WASHINGTON — Northrop Grumman Corp. of Los Angeles has agreed to sell its TASC consulting business, whose customers include the U.S. national security space community, for $1.65 billion to an investor group led by General Atlantic LLC and Kohlberg Kravis Roberts & Co., the companies announced Nov. 8

Chantilly, Va.-based TASC is a 43-year-old company that provides advisory services to the U.S. government for national security programs. Some one-third to one-half of the company’s business — or about $500 million to $750 million in annual revenue — is space related, according to an industry source.

The sale was driven by acquisition reform legislation passed this year that created stricter conflict-of-interest rules for companies, Northrop Grumman said. Northrop Grumman is a major prime contractor on U.S. military programs, including satellites and ground systems.

“This transaction is in the best interest of Northrop Grumman’s customers, employees and shareholders,” Ronald Sugar, the company’s chairman and chief executive, said in a company press release. “It reflects Northrop Grumman’s desire to align quickly with the government’s new organizational conflict of interest standards, while preserving TASC’s unique organizational culture and its status as the advisory services employer of choice.

TASC employs 5,000 people and expects 2009 revenue of $1.6 billion. The sale, which is expected to be complete by the end of the year, is expected to generate $1.1 billion in cash for Northrop Grumman after taxes, which will be used to repurchase shares of the company’s common stock, the release said.

In a press release, General Atlantic, said its advisers on the deal included Donald Kerr, a former director of the U.S. National Reconnaissance Office; Peter Marino, former director of technical services for the CIA; R. Evans Hineman, a former senior intelligence official and former president of TASC; James Frey, also a former president of TASC; and Reuben Jeffery, former U.S. undersecretary of state for economic, energy and agricultural affairs.

The transaction is subject to approval by U.S. government regulators.

“Today’s announcement is another major milestone in TASC’s long history of leadership in serving the federal government and national security communities, and provides an exceptional foundation for our continued growth,” Wood Parker, TASC’s general manager and prospective president and chief executive, said in a prepared statement. “As a fully independent entity, TASC will expand its ability to solve the U.S. Government’s most pressing technical challenges. Our singular focus, as always, will remain supporting the vital missions of our customers.”