Perot Launches Government Business

Perot says it will acquire $67 million government consulting and IT services firm ADI Technology as the cornerstone for its new services unit.

The deal is for about $32 million in cash, plus up to $15 million in cash and stock of Perot Systems, depending on whether or not it meets performance targets. Greg Bedner, CEO of ADI, will head up the new Perot government services unit.

Perot's move into the government market comes as the company's business operations go under the spotlight because of accusations from California officials that the company gave sensitive information to electricity market participants to help them exploit loopholes in the systems it helped create.

In 1997, the company helped build the systems for agencies that regulate California's energy markets, including the California Independent System Operator and the California Power Exchange. But the company is accused of having conflicting interests because it simultaneously tried to launch a consulting business to show energy firms how to exploit loopholes in the energy markets. According to records turned over to investigating agencies, the company was looking to sell consulting services to companies including Enron, Edison International's Southern California Edison and PG&E's Pacific Gas and Electric.

Officials, including California Sen. Joseph Dunn, say the two roles posed a conflict of interest that violated the company's contract with the ISO.

Perot has denied any wrongdoing, and company chairman H. Ross Perot has agreed to appear next week, along with a number of former employees, before a California Senate committee that is investigating the matter.

Perot's stock, which has dropped close to 50 percent since early June, was selling slightly higher in late morning trading Wednesday, up about 10 percent, to just over $10 a share.