The Nationals increased their win total from 59 in 2009 to 69 this past season, and their 10-game improvement tied for the fourth-best in the Major Leagues this season behind the Padres (plus-15), Reds (13) and Rays (12).
"Mike Rizzo is unquestionably one of the best baseball minds in the game," managing principal owner Ted Lerner said in a statement. "He has a unique ability to see player talent for what it is, what it can be, and how it fits into building a team.
"Mike has been one of the architects of the rebuilding of the entire Nationals player system, from scouting to player development to big league signings. We believe the talent foundation we are establishing on and off the field will make the Nationals one of baseball's most exciting teams over the next several seasons."
Rizzo, who has been the GM since the spring of 2009, said the team started talking to him about his promotion and an extension after Stan Kasten resigned as team president late in the season.
Rizzo will be in charge of the team's baseball operations. He will report directly to the ownership group. In the past, Rizzo reported to Kasten.
"I know it's a huge opportunity and a huge responsibility," Rizzo said during a conference call. "I'm going to embrace it. For a guy who loves baseball and who grew up in it, this is a dream opportunity for me to kind of home in on a franchise and build it the way I see fit. I'm very humbled by it. I'm very honored by it."
Rizzo said his greatest accomplishment as a GM so far was assembling the front office staff. He hired assistant GM Roy Clark, special adviser Ron Schueler, scouting director Kris Kline and player procurement director Kasey McKeon.
The system is now loaded with pitchers -- including 2009 No. 1 overall Draft pick Stephen Strasburg, who is recovering from Tommy John surgery -- who are expected to make an impact in the big leagues very soon.
The team also has its share of sluggers in the system including Bryce Harper and Michael Burgess. Both players are expected to be in the big leagues in two years.
"If I had to put my finger on one thing, I think it would be [putting together] the front office as we see it today, with our emphasis on getting the best and the brightest scouts, player development, front office types in the organization," Rizzo said.
"It took us awhile to assemble the cast that we have right now," he continued. "I think that is going to pay dividends down the road. It has paid dividends currently, but it's going to really pay dividends down the road. This organization is going to be built on scouting, player development. That doesn't happen without the good foundation of scouts in the field, Minor League coaches, managers, assistant GMs and the like."
Kasten, who retains his minority ownership stake in the Nationals, said the club extending Rizzo's contract is an important demonstration of stability.
"It's something every successful franchise needs," Kasten said via telephone. "It a great step for the franchise and also a great indication to the fans about how serious the organization is about building long-term success."
Rizzo is planning to stay busy this offseason. He said starting pitching is the Nats' top priority. Rizzo thinks he can get a top-of-the-rotation pitcher through a trade of some prospects or through free agency.
The Nationals thought they had an ace in Strasburg, but he is out for most of next season after his elbow surgery in early September.
Rangers left-hander Cliff Lee is the top pitcher in the free-agent market this offseason, and the Nationals will have a lot of competition for his services. It is more likely Washington will trade for a top pitcher.
Rizzo also mentioned that he would like a bat at the top of the order to set up the sluggers to drive in runs. He said that center fielder Nyjer Morgan will be given every opportunity to fill that spot during Spring Training. Morgan had his worst season in the big leagues in 2010, hitting .253 with a .319 on-base percentage. Rizzo also wants hitters who can grind out at-bats.
Bill Ladson is a reporter for MLB.com and writes an MLBlog, All Nats All the time. He also can be reached on twitter -- @washingnats. This story was not subject to the approval of Major League Baseball or its clubs.