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The Economic and Intellectual Impact of Naval Surface Warfare Center Dahlgren Division

By NSWC Dahlgren Division Corporate Communications | May 16, 2018

DAHLGREN, Va. – The new Naval Surface Warfare Center Dahlgren Division (NSWCDD) Economic Impact Study closely examines the organization’s influences on the local economy, state and county revenues, as well as academic and intellectual life and progress, the NSWCDD Economic Impact Working Group announced May 16.

This year’s study also analyzes how the command’s role as a Working Capital Fund Activity influences its operations, products, and services, and by extension – its customers, sponsors and the wider community.

“Analysis of NSWC Dahlgren Division’s economic impact showcases the real economic engine behind our success among the warfare centers for the Navy,” said Capt. Godfrey ‘Gus’ Weekes. “This year’s study adds a new layer of granularity revealing the fuel of the economic engine as the real customer funding spent on RDT&E (research, development, test and evaluation). Some of our customers include the Air Force, Army, federal government, and other DoD entities, not including foreign military sales. By the same token, this shows how our funds are spent, maintaining a zero balance as part of the spirit of a working capital fund.”

“We receive more than $1.52 billion from naval and other customers eager to pay our scientists and engineers working on the base to conduct cutting edge research and develop innovative solutions,” said John Fiore, NSWCDD technical director. “Currently, Dahlgren’s intellectual impact – in the course of handling some of the Navy’s most critical real world challenges – can be seen in more than 500 patents from solutions our scientific community has developed.”

NSWCDD contributed $692 million in combined revenue for income tax, employee spending and property tax revenue to the economy last year, according to Todd Gillingham, a senior economist at the Fredericksburg Regional Economic Alliance.

"The economic impact is significant," Gillingham emphasized. "If you live in King George County, you understand it. If you're a little bit further away in southern Maryland or in Fredericksburg, Virginia, you know it's here but you may not appreciate the extent of its impact."

Unlike other Department of Defense (DoD) organizations that receive their funding directly from appropriations acts, Defense Working Capital Fund (DWCF) activities, including NSWCDD, must earn their funds by marketing their services and charging sponsoring customers for services rendered. Unlike profit-oriented, private-sector companies, however, the goal of the DWCF organizations is to break even financially – not make a profit. Most DWCF customers are DoD organizations. Annually, about 20 percent of DoD’s appropriations flow through and are executed by DWCF activities.

From the first tier of information titled “Economic Impact” on the external “NSWCDD Impact” infographic, incoming funds totaled $1.52 billion last year, with the lion’s share – $615 million – coming from sponsor money on contract. The second largest income stream is composed of Navy and Marine Corps funds at $601 million, followed in descending order by other DoD entities at $228 million, the Air Force at $30 million, foreign military sales at $26 million, the Army at $16 million, private parties at $2 million, and other government entities at $1 million.

Revenue Impact
“NSWC Dahlgren Division not only continues to be a catalyst for cutting edge technology and innovation in the public and private sectors, but a very significant economic driver at both the state and regional level,” said Gillingham. “As total revenues increase to $902 million, up from $870 million in fiscal year 2016, so too does the far-reaching impact of average wages and employee spending. These increases provide a key source of state income tax revenue generated by the command, and at least $5.7 million in combined property tax revenue for localities. The ripple effect that an organization like NSWCDD has on a state, region, or even an individual county translates into more jobs, both public and private, more small business opportunities, and a consistent improvement to the community.”

Small Business
"Our collaborative efforts in creating an organizational climate to advance small business opportunities through exceptionally managed small business programs and challenging initiatives have maximized opportunities for interested small businesses,” said Kristofer Parker, NSWCDD deputy for small business.

In response, small business owners and executives have been taking advantage of the opportunities. Over the past five years, NSWCDD demonstrated continued growth in small business participation, closing out fiscal year 2017 with over 48 percent of its total obligations going to small business prime contractors.

"Unique acquisition approaches, including early acquisition planning at the stakeholder level, effort-specific Industry Days, and extensive outreach initiatives have enabled NSWCDD to optimize small business participation,” said Parker. “These approaches enabled us to create a broad base of capable partners to support our mission and strengthen national economic development. The command's small business efforts have been recognized at both the Naval Sea Systems Command and Navy levels and continues to grow as we move through fiscal year 2018. When possible and appropriate, we have made small businesses our first option, demonstrating that NSWCDD is truly open for small business."

