The waiting game for re-award of a multibillion-dollar contract for liquid waste management at the Department of Energy’s Savannah River Site in South Carolina might be over soon, an AECOM executive said Tuesday.
“We expect the Savannah River Site to be awarded any day now,” Chief Operating Officer Randall Wotring said during the company’s quarterly earnings call. He did not elaborate, except to say there could soon be “some news about that particular bid.”
More broadly, the Los Angeles-based engineering and infrastructure provider is confident in certain bids it has under consideration now at DOE and the Department of Defense, the COO told financial analysts. He suggested AECOM will be an active bidder not just on DOE nuclear cleanup contracts, but also on “defense-type projects” at the department’s semiautonomous National Nuclear Security Administration.
The Energy Department in October 2017 issued a $4.7 billion SRS liquid waste contract to Savannah River EcoManagement, a partnership of BWX Technologies, Bechtel, and Honeywell. However, the Government Accountability Office in February 2018 upheld a bid protest by an AECOM-CH2M bidding team. The Energy Department that spring asked the original three bidders, including a Fluor-Westinghouse venture, to submit updated proposals.
Rumors of the new award have popped up occasionally since then. No contract announcement had been made as of Thursday.
Wotring noted AECOM-led Savannah River Remediation, which continues to oversee waste management at SRS under an Energy Department contract extension scheduled to expire March 31, last week received an “excellent” performance rating. The other partners in the venture are BWXT, Bechtel, and CH2M. If nothing else, DOE would need to execute another extension for SRR by March 31, sources noted this week.
Even if an award is announced in a matter of days, sources said SRR would likely receive an extension to stay on for another couple months during the transition to the new contractor.
On the NNSA side of the business, AECOM is a member of Bechtel-led Lawrence Livermore National Security, which runs the Lawrence Livermore National Laboratory in California. It was previously a member of the teams that managed the Los Alamos National Laboratory in New Mexico until late 2018 and the Nevada National Nuclear Security Site until 2017.
One big prize that could attract AECOM, among others, is a new management contract for the NNSA’s Y-12 National Security Complex in Tennessee and Pantex Plant in Texas. The joint management contract is currently held by Consolidated Nuclear Security (CNS), headed by Bechtel. The current contract option expires on June 30, 2021, but additional extensions could keep CNS in place through March 31, 2024.
AECOM subsidiary URS, purchased in 2014, has experience as a defense contractor. Internationally, AECOM is picking up new defense-related work. AWE plc recently picked AECOM to provide facility decommissioning and demolition for the United Kingdom’s nuclear weapons program.
AECOM Revenue Rises Across Company and Within DOE Business
AECOM on Tuesday reported $5 billion in revenue for the quarter ended Dec, 31, about 3 percent more than the $4.9 billion reported in the same period one year earlier.
Net income attributable to AECOM came in at $52 million, down 54 percent from $111 million reported in the same quarter a year ago. The company reported earnings for the three months ended Dec. 31, which is the first quarter for fiscal 2019 for AECOM.
The company reported quarterly earnings per share of $0.33, down 53 percent from the $0.70 recorded for the quarter ended Dec. 31, 2017.
AECOM’s income from operations was $84 million for the quarter, dropping from $131 million a year earlier. The recent partial federal government shutdown slowed cash flow for some company operations, which should be recouped later, executives said. Factors such as the pending U.K. withdrawal from the European Union, and AECOM’s exit from certain less-profitable businesses and countries, also reduced quarterly income.
AECOM’s Management Services (MS) unit, which includes its Energy Department and NNSA ventures, recorded $989 million in quarterly revenue, rising 17 percent year over year from $843 million. The sector’s operating income was $51 million, up more than 25 percent, from $40 million.
Other than SRS liquid waste management, there wasn’t much mention of specific DOE contracts in either the earnings release or the conference call.
For fiscal 2019, which started Oct. 1, AECOM expects adjusted earnings per share in the $2.60 to $2.90 range.
“Continued overall growth in the DCS [Design and Consulting Services] and MS segments, new records for wins and backlog, and adjusted earnings that surpassed our expectations resulted in a strong start to the year,” AECOM Chairman and CEO Michael Burke said in the earnings release.
Along with its liquid waste work at Savannah River, AECOM leads vendor teams in major DOE contracts at the Waste Isolation Pilot Plant in New Mexico, the Oak Ridge Site in Tennessee, Hanford Site tank management in Washington state, and the Separations Process Research Unit in New York state. Altogether, the AECOM-led contracts at DOE are worth more than $15 billion.
During the call, AECOM officials stressed continuing efforts to reduce the risk profile of the company. The company is moving away from what it deems “international at-risk construction projects” as well as building fixed-price natural gas power plants in the United States.
