http://www.stltoday.com/news/nation...cle_53336d9b-a75f-5a1a-bb19-d46d3186a960.html
By GREG JAFFE and JIM TANKERSLEY Washington Post
WASHINGTON • So much money to be had if you know where to look.
The avalanche of cash that made Washington rich in the last decade has transformed the culture of a once staid capital and created a new wave of well-heeled insiders.
The winners in the new Washington are not just the former senators, party consiglieri and four-star generals who have always profited from their connections. Now they are also the former bureaucrats, accountants and staff officers for whom unimagined riches are suddenly possible. They are the entrepreneurs attracted to the capital by its aura of prosperity and its super-educated workforce. They are the lawyers, lobbyists and executives who work for companies that barely had a presence in Washington before the boom.
During the past decade, the region added 21,000 households in the nation's top 1 percent. No other metro area came close.
Two forces triggered the boom.
The share of money the government spent on weapons and other hardware shrank as service contracts nearly tripled in value.
At the peak in 2010, companies based in Rep. James Moran's congressional district in Northern Virginia reaped $43 billion in federal contracts — roughly as much as the state of Texas.
At the same time, big companies realized that a few million spent shaping legislation could produce windfall profits. They nearly doubled the cash they poured into the capital.
The signs of the new Washington are everywhere — from the Tiffany store that Fairfax County (Va.) development officials boast is the most profitable in the country to the new Tesla dealership in Tysons Corner. Every morning on the Beltway, contractors, lobbyists and some of the country's highest-paid lawyers sit in the nation's worst traffic. Sports talk radio crackles with rants about the Redskins and the latest ads from Deltek, a firm that advises companies on "capture strategies" for winning government contracts. The radio signal doesn't extend much beyond the Washington commute. It doesn't have to. The ad barely makes sense to most Washingtonians, let alone those living outside the capital.
At Cafe Joe, a greasy spoon near the National Security Agency in suburban Maryland, software engineers with top-secret clearances merely have to look at the place mats under their fried eggs to find federal contractors trying to entice them away from their government jobs with six-figure salaries and stock options. The place-mat ads cost $250 a week. They are sold out through 2014.
The new money and jobs have raised Washington's stature in the global economy. Tens of thousands of the nation's best-educated workers flocked here, some for contracting jobs, some simply to be part of the newly energized business climate. The money and brainpower supercharged the region.
Now, with lawmakers struggling to shrink the nation's debt and contract dollars declining, Washington is revving its economic engine. If it can run on its own — if all this new wealth and brainpower can innovate and produce beyond government work — the region may be able to sustain its growth.
Venture capital is already flowing in, and the thriving local economy continues to draw the nation's best-trained workers. Essentially, Washington has been the beneficiary of a decade-long, taxpayer-funded stimulus package. "We could have been a dodo bird," said Mark Muro, policy director at the Brookings Institution's Metropolitan Policy Program. "Instead we are the center of the universe."
Washington has long been a place where power outshone money, where companies tried to be discreet about their influence, where defense contractors knew not to wear watches that outshone the admirals'. The new Washington has lost some of those old inhibitions and has begun to resemble other global financial centers. Power still animates the city, but so increasingly does the pursuit of wealth.
Ulysese Jefferson was the kind of everyman only Washington could produce. He'd spent 30 years traveling the world fixing computers for the State Department. In 2002, he had a tidy pension, a split-level home in Laurel, Md., and about $5,000 in the bank. He was 64, a widower, and looking for something to keep him busy.
"I knew there was pressure to reduce the size of the federal workforce," he said. "But someone still had to do the work. Obviously, they were going to turn to contractors."
And who better to turn to than Jefferson? He knew the work and stayed in touch with dozens of State Department retirees. His goal was to win some State Department IT contracts and build a business that he could leave to his sons, both of whom were pretty good with computers. "I was never trying to make a fortune," he said.
Nearly 10 years later, Jefferson sold his company to the contracting giant ManTech for $90 million.
Jefferson's feat was accomplished during the post-9/11 period, when taxpayer money poured into the Washington area at rates that dwarfed any other time in the capital's history.
By 2010, the government was spending $80 billion a year on contracts here, much of it driven by the wars in Iraq and Afghanistan. "The culture changed," said Brett Lambert, the Pentagon's former head of industrial base policy. "It was spend, spend, spend."
It's hard to say exactly how many of Washington's households in the top 1 percent draw their incomes from the broad business of serving, supplying or influencing the government. But an analysis of tax data by the Economic Policy Institute shows that the area's 1-percenters are most likely to be lawyers and executives, or those who work in management consulting or IT. Nearly 1 in 10 of those households is headed by a government worker.
Jefferson was a small player in the federal contracting scrum. Every morning he would scan his contractor badge and head for the State Department cafeteria. His sons, who often joined him, thought of their dad as the quintessential State Department man. He was a fastidious dresser, but never flashy. He wore reading glasses perched on the tip of his nose. Over coffee, he caught up with old colleagues, sharing stories of Africa, Afghanistan, Pakistan and China. These conversations were where he picked up his best leads.
Because Jefferson was part of a special program for minority-owned small businesses, he could receive small contracts without going through the months-long competitive bidding process. By 2005 his company, which he named Worldwide Information Network Systems (WINS), had picked up several million dollars in contracts and had a couple of dozen employees.
"What happened to me and my company was built on my relationships," he said.
Most of his employees were State Department retirees who worked at government desks. Companies like Jefferson's are known around the Beltway as "body shops" or, more derisively, as "butts-in-seats" businesses. Jefferson paid his employees about 30 to 40 percent more than they had made in the State Department.