The Department of Energy has extended Fluor Hanford's contract to manage a major part of the site's cleanup through 2006.

The six-year contract is worth approximately $3.8 billion, with incentives for Fluor to earn up to about $168 million in profit. The company earned nearly $20 million this year under its existing contract, which was set to expire in 2001.

Keith Klein, manager of DOE's Hanford operations, and Ron Hanson, president of Fluor Hanford, signed the contract extension Thursday morning.

Klein said the new contract signals DOE's satisfaction with Fluor's work.

The firm handles overall management of the Hanford site and manages several cleanup projects. Its largest projects include removing spent nuclear fuel from the leaky K Basins and converting plutonium at the Plutonium Finishing Plant into safer forms.

The company replaced Westinghouse Hanford Co. as the primary contractor Oct. 1, 1996. Fluor and its main subcontractors employ about 4,200 people.

"Fluor has earned $20 million this year -- that's a reflection of good work," Klein said.

Hanson was pleased with the contract extension.

"We've had a banner year in terms of the work that's been done," he said.

That work includes removing fuel at the K Basins, accelerating by a factor of four the rate of plutonium stabilization, shipping the first batch of transuranic waste to New Mexico and dispatching 667 metric tons of uranium trioxide to DOE's facility in Ohio.

The new contract contains a series of cash incentives for Fluor to meet goals related to deadlines and volumes of wastes handled.

For example, Fluor must move spent fuel from the K Basins each year to earn its fee. It also must complete cleanup of the basins, including removing water, sludge and debris, by a certain date. The final fee will depend on how soon the job is completed and at what cost to taxpayers.

Other key contract features include:

-- Fluor must comply with good management practices and DOE agrees to streamline paperwork and eliminate red tape. The agreement does not affect legal requirements, including those spelled out in the Tri-Party Agreement.

-- DOE may terminate the contract early if Fluor does not live up to performance expectations.

-- Fluor must continue its commitment to diversify the local economy and generally be a good neighbor. The new contract does not spell out job-creation goals like its predecessor.

Hanson sought to reassure business leaders that Fluor will continue its good neighbor policy.

He pledged that Fluor Hanford and the Fluor Foundation will continue to support community service agencies, social, civic, educational and charitable organizations. It will continue to lend its business expertise to economic development agencies and will continue to pay for an industrial recruiter to the Tri-City Industrial Development Council.

He also pledged Fluor will maintain an economic development fund and will sustain its membership with local economic development agencies.

"It's important to us. We are members of the community," he said.

Reaction to the Fluor contract extension was mixed.

Gerald Pollet, director of Hanford watchdog group Heart of America-Northwest, agreed with the performance-based approach to the contract. However, he said he was troubled that it is not as specific in some areas as the one it replaces.

Pollet said he was concerned about the commitment to supporting the local economy, a feature that was cited by DOE when it initially selected Fluor in 1996.

He also questioned how Fluor will report overhead costs and its commitment to the Hanford Joint Council for Employee Concerns, an independent forum for arbitrating employee complaints about safety and environmental issues.

Other Hanford watchers treated the announcement as good news.

Rep. Doc Hastings, R.-Wash., issued a statement calling it great news for the community and taxpayers.

"Fluor has consistently improved their performance at Hanford over the life of their contract, and clear progress is being made all across the site," he wrote. He singled out Fluor's successful removal of the first batch of spent nuclear fuel from the western K Basin earlier this month as one of its chief successes.

Todd Martin, incoming chairman of the Hanford Advisory Board, said he hadn't seen the contract but was inclined to view the extension as good news. Switching to a new contractor would have delayed the cleanup by at least nine months to a year, he said.

Pam Brown, Hanford analyst for Richland, said the contract extension is welcomed by Hanford communities.

"We've very pleased that the contract is signed particularly since it's coming in December and before the change in administration," she said.

Brown said opening the contract to competition would have been disruptive to the community and to workers and their families and wasn't necessary because Fluor has begun moving spent fuel from K Basins, shipped waste to the Waste Isolation Pilot Project and has made progress at the PFP.