groveton Avatar

    Andrea – Richmond has never gotten to the point of a cluster. Silicon Valley is clearly a computing cluster. Northern Virginia is a defense cluster. Hartford is an insurance cluster. New York is a financial cluster. Greensville is a precision manufacturing cluster.

    What is Richmond?

    I think Richmond will find it very hard to rebrand itself as a solid spot for entrepreneurs and R/D generically. They need to pick a more specific area of entrepreneurship and R/D and go from there.

    Greenville worked with Clemson to establish a center for automotive research. Very specific.

    I think Richmond would need to pick a direction and take it.

    I have been advocating for “data science” in Northern Virginia. Spoke to state legislators, spoke to public university administrators. I should have spent my time spitting into the Potomac River. It would have been time better spent.

  23. I’d just point something out here. 20 years ago – Detroit was considered the center of “innovation”.

    Before that – we had other cities involved in other industries.

    It would be easy to think a city needs to innovate for the CURRENT technologies ….

    but technologies change … and cities that are anchored in specific technologies risk getting left behind like Detroit.

    Some day.. it could be that Silcon Valley ends up like a gold mining ghost town… if it fails to evolve.. as technology evolves.

    DOD, on the other hand – evolves… and they are good at it.

    Drones ( actually all autonomous vehicles) have not only revolutionized warfare – they are revolutionizing civilization….

  24. Groveton Avatar

    “but technologies change … and cities that are anchored in specific technologies risk getting left behind like Detroit.”.

    Nope. Automotive is an industry, not a technology. And the automotive industry is fundamentally sound even if Detroit lost its way.

    Detroit failed, the global automotive industry did not.

    There is nothing wrong with DoD other than the fact that it absolutely, positively MUST shrink in size in the United States.

    Also, I believe that drones are not autonomous. They are remote controlled. I am not entirely sure of this but I didn’t think they flew by themselves.

    But the big deal is this …. virtually none of the DoD contractors are capable of commercializing the technology that is developed for the DoD. There are lots of commercial uses for GPS. Mio, TomTom, Garmin – none are offshoots of DoD contractors to the best of my knowledge.

  25. automotive is not a technology but personal mobility is.

    GE knows how to diversify and adapt and evolve with changing technologies.

    they do that REGARDLESS of the technologies themselves.

    On GPS – Groveton – you do realize that DOD created the GPS Satellite system – with contractors – and the same contractors designed and developed the handheld and mobile units ….

    DOD did not create the GPS satellite system and then stood around waiting for the private sector to develop devices… do you think?

    I thought you were a “tech” guy…


  26. What about a center for cyber security and privacy protection? I think these are two of the biggest areas where our systems need major improvement. Better solutions in these two related areas would send e-commerce, e-government and national security to new dimensions.

Leave a Reply