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U.S. Lets Contracts To Clean Up Overseas Bases Tetra Tech To Benefit

The United States military over the last nine years has established and operated large bases in Afghanistan and Iraq. The Global War on Terror (GWOT)/Overseas Contingency Operations (OCO) required substantial investment in new bases in places as diverse as Uzbekistan and Djibouti as well as new facilities at existing military installations in Europe and Asia.

These bases may not be owned and maintained forever by the U.S. As part of the realignment of U.S. forces and the draw down in Iraq some of the existing facilities will be closed or given to Iraq. As part of this process the U.S. will have to clean up the bases and remove their equipment. To carry out the Explosive Ordnance Disposal (EOD) part of this function the U.S. Army recently awarded an omnibus contract that could be worth almost a billion dollars.

Tetra Tech (TTEK) recently announced that they were one of the seven large businesses who qualified for this contract. The way these contracts work is that teams are qualified to bid for specific tasks under it. These are often time and material contracts and the Government competes the tasks among the qualified companies. The benefit to the Government is that the long and difficult source selection process is done during the qualification phase. Tasks can be awarded quickly with less effort as all of the teams bidding have already proven that they meet the requirements of the base contract.

This contract will provide for EOD services and clean up anywhere the U.S. military has operated. It includes clean up of training munitions and sites as well. Tetra Tech has already worked on the previous contract for this and possesses abilities to not only deal with munitions but hazardous, toxic, and radioactive waste (HTRW) remediation.

The U.S. has invested heavily in developing its own military and civil response capability in dealing with EOD and Weapon of Mass Destruction (WMD) response. In cases like this though where it requires long term remediation projects it makes sense to use a contractor to do this work. The Government capabilities are meant to support combat operations and respond to attacks.

Over the last five years Tetra Tech has seen its revenue increase over a billion dollars and the company went from a loss of to a positive income flow. The company has major contracts with the U.S. EPA, DoD and DoE asw ell as many state and local agencies involved in water management and sewers. The company is also expanding its role into carbon management as governments and private entities desire to reduce their carbon footprint. This is done through planning, assessments, and project design and implementation.

The only issue with omnibus contracts like this is that there is no guarantee that all of the qualified companies will get work or that any will be ordered. The contract allows for the Government to buy what it needs. The qualifiers must compete with each other and there is a chance that one or more teams may not be able to win any work from the others. This also requires companies to have the ability to ramp up fairly quickly to take on new work.

The requirement for this kind of environmental and EOD remediation is out there. It is up to Tetra Tech and its competitors to win it from the Government and continue to grow their business.