CSC takes $250M hit in contract settlement
By
Nick Wakeman
Agreement with unnamed customer also includes a five-year contract extension, potentially worth $1 billion.
Computer Sciences Corp. signed an agreement to settle a contract dispute with the government.
While the company declined to name the customer or contract, the case had been pending infront of the Armed Services Board of Contract Appeal. In November, CSC and the government agreed to enter into nonbinding alternate dispute resolution process to resolve the matter, the company said in an announcement.
The agreement pays CSC an upfront cash settlement of $277 million along with a five-year contract extension valued at $1 billion. The extension is to “support and expand the capabilities of the systems covered by the original contract scheduled to expire in December 2011."
But CSC also said it will take a noncash pre-tax charge to earnings in the second quarter of $250 million. The charge will reduce its earnings per share by $1.15.
“We are pleased we were able to reach an equitable agreement with the government while preserving our important role in a critical government program,” said James Sheaffer, CSC president, North America public sector, in the company statement.
A company spokesman said CSC could not comment beyond the published statement because CSC officials signed a nondisclosure agreement when they entered the alternate dispute resolution process.
CSC is ranked No. 11 on the 2011 Washington Technology Top 100 list of the largest government contractors.