CSC sells unit to satisfy new ethics rule

500-person business will go to ASRC

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.


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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.

About the Author

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

Reader Comments

Fri, Jan 28, 2011

The real story here is ASRC, who remains an 8(a) company. How is it the Government allows this organization to continue to receive preferential treatment under the 8a program for Government contracts, at the detriment to true 8(a) companies? ASRC can continue to spin off new 8a companies as well, and now has ASRC Energy Services, Arctic Slope Compliance Technologies, ASRC Constructors Inc., ASRC Construction Holding Company, LLC, PETRO Star Inc., ASRC Federal, Top of the World, SKW Eskimos, Inc., Arctic Education Foundation, Alaska Growth Capital, and Eskimos Inc. (really?). If the Government wants to send money to Alaska, fine, but do so via some means other than the 8a program, where it can be tracked and the value it brings be truly determined. That would leave true 8a companies to compete for 8a work under the standard 8a limitations. I'd like to see a story from Washington Technology on how much money in the 8a program is going to ANCs vice the rest of the 8a companies, and if that resulting number is removed, if the Government would really be meeting their 8a goals. I believe their percentages are skewed because of the very large multi-million dollar contracts companies like ASRC get!

Mon, Aug 16, 2010 NW DC

What is the potential conflict of interest? Obviously there is some service CSC is providing that is forcing them to cut their losses by "avoiding the appearance of evil" with MDA.

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