Northrop hires bankers to sell TASC business, report says

Tighter conflict of interest rules likely the motivating factor

Northrop Grumman Corp. is shopping its TASC business unit and has hired to investment banks to sell the business, according to Reuters.

Company officials declined to comment on the report that Northrop has hired Goldman Sachs and Credit Suisse to sell the unit in what could be a $2 billion deal.

TASC provides advanced systems engineering, technical assistance and other analysis and advisory services, primarily to Defense Department and intelligence agencies.

Large defense contractors often have divisions that provide these advisory services for programs that other parts of the companies manage, creating potential conflicts of interest. In May, President Barack Obama signed the Weapons System Acquisition Reform Act, which tightened rules governing that type of organizational conflicts of interest.

Executives in the information technology industry expect more large defense contractors to begin selling off divisions that provide advisory services. Otherwise, they risk being shut out of bidding on large defense programs. The sell-offs will create a buying opportunity for a variety of IT contractors.

However, the size of TASC will likely limit the number of buyers to large private equity groups.

Bloomberg named Carlyle Group, Kohlberg Kravis Roberts & Co and Blackstone Group as potential buyers.

About the Author

Nick Wakeman is the editor-in-chief of Washington Technology. Follow him on Twitter: @nick_wakeman.

Reader Comments

Fri, Aug 21, 2009 jeff p Fairfax, VA

TASC never thought it was part of Northrop Grumman. When I as an ex-PRC employee after PRC had been acquired by NG, I applied for a job at TASC I was asked why I wanted to work at TASC. I thought twice considering my response, for as I explained, I thought I was working for Northrop Grumman, and I imagined working at TASC was no different than working at any other NG entity. Obviously I was wrong, and as I wasn't gungho enough for the folks at TASC, remained with NG.

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