Bechtel and CH2M Hill are the two finalists to buy Lockheed Martin Hanford Corp., which manages Hanford's tank farms.

Lockheed Martin Corp. is expected to decide by the end of November which company it will sell the subsidiary to, said Steve Wiegman, acting assistant manager for tank wastes storage and retrieval for the Department of Energy's Office of River Protection.

The company would manage the operations and safety of the 177 underground tanks holding 54 million gallons of radioactive wastes in central Hanford.

Originally, nine corporations expressed interest in buying the Lockheed subsidiary, before the field narrowed to the Denver-based CH2M Hill and San Francisco-based Bechtel, Wiegman told the Hanford Advisory Board's financial affairs committee Wednesday in Richland.

Lockheed corporate spokesman Jim Fetig declined to discuss the potential sale, saying the firm won't talk about the transaction until it occurs.

There is an extra complicating factor in the potential sale.

Lockheed recently converted from being a Fluor Daniel subcontractor to becoming a prime Hanford contractor with about 1,150 employees.

As a result, Lockheed and the Office of River Protection are in the final stages of negotiating a new contract - an agreement CH2M Hill or Bechtel would inherit.

So, CH2M Hill and Bechtel are now performing "due diligence" research on the contract talks and on the tank farm operations to make sure they really want the subsidiary.

Lockheed came to Hanford in late 1996 as part of Fluor's six-company team.

Besides managing the tank farms, its other main thrust is to get the right wastes in the proper conditions to the correct place at the right time for BNFL Inc. to start accepting that material in 2007 to convert it into glass.

DOE's Office of River Protection supervises and coordinates Lockheed and BNFL. And Lockheed must get the agency's approval for any sale.

Meanwhile, Lockheed's parent corporation found itself unable to sufficiently manage its huge collection of worldwide subsidiaries and decided to concentrate on its core aerospace, defense and technology service programs.

That put Lockheed Martin Hanford Corp. up for sale. However, the Tri-Cities' other Lockheed subsidiary - Lockheed Martin Services Inc., a computer support services company with 500 employees - is not for sale.

The parent Lockheed Martin Corp. announced its decision to sell its tank farm subsidiary in late September - a few days before it became a prime contractor on Oct. 1. Lockheed Martin Hanford Corp. assumed a two-year prime contract with DOE having the option to extend it up to five more years.

Lockheed and the Office of River Protection are now negotiating incentives that will determine how much Lockheed or its successor will get paid in fiscal 2000, which began last Oct. 1, Wiegman said. He hopes to have these negotiations done within two weeks.

Right now, Lockheed or its successor appears on its way to managing about $325 million to $348 million worth of work in 2000, although DOE has not nailed that figure down yet.

Lockheed or its successor will have a performance-based contract, meaning its fees or profits are contingent on goals actually achieved.

That potential maximum fee is in the $14 million to $15 million range for 2000, compared with a roughly $12 million maximum fee Lockheed could have earned in 1999, Wiegman said.

In 2000, Lockheed or its successor will earn $6 million for meeting normal expectations, and up to $9 million for achieving goals ahead of schedule. The goals for the $9 million are still being negotiated.

Lockheed and DOE also are discussing whether DOE will pay extra bonuses if the tank farm management company can accomplish work in 2000 that is scheduled for 2001 and beyond without spending more than the current-year budget.