Md. taps flow of federal dollars

State contractors received $24 billion, new database shows

December 27, 2007|By David Nitkin | David Nitkin,Sun reporter

WASHINGTON -- Maryland companies have received a windfall in federal contracts during the Bush administration, thanks to a White House that has tried to restrain the size of bureaucracy even as government spending has surged.

An increasing reliance on outside companies and consultants to do the work of government secured fourth place for Maryland in per capita spending on contracts in the United States, behind only the District of Columbia, Virginia and Alaska.

The figures come from a new public database containing the most accessible information yet compiled on the flow of federal dollars. Information on shows that the government spent at least $415 billion nationally on contracts for companies outside government in fiscal 2006, for everything from security in Baghdad to computer programming in Beltsville, roughly twice as much as seven years earlier.

Of that total, $24 billion was paid to companies in Maryland, according to the new database, which recently went online.

"Maryland is one of the most government-dependent states there is," said Richard Clinch, the University of Baltimore's director of economic research, who has studied the impact of federal spending on states and localities. "And that has good things and bad things associated with it."

On the plus side, the federal government almost always grows, meaning a steady source of money for contractors, he said. But economic diversity can suffer as a result.

Driving the growth in contract spending has been increased demand for homeland security, defense and intelligence needs after the Sept. 11 attacks, along with the recovery efforts after disasters such as Hurricane Katrina. With the Bush administration's opposition to expanding the central government, independent contractors outnumber federal employees by a 3-1 ratio at some agencies.

Proponents hope that the database, which remains incomplete and awaits information from some agencies, evolves into a powerful tool for public accountability.

"I think it's safe to say that there has been nothing like this," said Gary Bass, executive director of OMB Watch, a nonprofit advocacy group that helped persuade Congress to make the information available in a convenient form for the first time.

Bass' group, which had been running a version of the program for the past year, sold its software to the federal government after lawmakers adopted the measure - becoming one of the contractors it had been tracking.

A growing proportion of federal contracts are awarded with little or no competition, according to Bass' analysis.

"Twenty companies account for about 36 percent of all contracts, so the concentration of money in a handful of companies is quite extreme," he said.

"And that raises all kinds of questions about accountability at a time when we see increased corruption and problems of monitoring the dollars."

The single largest federal contractor in the country last year was technology and defense giant Lockheed Martin.

Nationwide, Lockheed Martin received about $32.1 billion last year, up from $19.3 billion in fiscal 2000. Its offices in Gaithersburg, Bethesda and Middle River received about $1.14 billion from federal agencies in 2006, including $158.5 million for data services at the Woodlawn-based Social Security Administration.

Not all the money that starts out in Maryland stays in the state, company officials said. Especially on defense projects, many sub-contracts go to vendors elsewhere.

Maryland's second-largest government contractor last year was the Johns Hopkins University, which received $908 million for medical and health studies, research into space science, weapons testing and other services, according to the database.

The university itself reports an even larger federal take, when grants and other money are included. Hopkins said it received $1.3 billion for research and development in fiscal 2006, ranking it No. 1 among all schools nationally for the 28th consecutive year. Hopkins has yearly revenues of about $3.12 billion from all sources, with the federal government providing a huge proportion of the school's funding.

"It's good for Maryland, having this kind of federal money coming into the state," university spokesman Dennis O'Shea said.

Not all federal contracts are measured in the billions. Small businesses in Maryland have also benefited.

Steve Phillips' Annapolis-based promotional products business, Anchor Enterprises, received a rush order from the Department of Veterans Affairs last year after a laptop computer containing millions of veterans records was reported stolen. The agency was training its employees to avoid similar situations and ordered 500,000 pencils printed with computer safety messages.

After the agency called some companies it had done business with before, Anchor Enterprises got the $49,940 emergency contract.

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