As federal budget cuts loom, a state task force is suggesting how Maryland might get more bang from the bucks spent by federal agencies in the state.
The raft of recommendations in the Federal Facilities Advisory Board report — released Thursday at the sprawling complex of an Annapolis defense contractor — include doubling down on cybersecurity efforts and coordinating with universities and government labs to get more federally funded research turned into commercial enterprises.
"It's something that we cannot take for granted — the fact that these facilities are here is not an excuse for running in place," Gov. Martin O'Malley said. "The fact that our nation struggles right now to restore fiscal balance ... is all the more reason for us to come together as we never have before around these important federal facilities."
O'Malley, speaking to a small crowd inside the headquarters of ARINC, an aerospace, transportation and security company, said the economic effect of Maryland's 70-plus federal agencies and military installations isn't limited to the hundreds of thousands of jobs there and at the contractors serving them.
"They also fuel innovation," he said.
Maryland is one of the top recipients of federal spending, both in direct salaries and in the billions of dollars spent on goods, services and research here. So much of the state's economy is tied up with Uncle Sam, in fact, that economists such as the University of Baltimore's Richard Clinch have been warning for years that Maryland must diversify.
But Clinch said Thursday that this need, more pressing now that the days of rapid federal spending growth are over, shouldn't stop Maryland from "squeezing every bit of juice out of the orange."
"Efforts to improve the capture rate of federal contracts and the commercialization rate of federally derived technology [are] vital," said Clinch, director of economic research for the University of Baltimore's Jacob France Institute. "It's important even with our high level of dependence."
State leaders have acted on some of the advisory board's suggestions, percolating since the panel was formed three years ago. The state's economic development agency recently hired a cybersecurity director, and O'Malley's proposed budget includes $3 million for new cybersecurity tax credits.
The state is trying to capitalize on the fledgling U.S. Cyber Command at Fort Meade to solidify itself as the center of a fast-growing industry — one that seems poised for federal expansion and has applications in the private sector. Companies and agencies alike must fend off sophisticated attacks on their computer networks.
"There is a huge market for companies to come up with solutions," said Kevin F. Kelly, chairman of the federal advisory board.
Among the panel's 25 recommendations:
•Expedite permit reviews for companies constructing buildings for federal contractors or federal agencies
•Get Marylanders ready for federal work by better coordinating with the agencies about future needs, launching the appropriate college training programs and staffing the state's one-stop career centers with people who can guide residents through the complex process of applying for federal jobs
•Investigate the opportunities and weaknesses associated with the biggest federal installations in Maryland
The risk for Maryland, one that Kelly and O'Malley alluded to Thursday, is that efforts to rein in the federal deficit could translate into sizable cuts in the state.
Automatic budget reductions known as sequestration are to take effect March 1 unless Congress agrees on another plan — or delays the cuts again. Sequestration would lower the federal budget by $85 billion this fiscal year, with $110 billion in annual cuts to follow through 2022.
Kelly, managing partner of a Washington law firm and a former congressional staffer, thinks Maryland officials should carry out the advisory board's recommendations whether sequestration occurs or not.
O'Malley sees it as capitalizing on the accident of location.
"So long as we are a nation, we will always be next to the nation's capital," he said.
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