Capitol flight: Facing budget cuts, companies reconsider the value of Washington lobbying offices. (View from the Hill).

The high-tech boom was just reaching its peak when 3Com, a high-flying Internet net-working company in Santa Clara, Calif., hired Greg Garcia to head its new Washington office in February 1999. Two years later, Garcia was let go. Facing budgetary shortfalls, 3Com management jettisoned company units that didn't generate revenues.

It's a common story. Budget cuts in the slowing economy force CEOs to make hard decisions: Should they maintain their own lobbying staff in Washington, or hire independent consultants to lobby for them on Congressional actions affecting their companies?

Besides 3Com, Doubleclick, J.C. Penney, Lucent Technologies, Novell and Ryder System shuttered Washington offices in 2001. AT&T and Cable & Wireless laid off personnel in Washington, while Intel and Hewlett-Packard opted not to replace new lobbyists after employees departed.

Even so, others are hiring. Siebel Systems just brought aboard a new lobbyist, as did Yahoo! and Dow Chemical. Amway, Cisco Systems and eBay are all hiring representatives in the capital. "[We] found the dollars to make it happen," says Thomas Siebel, the Siebel CEO, who believes federal agencies could be a lucrative market for his software.

CEOs shouldn't make a decision to close a capital outpost rashly, particularly if their industry is highly regulated, warns Charles S. Mack, a former president of the Business-Industry Political Action Committee.

Nevertheless, says Mack, in same cases a trade association or outside lobbying consultants can protect a company's interests in Washington just as well as an office of their own when money is tight.

Experience of several companies, however, shows that employing lobbyists on the corporate payroll, as opposed to just retaining an outside firm or relying on a trade association, may have given them an edge in fighting unwelcome regulation.

Microsoft, of course, was once the poster child for being unschooled in Washington's ways. Up until 1995, the software maker employed just one Washington lobbyist, who was stationed in the firm's marketing department in Chevy Chase, Md. Once the Justice Department socked the company with an antitrust suit in 1997, things changed quickly. Microsoft now employs several outside firms and has an office in Washington wit 10 registered lobbyists.

Bridgestone/Firestone learned how costly it could be to hire to few lobbyists when the tire maker was forced to recall millions of tires in August 2000. It initially had no Washington office and only a few outside consultants. By the time of Congressional hearings, most of the outside consultants had quit because of conflicts of interest or to save their reputations.

Now the tire maker operates its own Washington office and retains six highly paid outside firms. Its lobbying tab has shot up to $5.3 million from about $100,000 in the year before the recall.

Other companies have also come to regret not maintaining their own lobbying staff. Two years ago, Maine Republican Senator Susan Collins held hearings to examine the marketing practices of direct marketing companies. Major sweepstakes companies like American Family Enterprises and the Michigan Bulb Co. hired lobbying firms to combat the proposed regulation, but Collins succeeded in passing legislation within a year.

It's unclear whether a Washington presence would have stopped the legislation or watered it down, but relying on outside firms proved completely ineffective. The legislation passed unanimously.