KBR builds international momentum

Company balances military sales with infrastucture work

With nearly 80 percent of its consolidated revenues coming from ventures abroad, KBR doesn’t seem overly concerned about any slowdown in U.S. government spending. Active in 65 countries, the Houston-based firm has a global reach, offering engineering, construction and management services, supporting energy, hydrocarbons, government services, minerals, civil infrastructure, power, industrial, and commercial markets.

“We’ve made some adjustments,” said Byron Bright, KBR vice president of sales and marketing for the company’s North American Government and Defense Business unit. “But we continue to focus on broadening and diversifying.”

Diversification appears to be accelerating overseas. With the establishment or expansion of operating centers in Angola, Kazakhstan, Saudi Arabia and Perth, Australia, KBR is expanding its access to local talent and opportunities. In January, the company reacquired ownership interest in London-based M.W. Kellogg Limited that, in concert with its Leatherhead Data Center in Hill Park South (a computing hub for European and African regions), will give KBR one of the largest engineering and construction capabilities in the United Kingdom.

The company’s U.S. government services business landed it at the No. 10 spot on the Washington Technology 2011 Top 100 with $3.5 billion in prime contracts.

The company says domestically it remains focused on military business, looking to pursue proposals for projects to build new military living quarters, hospitals, commissaries and the like. But the pending drawdown of the U.S. military in Afghanistan could offer KBR more opportunities

“We believe as the military returns home, equipment-based maintenance and support will become more important,”  Bright said. “We’re on a very steady path, investing in installations. Our focus in U.S. government will be the Department of Defense, as they look to invest in quality of life for the troops.”

The company continues to have a large stake in the U.S. Army’s LogCAP III and LogCAP IV contracts. KBR’s work under LogCAP III was extended by the Army through the end of 2011. In 2010, the company won a contingency task order for transportation, postal and logistics support in Iraq, its first major win under LogCAP IV. Recently, KPR broadened its LogCAP IV portfolio with a task order to provide base life support services to the Naval Forces Central Command in Bahrain.

“We don’t see a lot of [civilian federal-sector] growth coming. There’s a downturn on the contingencies side,” Bright said. “It’s relatively flat and stable as far as services and operations and maintenance is concerned.”

KBR believes it has a good shot at winning a piece of a management-services and quality-oversight contract that is now being bid by the Army Corps of Engineers. In all, the effort to construct buildings, parking, utilities and other infrastructure for the Afghan National Army and that country’s national police force could amount to as much as $3 billion.

Another of the company’s biggest deals may turn out to be literally on the other side of the world. Last September, KBR announced it was awarded a contract to provide engineering, procurement management and construction management for the Hope Downs 4 iron ore mine in remote Western Australia. The scope of the project is valued at almost $1.3 billion in U.S. dollars.

The undertaking is part of a joint venture between Rio Tinto – the world's second largest iron ore producer – and Hancock Prospecting. Rio Tinto will develop and operate the Hope Downs 4 mine as manager of the joint venture, for which KBR completed both the preliminary and final definitive engineering studies. KBR is providing design, engineering, procurement management, project and construction management. Construction started this past February and is slated to be completed in early 2013.

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