BearingPoint Sale Could Disrupt Customer Engagements - InformationWeek
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3/30/2009
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Paul McDougall
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BearingPoint Sale Could Disrupt Customer Engagements

Tech consulting firm Gartner is warning clients that the sale of government outsourcer BearingPoint could disrupt work on current projects, such as the rebuilding of Afghanistan's civil institutions.

Tech consulting firm Gartner is warning clients that the sale of government outsourcer BearingPoint could disrupt work on current projects, such as the rebuilding of Afghanistan's civil institutions."These deals could cause short-term disruption for many BearingPoint clients but may lead to a more stable business environment in the long run," Gartner said in a research note Friday.

BearingPoint, which filed for Chapter 11 bankruptcy protection in February, last week announced a deal to sell the bulk of its Public Services government outsourcing unit to Deloitte for $350 million. The agreement is subject to bankruptcy court approval.

BearingPoint also said it signed a non-binding letter of intent to sell its smaller North American commercial unit to PricewaterhouseCoopers for $25 million. Additionally, the company said it's in negotiations to sell off its European and Asian operations.

Gartner warned that the extensive restructuring could put client projects in jeopardy.

"BearingPoint has not finalized these deals, nor do they account for all of BearingPoint's business. This uncertainty may drive some BearingPoint employees to seek jobs elsewhere--and the transition will bring inevitable loss of focus," Gartner said.

Gartner is advising BearingPoint customers to press the company for details on the status of their project teams, extend project timelines if possible, and meet with any new owners of the company.

The uncertainty is apparently not stopping the federal government from handing more work to the bankrupt firm. The General Services Administration on Monday announced the selection of BearingPoint as an official vendor on the 10-year, $50 billion Alliant contract. Under the Alliant project, the federal government plans a sweeping revamp of security-related IT systems.

BearingPoint holds numerous, sensitive government contracts--a situation that makes a smooth transition to new ownership all the more critical. For instance, the United States Agency for International Development in 2007 awarded the company a five-year, $218 million deal to assist with the rebuilding of private and public institutions, from banking to education, in Afghanistan.

BearingPoint is also working on a number of other key military and security contracts. The company's financial problems date back several years.

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