A team consisting of URS Corporation’s (URS) Energy & Construction group and CH2M HILL Constructors Inc. has entered into a contract with the U.S. Department of Energy (DOE) to supply remediation and cleanup services to the East Tennessee Technology Park (ETTP) in Oak Ridge, Tennessee. The contractor team is being led by URS Corporation and will provide decontamination and decommissioning services to ETTP.
The ETTP site includes many industrial facilities, which were used at the time of World War II to support the Manhattan Project. Initial period of the contract is five years, with an option to be extended by four years. Maximum value of the contract for the team is $2.2 billion, considering the option period. The team will be managing and executing cleanup work at ETTP, which will contribute to the cleanup of the Oak Ridge Site.
URS Corp. continues to see favorable trends in the federal government sector. There is strong funding for O&M programs, which signifies increased opportunities to support long-term Department of Defense initiatives and stable funding for the Department of Energy’s environmental and nuclear programs, including the National Nuclear Security Administration. In 2011, the company expects its federal sector to benefit from its large indefinite delivery contracts with the Department of Defense as well as new opportunities with the Department of Energy. Further, the company is not dependent on any single contract on an ongoing basis, and as such the loss of any single contract would not have any material adverse effect on its business.
However, since the company’s largest clients are from the federal market sector, loss of clients like the federal government, the U.S. Army, or DOE would have a material adverse effect on its business. As a government contractor, the company must comply with various procurement laws and regulations, and is subject to regular government audits. The violation of any of these laws and regulations could result in sanctions, contract termination, forfeiture of profit, harm to its reputation or loss of its status as an eligible government contractor.
URS Corp. provides engineering, construction and technical services. As such, it offers a broad range of program management, planning, design, engineering, construction and construction management, operations and maintenance, and decommissioning and closure services to public agencies and private sector clients globally.
We continue to maintain a Neutral rating on URS Corporation for the long term. The company has a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.
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