Beltway bandit is a term for private companies located in or near Washington, D.C. whose major business is to provide consulting services to the US government. The phrase was originally a mild insult, implying that the companies preyed like bandits on the largesse of the federal government, but it has lost much of its pejorative nature and is now often used as a neutral, descriptive term.
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The name comes from the Capital Beltway, the ring road that surrounds Washington. (The entire road is officially called Interstate 495, although the eastern half is cosigned with Interstate 95, which traverses most of the East Coast.) The majority of private contractors are located, or at least headquartered, at intersections along this road in order to be close to federal agencies and legislators. There is a tendency for contractors for the various civilian departments and agencies to locate along the Maryland portion of the Beltway, while defense contractors locate nearer to the Pentagon, along the Virginia section.
History
An early use of the term may have been from a description of thieves who took advantage of the newly constructed Beltway to rob houses from their back yards, which were now exposed to the highway. Neighbors would not have seen them from the front yards, and by the time the police arrived, the thieves would have used the Beltway to escape to another state, when communications between Virginia and Maryland police departments was fairly rudimentary.