CSC sells unit to satisfy new ethics rule

Computer Sciences Corp. is selling its 500-person Mission Solutions Engineering unit to satisfy a pending organizational conflict-of-interest rule.

Terms of the sale to ASRC Federal Holding Co. were not disclosed. ASRC is part of Arctic Slope Regional Corp., an Alaska Native Corporation.

CSC created Mission Solutions Engineering about six months ago as a standalone affiliate to keep the work it has with the Defense Department. The company hoped the structure would satisfy new organizational conflict of interest rules were required by the 2009 Weapons Acquisition System Reform Act, said Lannie Elderkin, CSC’s deputy general counsel.

RELATED STORIES:

DOD proposes new conflicts of interest rules 

7 do’s and 1 don’t for avoiding conflicts of interest

DOD ethics rules short on mitigation 

As an affiliate, Mission Solutions Engineering had its own management team and outside board of directors, a similar structure that allows foreign-owned companies to operate as defense contractors in the United States, she said.

“We took a very vigorous approach to this,” she said.

However, the company decided it had to sell the unit as the draft regulations moved forward because the rules included all subsidiaries and affiliates as part of its definition of what would constitute a conflict of interest, she said.

The defense rule is not final but few changes are expected, Elderkin said.

CSC joins other companies, such as Northrop Grumman Corp., which sold its TASC business unit, and Lockheed Martin Corp., which is selling its Enterprise Integration Group, in divesting businesses to comply with the pending regulations.

Elderkin said she disagrees with the new rule. “If the entire construct is that a foreign-owned contractor can operate with a proxy model with a separate management team and separate board of directors, why isn’t that good enough for a U.S. company?” she said.

CSC will continue to monitor its operations for organizational conflicts of interest and listen to concerns of its customers, Elderkin said.

ASRC is picking up a business unit that provides systems and software engineering services to the Missile Defense Agency and the U.S. Navy.

The deal is expected to close in 60 days. The unit will become a subsidiary of ASRC and President Tim Caswell will continue to guide the strategic direction and Chief Operating Officer Mike Knowles will manage operations.