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Military Spending Growth Post-9/11 Transforms Private Companies Into Federal Contractors

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The 9/11 attacks resulted in funding increases for departments of Defense (DOD) and Homeland Security (DHS) to help counter small terrorist networks and improve national security to prevent future attacks, The Wall Street Journal reported Monday.

U.S. military spending also rose to approximately $700 billion, or about 20 percent of the U.S. government’s total spending, 10 years after the terrorist attacks, flowing money into commercial firms competing for federal security contracts and resulting in the expansion of intelligence and military contractors in northern Virginia.

According to government spending data, private companies operating in and around the region saw an average annual increase of 15 percent in federal contracting from 2001 to 2011.

Some of the companies that have expanded in the region are CACI International and Beacon Interactive Systems, a software company headquartered in Massachusetts.

CACI, which has approximately $3 billion in federal contracts, unveiled a new headquarters in Reston, Virginia, in May and has purchased over 36 companies in intelligence, defense and computer technology sectors since 9/11.

Beacon, which now has a Virginia-based office, shifted from developing custom technologies for other companies to delivering specialized software platforms for the U.S. Air Force and the U.S. Navy.

“9/11 is what made us turn our heads to the defense marketplace,” said Beacon CEO ML Mackey.

The U.S. government has also turned to contractors to provide analysts, developers, engineers, consultants and other personnel to work on national security and intelligence programs, according to the report.