Lockheed to sell 2 units, merge others

WASHINGTON - Lockheed Martin Corp. said Wednesday that it will sell two businesses and realign others, moves it said will improve performance and avoid potential problems over new government regulations for defense contractors.

The company says it will sell the enterprise integration group and the Pacific Architects and Engineers unit. Combined, the two make up about 3 percent of Lockheed's annual revenue.

A Lockheed spokesman said that the planned sale, plus a combining of other Lockheed units, would affect employees in the Philadelphia region.

Company CEO Robert Stevens said in an interview that the changes were based on Lockheed's assessment of the market for global security services and the needs of its customers, made up mostly of U.S. government agencies such as the Pentagon and intelligence services.

Stevens said that Lockheed does not yet have a group of prospective buyers and declined to give any details on possible valuations of the two units.

Defense contracting reform legislation passed last year includes a provision designed to reduce conflicts of interest for contractors, many of which are huge and deeply involved in a broad range of government operation. Lawmakers were concerned that this could give companies access to nonpublic information that could help them win additional contracts.

Stevens said Lockheed concluded the enterprise integration unit could pose conflicts of interest. For example, Lockheed could be doing systems engineering for an intelligence agency while at the same time bidding on a satellite contract for that same agency, Stevens said.

Lockheed paid an undisclosed sum for Pacific Architects and Engineers in 2006. The company provides services such as disaster relief and support of peacekeeping missions for governments. Stevens said its customers wanted more services, such as construction or maintenance, that do not fit in with Lockheed's plans for the company.

Lockheed also says it will combine its Readiness and Stability Operations and Savi Technology units with its Simulation, Training and Support business, and rename them Global Training and Logistics.

Lockheed has almost 11,000 employees in the Philadelphia region. Company spokesman Jeff Adams said that about 1,300 employees in the Philadelphia region will be affected by today's announcements: About 700 will be part of the enterprise integration group divestiture, with the rest remaining with Lockheed.

Lockheed Martin Corp. laid off 126 people, including 73 unionized engineers, from its Moorestown facility in April. That move was part of a job reduction of 1,200 that was announced in January and was carried out with early retirements and attrition in addition to layoffs.

Shares of the Bethesda, Md., company fell 37 cents to $78.80 in morning trading.