Fed money boosts D.C. tech

Greater Washington Initiative

Federal information technology spending has helped companies in the Washington, D.C., metropolitan region maintain job creation, spawned new technology firms and produced concentrations of some IT specialties, according to a new report released today by a regional cooperative marketing organization.

According to the report, "Information Technology, Communications & New Media in Greater Washington," the public and private sectors have created a regional technology workforce approaching 333,000, more than twice the national average.

Tim Priest, vice president of business development with Greater Washington Initiative, which spearheaded the analysis, said the Washington D.C., region broke even in terms of the number of technology jobs during a five-year period, while Silicon Valley lost almost 250,000 jobs.

"Break even doesn’t sound great, but when you compare it to the alternative, it's huge," he said. "We had collapse of the dot-com bubble. We had a major telecom decline. And we were able to come back from that and to redirect the skills and the workers into more productive activities. It really shows that the community is vibrant, and I think the fact that we didn’t lose a bunch of jobs in technology really is a credit to the federal government in its presence here."

The forecast appears favorable for the area, too. Federal IT spending will increase from $58 billion in fiscal 2005 to $74 billion in 2009, according to an analysis by Input, a market research firm.

"There’s no good numbers on how much of our community is focused on the federal government,” Priest said. As part of the study, George Mason University researchers estimated that 60 percent of the IT sector in the greater Washington area focuses on the government technology market.

The report focused on IT, telecommunications and new media companies, but not biotechnology firms. Researchers examined the impact of the commercial and government sectors on the area. According to some of the report’s statistics:

• The Washington, D.C., region has 132,700 workers in computer systems designs and related services, significantly outpacing all other major metropolitan regions and almost three times more than San Jose’s 41,500 workers.

• Washington, D.C., and the surrounding area has a higher concentration of network and computer systems administrators, database administrators and computer programmers than the San Francisco/San Jose area.

• Federal purchases from Washington-area contractors in 2003 reached $42.5 billion, up from $6 billion from the previous year.

• A large number of minority- and women-owned technology firms in the nation maintain a Washington, D.C., office and benefit from federal subcontracting mandates.

The report's authors listed some challenges ahead, including an impending shortage of technology workers in important positions, high living costs and worsening traffic congestion.

Federal research and development priorities could cause problems. Priest said there needs to be more technology transfer and commercialization of federal R&D opportunities.

He said university officials also feel that many companies would rather partner with the federal government than academic organizations. He said several company executives echoed similar arrangements.

"If you were in Boston you’d work with MIT," he said. "If you're in Washington, you don't necessarily go to the universities, you go to the government first, and that’s been a point of frustration for the universities. It does affect innovation because universities are centers of innovation, and they can be helpful in all of this. They're an important component, and they're being neglected. If we did address that, it would be a positive thing for our tech community."

Although the Washington, D.C., area has been successful during the past four years, the region never grows as fast during the long term as some of the major markets. But it never crashes as hard as other regions, Priest said.

The report provides some recommendations for improvement in the sector. Greater Washington Initiative officials created an IT Study Advisory Committee of private- and public-sector executives who provided guidance to the organization’s in-house study team. Executive interviews and research were conducted between October 2004 and February 2005.

Anne Armstrong, publisher of the FCW Media Group, was a member of the advisory group.