URS Corporation (URS) will be helping the Defense Threat Reduction Agency in its Cooperative Threat Reduction Program as it received an indefinite delivery/indefinite quantity contract from the Department of Defense. The motive of the program is to encourage efforts between the United States and other countries to protect and eradicate weapons of mass destruction.
Base term for this multiple award contract is five year, with an option to be extended by one year. There are four awardees, including URS, for the contract and maximum aggregate value is $950 million, provided the option is exercised. As per the agreement, the Cooperative Threat Reduction Program will be served by training, engineering, facilities maintenance and management services from URS. The company has expert knowledge in managing chemical, biological and nuclear materials.
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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