Northrop Grumman chooses Virginia over Maryland

In a closely watched, highly competitive deal to lure the headquarters of one of the country's largest defense contractors, Northrop Grumman is rejecting Maryland and putting its main office in Virginia, the company confirmed Monday night.

Gov. Robert F. McDonnell of Virginia is expected to announce today that the company will relocate its California headquarters and 300 employees to his state, economic development officials confirmed.

Gov. Martin O'Malley learned about the decision in a late afternoon call with Northrop chief executive Wesley G. Bush, said O'Malley spokesman Rick Abbruzzese. The head of the Los Angeles-based company said his choice of Virginia was a real estate decision, he said.

O'Malley congratulated Virginia in a statement and said the relocation was still a win for the entire region. The company already employees 40,000 in Maryland, Virginia and the District of Columbia.

"With today's announcement the region will not only gain new corporate-level jobs, but a number of the company's key subcontractors and suppliers," O'Malley said.

Northrop executives announced in February that the company planned to move its 300-person headquarters to the Washington region in 2011. It has since been heavily courted by all three jurisdictions.

The chance to lure the defense contractor was especially enticing to Maryland, which has lost several headquarters in recent years, most recently Black & Decker, which merged with Connecticut-based Stanley Works. Some had hoped a Maryland win would help reverse a perception that the state isn't business-friendly.

Virginia officials remained tight-lipped about the deal Monday. A spokesman with the Virginia governor's office would not comment when asked about the announcement. "We are still very much in the negotiation process with them," Christie Miller, a spokeswoman with the Virginia Economic Development Partnership.

Northrop Grumman released a statement Monday night about the move.

"Our final decision was driven largely by facility considerations, proximity to our customers, and overall economics," Bush said in the statement.

Northrup is in negotiations with building owners in the Falls Church/Arlington area, with a specific building to be announced soon, the statement said. The new office would open in 2011.

Karen M. Vasquez, public relations manager for Arlington Economic Development in Virginia, said her group was told the governor would make an announcement today, but said it would not comment until after the announcement.

News that Northrop had chosen Virginia did not come as a surprise to some who follow the region's economy.

"I always thought Northern Virginia would win — not only are they a lower-cost location in a state that is generally more friendly to business — the congressional delegation is also much more pro-military," Richard P. Clinch, director of economic research at the University of Baltimore's Jacob France Institute, said in an e-mail.

Virginia's pro-business and military-friendly reputation was a major factor when General Dynamics chose the state over Maryland a decade ago, Clinch said.

"I do not believe Maryland or D.C. was seriously in the running — unless they were willing to buy the deal — which cuts in economic development funding made difficult," Clinch said.

Maryland Republican Party Chairman Audrey Scott called the Virginia move "somber news" and blamed a bad business climate in the state.

"Sadly, this announcement should come as no surprise to anyone, as Governor O'Malley has made it nearly impossible to do business in this state," Scott said in a statement. "Through record tax increases and bureaucratic red tape O'Malley has turned Maryland into an increasingly hostile environment for job creation."

Members of the state's congressional delegation tried to look on the bright side.

Sen. Benjamin L. Cardin was "disappointed in the decision, but Northrop Grumman will still have a major presence our state and we will continue to build on that relationship," Sue Walitsky, a spokeswoman for the Democrat, said in an e-mail.

"This is deeply disappointing. Maryland has been a very good neighbor to Northrop Grumman," Democratic Sen. Barbara A. Mikulski said in a statement. "We appreciate what they do to provide jobs to thousands of Marylanders and the important role they play in national security. If they change their mind, we will keep a light in the window for them."

Others said that despite the intense competition, the Northrop move would benefit the entire region.

"When Northrop Grumman made the announcement back in January that they would be coming to the Greater Washington region,…that was a win for the region regardless of where they decided to locate in Greater Washington," said Angie Lawry, director of strategic marketing for the Greater Washington Initiative.

Based in Los Angeles since its founding in 1939, Northrop has said it was relocating to better serve its customers, which include the Pentagon.

The region is home to other defense contractors, including Lockheed Martin in Maryland and General Dynamics in Virginia.

Washington, Maryland and Virginia had fought fiercely for the headquarters, with Maryland even recruiting Mayo A. Shattuck III, CEO of Constellation Energy Group, to convince Northrop of the benefits of that state.

Gus Sentementes contributed to this article

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