Economic Development Assistance – state warfare leads to corporate welfare

The latest news around these parts involved the decision by Northrup Grumman to move their 300 person corporate headquarters to Northern Virginia from California.   Gov. McDonnell was giddy with joy at the announcement,  beating out Washington, D.C. and Maryland in a fierce competition to see who could offer the best incentives. 

It was hard to pry details of the deal out of the company, but the governor later admitted in a radio interview with WTOP that the package of incentives came to $12,000,000 to $14,000,000.  Subsequent press accounts put the number at $12,000,000 to $15,000,000.  Hmmm, let me do the math.  That’s $40,000 to $50,000 per job.   Excuse me while I get violently ill.

As I was researching the amount of the incentives, I came across some other interesting facts about Norththrup Grumman and the Commonwealth of Va.  It seems that Northrup has a $2.3 billion, 10 year contract with the Commonwealth for consolidation and outsourcing of the state government’s IT services.    A year ago there was a dispute about contract performance.

Here’s an excerpt from Government Technology:  (

“Some critics and lawmakers have complained the outsourcing contract and partnership has been plagued by poor service and cost overruns. A VITA oversight board dismissed former Virginia CIO Lem Stewart in June, shortly after he said he wanted to withhold a scheduled $14 million payment to Northrop Grumman because he said the vendor wasn’t fulfilling its contractual obligations.”

That was then – this is now.  So how are things working out?

The Shad Plank had some  depressing revelations about campaign contributions from the company to Governor McDonnell and the state Republican Party, and then this:

“Couple that with the big and lucrative extension McDonnell signed with Northrop Grumman and the Virginia Information Technology Agency. The three-year extension on the problem-laden contract included $105 million in extra payouts and $47 million in additional purchases from the state.”

(See the full article at:

Bloomberg news reported this on April 7, 2010:

“Gov. Bob McDonnell and Technology Secretary Jim Duffey on Tuesday outlined changes to the Virginia Information Technology Agency partnership that had prompted bitter complaints of poor, slow service by state agencies and a scathing audit by the General Assembly.

The revisions put new pressure on government and defense contracting giant Northrop Grumman, which holds the $236 million-a-year contract, the largest ever written by Virginia state government to a single vendor.”

I think the governor misunderstood his strong negotiating position, to say the least.  What is it with politicians and big companies?  It’s just corporate welfare as far as I’m concerned.  As a taxpayer, I’m pissed at McDonnell for wasting precious state resources.  As a small business owner, I livid that I didn’t get to participate in such a lucrative scam.

I’m seriously considering moving the Luhring SurvivalWare Headquarters to California in protest.  How cool would this be:  showing off SurvivalWare’s Comparanator and Automator at a press conference with the Governator.  You read it here, first.


One Response

  1. Hi.

    Tks for this post.

    It is useful.


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