Academic & Intellectual Impact
The academic and intellectual reach of NSWCDD continues to grow, expanding to incorporate new programs; agreements with universities; educational partnerships; science, technology, engineering, and mathematics (STEM) educational programs; patents; and technical publications. In fiscal year 2017, there were 40 educational partnerships between NSWCDD and external educational institutions, as well as 14 university grants and contracts, and 14 cooperative research and development agreements. NSWCDD’s STEM programs have reached 36,834 students since 2005, with $647,000 invested just last year in 10 STEM programs within eight counties in Virginia and Maryland. The program is expected to expand statewide in Virginia. Since the 1970s, Dahlgren personnel have been granted over 510 patents and, today, continue to develop new and innovative solutions for the Navy, DoD, and other federal agencies

Dahlgren’s unique mix of military, civil service, and contractor personnel provides a versatile work force with expertise in many technical and support fields, including mathematics, physics, engineering, chemistry, biology, computer science, law, and business, to name a few. Scientists and engineers make up at least 70 percent of the workforce, of which 82 percent have a four-year degree or higher. Currently, 51 percent of NSWCDD employees have bachelor’s degrees (2,134 employees) and 31 percent have master’s degrees (1,162) or doctorates (135). NSWCDD currently employs 4,164 federal civilians; 4,353 contractor personnel; and 37 military members. Among the command’s federal civilian employees, 3,754 live in Virginia, 274 live in Maryland, and 136 are from other states. Thanks to the nine commands that are currently located at the Dahlgren Navy base, King George County boasts more Ph.D.’s per capita than the other 94 counties in Virginia.

Fiscal Year 2017 U.S. Contract Obligations – U.S. Map
As part of the overall economic impact assessment for 2017, the NSWCDD Public Affairs Office worked with the comptroller, budget, and finance offices to arrive at a state-by-state depiction identifying where Dahlgren’s fiscal year 2017 contract obligations were spent.

The only state with greater than $50 million spent, is Virginia, where NSWCDD is headquartered, with $560.3 million spent in the commonwealth. The second tier of contract obligation spending was from $10 million - $50 million, which included the following states: $48.5 million in Maryland, $34.2 Million in California, $15.6 million in Oklahoma, $14.3 million in Georgia, and $13.1 million in Pennsylvania.

The third tier of fiscal year 2017 contract obligation funding, which was from $1 to $10 million, included the following states: $8.4 million in Alabama; $8 million in Ohio; $7.4 million in New York; $7.2 million in Massachusetts; $7 million in Alaska; $6.5 million in Texas; $5.9 million in New Jersey; $3.4 million in Arizona; $3.4 million in Colorado; $2.6 million in Michigan; $2.5 million in New Hampshire; $2 million in Washington D.C.; $1.8 million in Illinois; $1.6 million in Utah and Connecticut; $1.4 million in Rhode Island; $1.2 million in Oregon; and $1.1 million in Missouri, Maine, South Dakota, and North Carolina.

In the final tier, NSWCDD spent less than $1 million in the following states: Vermont, South Carolina, Tennessee, Kentucky, Indiana, Arkansas, Louisiana, Iowa, Wisconsin, Minnesota, North Dakota, Nebraska, Kansas, Montana, New Mexico, Washington, and Hawaii.

Virginia County Map
Within the state of Virginia, the counties and independent cities in which fiscal year 2017 contract obligations topped $50 million were King George County with $373.9 million and Virginia Beach with $53.2 million. Counties and independent cities with fiscal year 2017 obligations from $10 - $50 million included the following: $41.9 million in Fairfax County; $21.2 million in Spotsylvania County; $18.6 million in Accomack County; and $15.9 million in Norfolk. Counties and independent cities in which $1 to $10 million was obligated included the following: $9.8 million in Prince William County; $5.1 million in Arlington County; $4.6 million in Lancaster County; $3.63 million in Chesapeake; $2.8 million in Stafford County; and $1.4 million in Alexandria.

What NSWCDD means to You and Your Community

“What the Naval Surface Warfare Center offers to the nation, DoD, and the Navy is to provide the research, development, testing, and evaluation expertise to develop new weapons, weapon systems and specialized projects that take the Navy and its strategic partners to the forefront of warfare development,” said Alan Black, director for NSWCDD Corporate Communications.

In terms of the community at large, Capt. Weekes described NSWCDD as “a magnet, drawing in talent, employment opportunities, warfare expertise, and educational outreach throughout the region.”

“The economic engine is just the symptom of our success, and what we are trying to accomplish here,” said Fiore. “The real hallmark of our success is the determination of our people to continuously make an impact as the Navy’s leading warfare system architect and systems engineer, recognized as the technical leader in delivering innovative, cost effective solutions for the Fleet, joint forces and the nation.”