U.S. taps DynCorp, Fluor over KBR for Afghan work

WASHINGTON (Reuters) - DynCorp International Inc and Fluor have been picked over KBR Inc for five-year contracts worth up to $7.5 billion (4.7 billion pounds) each to support U.S. troops in Afghanistan, the U.S. Army said on Wednesday.

The deals involve one base year plus four option years to provide services such as laundry, dining and recreation, said Dan Carlson, a spokesman for the Army Sustainment Command in Rock Island, Illinois.

The base year, starting on Wednesday, is worth up to $1.5 billion, the Army said in a statement. DynCorp was awarded work in southern Afghanistan, while Fluor's work is in the north, Carlson said.

Cindy Green, director of DynCorp investor relations, said in an email that DynCorp's initial award for the first year of the contract was for $640 million to $650 million.

Fluor said in a statement it would book awards as the task order is incrementally funded, with an initial undisclosed award expected to be booked in the third quarter of 2009.

Fluor's task order award includes work for 74 operating bases. Its work includes construction, power, water, housing, base operations, sustainment services and logistics support.

DynCorp shares jumped 11 percent to $17.59 on the New York Stock Exchange. Fluor was down 1.7 percent at $45.56, while KBR shares fell 1.3 percent to $16.62.

The awards are the largest of their kind since the Logistics Civil Augmentation Program, or LOGCAP, was reshaped in April 2008 into an open competition pitting KBR, which won the original work in 2001, against DynCorp and Fluor for individual tasks.

Carlson said the selection was made on the basis of best value to taxpayers as part of the LOGCAP IV contract. The chief factors weighed were past performance, cost, and each company's proposal for the work, he said.

KBR said it had requested a briefing on the selection process. "No decision will be made on a possible protest until we have a chance to review that information," the company said in a statement.

The new task orders will shift all remaining work in Afghanistan to LOGCAP IV, the Army said. Similar processes for the work in Iraq are also under way.

LOGCAP uses private contractors to provide a broad range of logistics and support services to U.S. and allied forces during combat, as well as to other contingency, peacekeeping, humanitarian and training operations.

Fluor had already received previous work under LOGCAP IV, including expanding and operating four forward operating bases in northern Afghanistan; providing measurement and testing services in Kuwait; and building and operating eight more forward operating bases in Afghanistan.

Fluor said it has realized more than $300 million to date for all incrementally funded LOGCAP work.

(Reporting by Jim Wolf, with additional reporting by Karen Jacobs in Atlanta and Braden Reddall in San Francisco; editing by Gerald E. McCormick and John Wallace)