Large East Hills Business Park employer to be sold as part of $400 million deal

photo by: Conrad Swanson

General Dynamics, 3833 Greenway Drive.

One of Lawrence’s largest employers soon will have a new owner. The General Dynamics call center in the East Hills Business Park is part of a $400 million deal that will transfer ownership to a company that specializes in operating customer service centers for the federal government.

A General Dynamics spokesman confirmed Wednesday that the call center at 3833 Greenway Drive is part of a pending purchase by Reston, Va.-based Maximus. The deal is expected to be finalized in mid-November.

The Lawrence center at times has had more than a thousand employees providing customer service support for everything from student loan programs to federal health insurance plans. Jeff Davis, a spokesman for General Dynamics, said he couldn’t provide specific job totals for the center, but said its employee totals definitely were still in the range of multiple hundreds of people.

Davis said he did not think the deal would produce a major change in strategy for the center, and he did not expect any interruptions in service.

“From our standpoint, we expect this will be completely transparent to the employees and customers,” Davis said. “This is something that Maximus has a lot of experience doing, and it is not one of our core competencies as a company.”

General Dynamics Information Technology

General Dynamics is best known for being a federal contractor that makes submarines and weapons systems for the military and Gulfstream jets for the private sector. But it also has an information technology division that operates several call centers that provide customer support for federal or state contracts — in other words, large call centers that answer the phones to help people navigate through sometimes complex government programs.

Davis, though, said most of General Dynamics’ Information Technology division focuses on providing “high-end IT solutions” to a variety of clients. That made the call center business a bit of an outlier for the company.

Maximus — which is publicly traded on the New York Stock Exchange — touts itself as a company that specializes in such call center operations. Its description of its mission is to enable “citizens around the globe to successfully engage with their governments at all levels and across a variety of health and human service programs.”

Notably, Maximus processes applications for KanCare, the state of Kansas’ privatized Medicaid program. The company has been under fire this year because of a persistent backlog that Kansas officials said resulted from inadequate staffing.

A spokesman for Maximus referred questions about the deal to General Dynamics. A Maximus press release, though, made no mention of closing any of the centers or other large scale changes. Maximus President and CEO Bruce Caswell said the deal was made to get Maximus access to some of the federal government’s largest contracts.

“As a leader in business process management and the delivery of citizen services, Maximus is strengthening its position with some of the largest mission-critical federal civilian programs,” he said in the release.

Maximus is paying $400 million to acquire the Lawrence center and several other centers from General Dynamics. The Maximus release did not specify how many other centers or provide any details about them. The deal is expected to add about $670 million in revenue to Maximus.

The Lawrence call center has gone through several corporate ownership changes through the years. It previously operated as NCS and later as Pearson Government Solutions, among other names.

In other news:

• It could be an eventful week for Sears Holding Corp., which is the parent company for the Kmart distribution center that operates in Lawrence.

The Wall Street Journal reported Tuesday that Sears has hired a firm to prepare for a possible bankruptcy. Such a filing could come this week as Sears has $134 million in debt due on Monday.

The report indicates a Chapter 11 bankruptcy is the likely path the company would take, meaning it would seek to restructure its debt while remaining in business through the bankruptcy process. But reports also have surfaced that there is some fear that if Sears enters Chapter 11 bankruptcy, then the court may order the company to instead pursue Chapter 7 bankruptcy, which would be a liquidation of all its assets and mean the company would cease doing business.

A liquidation certainly would put at risk the estimated 300 jobs at the distribution center. It also would create questions about the future of the building, which is probably the largest industrial building in Douglas County. A liquidation, though, could make the property — which is located just north of the west Lawrence interchange of the Kansas Turnpike — available to other companies seeking a distribution center property. The various ins and outs of bankruptcy law, though, could make that a lengthy process.

As we reported last month, the distribution center pays about $550,000 a year in local property taxes that could be at risk if the company folds.

The Wall Street Journal, though, did not say bankruptcy was a certainty. It cited sources that said company leaders are still considering other options.


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