Perhaps they should read https://en.wikipedia.org/wiki/Piercing_the_corporate_veil

Parent isn't talking about shareholders or ownership, but full delegation of a process to a contracting company.

Calling "shell company" makes it sound like the University is the shareholder, but that's usually not what's happening IMHO. In general the entities are clearly defined and nothing crosses the client/contractor frame, the university just happens to be the sole client and the contractor will have the uni pay for their whole operation.