Lockheed could sell, spin off govt IT business

Lockheed Martin has signed a £18 million (A$38.3 million) extension to its deal with the UK Defence department as it considers selling off or spinning out its government IT services business.

The global defence contractor last week said it would complete a strategic review into its information systems and global solutions (IS&GS) division by the end of the year.

Subject to the review are five units within the division: technical services, government/enterprise IT, commercial cyber security, government healthcare IT and air traffic management.

It will also study the future viability of the technical services business within its missile and fire control division.

Both units employ around 17,000 staff. The company counts a total of 112,000 workers.

Services teams that target defence and intelligence customers will not be subject to the review, Lockheed said. Such functions will be realigned with other business areas.

It signalled the likelihood of the IS&GS and technical services divisions being spun off or sold outright.

The two businesses represent around US$6 billion of Lockheed's forecast 2015 sales.

Despite recent customer wins in the US, Australia and Europe, the company said recent shifts in the market meant the divisions could be better off outside of Lockheed.

“As global security market dynamics shift, this review will strengthen our competitive posture, enabling sustained, profitable growth and positioning Lockheed Martin to deliver value for customers, shareholders and employees,” Lockheed chairman and CEO Marillyn Hewson said in a statement.

The extended deal with the UK Defence department will see Lockheed continue to provides its joint asset management and engineering solution - JAMES - for a further six years. The pair first signed a deal for the technology in 2004.

The system keeps track of military equipment and assets.