McDonnell: Va. used incentive package of $12M to $15M to lure Northrop HQ from Calif.

McDonnell: Va. spends $12M-$15M to lure Northrop

ARLINGTON, Va. — Virginia used an incentive package worth $12 million to $15 million — significantly larger than what it has used in other recent deals — to land the corporate headquarters of defense giant Northrop Grumman Corp., beating out Maryland and the District of Columbia.

Virginia Gov. Bob McDonnell said Tuesday he considers the money well spent and that the relocation of the defense contractor from Los Angeles will result in $30 million in new tax revenue over the next 10 years.

He said the incentive package was less than what was offered by the D.C. government, which had been reported to be as much as $25 million.

The state announced Monday that Northrop, after months of wooing, will move its headquarters from California to Virginia.

On Tuesday, McDonnell and Northrop Chief Executive Wes Bush held a news conference to discuss the deal.

About 300 jobs with an average salary of $200,000 are associated with the move. Some executives will relocate from California, while others will be new hires, Bush said.

Bush said both Maryland and the District of Columbia put together strong packages, but the economics work best in northern Virginia, which has several feasible sites ready to go and is closer to the company’s biggest customer, the Pentagon.

“It’s fundamentally the reason we’re moving to this area,” Bush said. “We’re changing our mode of operations to be closer to our customers.”

Officials in Maryland said Monday that they put together a competitive package but that the real estate in Virginia was more attractive to Northrop, in part because of its proximity to the Pentagon.

Bush said the company has not chosen a location within Virginia, and is still evaluating sites in Arlington County and the Falls Church section of Fairfax County.

Bush said the potential to be essentially a next-door neighbor of General Dynamics would make “no difference” in choosing a location. Economics, including local incentive packages, would be the primary factor, Bush said.

The company hopes to choose a location in the next month and move in by the summer of next year, Bush said.

McDonnell said the incentive package is in line with what Virginia used recently to lure headquarters of the Hilton hotel chain and government contractor SAIC Inc.

While McDonnell did not spell out exact details of his incentive package for Northrop, it appears to be significantly larger than those deals. Hilton Worldwide received incentives of about $4.6 million for a relocation from Beverly Hills to Tysons Corner that also involved about 300 jobs.

SAIC is scheduled to receive about $10 million for a project expected to create about 1,200 new jobs in Virginia.

At Tuesday’s news conference, McDonnell said the anticipated tax revenue from the Northrop deal is significantly larger than the Hilton deal, justifying the bigger incentive package.

More generally, he said the competition is fierce from other states and other countries, and Virginia has to offer strong incentives to remain competitive.

Northrop is a Fortune 100 company that employs 120,000 people worldwide in aerospace, electronics, information systems, shipbuilding and technical services. McDonnell said Northrop already employs about 30,000 in Virginia, including a massive shipbuilding operation in Newport News.