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URS Corporation (URS - Analyst Report) received a $129 million contract from the U.S. Navy to deliver its construction services for the land-based Aegis Ashore missile defense program at the Pacific Missile Range Facility, Barking Sands, in Kauai, Hawaii.

The order was received under the US Navy’s Global Multiple Award Construction (GMAC) Indefinite Delivery/Indefinite Quantity contract, which was successfully received by URS in July 2009.

URS’s scope of work involves installation of a radar deckhouse, support building, initiate pad, electrical power and potable water systems, a sewer connection, and synthetic natural gas and communications systems. Moreover, the company will also perform testing work of government-furnished, government-installed weapons system at the Pacific Missile Range Facility as well as in Moorestown.

URS has worked on a number of projects related to national defense and homeland security, successfully providing its engineering and construction services.

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.

Indefinite delivery contracts (IDC) with the Department of Defense as well as new opportunities with the Department of Energy support a number of long-term federal initiatives. Furthermore, 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 a material adverse effect on its business.

The company’s largest clients are from the federal market sector. The loss of the federal government, the U.S. Army, or DOE would have a material adverse effect on the business.  As a government contractor, it must comply with various procurement laws and regulations, 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 for the long term and a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.

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