Fluor Daniel hopes to be Hanford's lead contractor through at least 2006, a top company official said Wednesday.

That's the duration of its five-year contract that began in 1996, plus five years worth of renewal options.

"We fully intend to be here nine more years and beyond," said Ron Peterson, president of Fluor Corp.'s government, environment and telecommunications group -to which Fluor Daniel Hanford belongs.

However, since early this year, parent corporation Fluor Corp. has been consolidating, reorganizing and considering divesting itself of several subsidiaries.

"The approach (last spring) was that there are no sacred cows in the company," Peterson said.

The process fueled speculation on what Fluor would divest and contributed to Fluor's stock price drop from about $75 per share to the low 40s last spring.

On Wednesday, the price was 39 1/4.

Speculation included the fact Fluor might attempt to rid itself of its government contracts.

The massive reorganization stems from Fluor Corp. reversing its extensive growth and diversification of the past several years - an expansion that had sped beyond Fluor's ability to manage.

Most of the reorganizing is taking place outside of Fluor's government, environment and telecommunications group.

And Peterson said he does not expect many major change to occur in his group, including the Hanford contract.

He said his group includes many of Fluor's longtime core businesses that it wants to stick with.

However, the corporate revamping and the accompanying Wall Street speculation is expected to continue for a while, he said.

Just how long it will go on likely will hinge on a just-beginning search for a replacement for board chairman and chief executive officer Les McCraw, who is retiring Jan. 1 because of health problems.

The search firm hired by Fluor has 120 days to find a replacement.

If the new CEO comes from within Fluor, Peterson expects no major changes because that person already would be in tune with the current corporate overhaul.

If the replacement comes from outside of Fluor, Peterson does not know what to expect.

Peterson explained Fluor Corp.'s reorganization is trying to strike a better balance between the low profit margins that a taxpayer-funded government favors in awarding contracts and stockholders' demands for higher profit margins.

Most of Fluor Corp.'s various government contract profit margins range from 2 percent to 4 percent, with anything above that making corporate officials extremely happy.

The Hanford contract has the potential to fit into that category.

Fluor's $4.88 billion, 5-year Hanford contract is its first in which its profits are based entirely on performance.

If Fluor posts a perfect record in its first year at Hanford, it could earn a $54 million performance fee, which Peterson noted is about 5 percent of a roughly $1 billion yearly contract.

"It's difficult to say (what the margin will be) with this being the first year. We have no history (at Hanford), and there's no history on this type of contract," Peterson said.

The Department of Energy is expected to finish grading Fluor's performance in early 1998.