Aug. 20 (Bloomberg) -- Northrop Grumman Corp., the third- largest U.S. defense company, plans to sell a unit that advises military and intelligence agencies and may garner $1 billion to $2 billion, said four people familiar with the matter.

Northrop hired Goldman Sachs Group Inc. and Credit Suisse Group AG to solicit bids for the division, known as Tasc, said the people, who spoke on condition of anonymity. Potential buyers include private-equity firms Carlyle Group, Kohlberg Kravis Roberts & Co. and Blackstone Group LP, the people said.

The U.S. Defense Department was ordered by Congress this year to tighten conflict-of-interest rules on firms like Tasc and is pushing to reduce its spending on outside consultants. The policy changes may have convinced Northrop to sell Tasc and focus on faster-growing businesses such as cyber-security, said Jim McAleese, a defense-industry consultant.

“It would be prudent for Northrop to shift these resources to a growth market,” said McAleese, of McAleese & Associates in McLean, Virginia.

Dan McClain, a spokesman for Los Angeles-based Northrop, declined to comment, as did spokesmen for Zurich-based Credit Suisse, New York-based Goldman Sachs, New York-based Blackstone and Washington-based Carlyle.

Northrop’s Tasc business sells “systems engineering and technical assistance” services, which includes advising government agencies on weapons systems, according to the company Web site. Other Northrop divisions sometimes bid for contracts to build such systems. Congress passed a law in May that requires the Defense Department to strengthen rules on potential conflicts of interests among providers of such services.

Northrop fell 18 cents to $47.70 at 4 p.m. in New York Stock Exchange composite trading. The shares have lost 31 percent in the past 12 months.

Defense Contractors

Defense Secretary Robert Gates said in April he would reduce the number of support-service contractors to the pre-2001 level of 26 percent of the Pentagon’s workforce from 39 percent currently. The department will add 30,000 civil servants in the next five years with as many as 13,000 hired in the year starting in October, he said.

“It’s very clear the Obama administration has stopped the outsourcing surge and there will be a reversal back into government of many jobs,” Loren Thompson, an analyst at the Lexington Institute, a public policy research group in Arlington, Virginia, said in an interview yesterday.

Carlyle last year bought Booz Allen Hamilton Inc.’s U.S. government-consulting business for $2.5 billion.

Litton Acquisition

Northrop acquired Tasc in 2001 when it bought Litton Industries Inc. for about $5 billion. Tasc, formerly called The Analytic Sciences Corp., was founded in 1966 by engineers from the Massachusetts Institute of Technology and now has almost 5,000 employees, according to its Web site. Northrop has about 120,000 people worldwide.

Northrop doesn’t break out sales and earnings data for the Tasc unit, which is also called Advisory Services. The business is part of Northrop’s information systems division, which had sales of $5.08 billion in the first half of this year, or 29 percent of Northrop’s total of $17.3 billion for the period.

The Tasc divestiture would be the biggest under Chief Executive Officer Ronald Sugar, who since 2003 has sold a dozen businesses that failed to perform to the company’s financial expectations or were deemed not to fit with its main businesses, which include making nuclear-powered aircraft carriers and unmanned Global Hawk spy planes. His predecessor, Kent Kresa, quadrupled the firm’s revenue over a decade with $26 billion of acquisitions.

The two largest U.S. defense contractors by sales are Lockheed Martin Corp. and Boeing Co.

To contact the reporters on this story: Zachary R. Mider in New York at zmider1@bloomberg.net; Kristen Haunss in New York at khaunss@bloomberg.net; Edmond Lococo in Boston at elococo@bloomberg.net.

Last Updated: August 20, 2009 16:09 EDT