Fluor 2014 Annual Report Download - page 52

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Most U.S. government contracts are awarded through a rigorous competitive process. The U.S.
government has increasingly relied upon multiple-year contracts with pre-established terms and conditions
that generally require those contractors that have been previously awarded the contract to engage in an
additional competitive bidding process for each task order issued under the contract. Such processes
require successful contractors to anticipate requirements and develop rapid-response bid and proposal
teams as well as dedicated supplier relationships and delivery systems to react to these needs. We face
rigorous competition and significant pricing pressures in order to win these task orders. If we are not
successful in reducing costs or able to timely respond to government requests, we may not win additional
awards. Moreover, even if we are qualified to work on a government contract, we may not be awarded the
contract because of existing government policies designed to protect small businesses and under-
represented minority contractors. Our inability to win or renew government contracts during the
procurement processes could harm our operations and reduce our profits and revenues.
Many of our U.S. government contracts require security clearances. Depending upon the level of
clearance required, security clearances can be difficult and time-consuming to obtain. If we or our
employees are unable to obtain or retain necessary security clearances, we may not be able to win new
business, and our existing government clients could terminate their contracts with us or decide not to
renew them, thus adversely affecting our revenues.
If one or more of our U.S. government contracts are terminated for any reason including for
convenience, if we are suspended or debarred from U.S. government contract work, or if payment of our
cost is disallowed, we could suffer a significant reduction in expected revenue and profits.
Employee, agent or partner misconduct or our overall failure to comply with laws or regulations could weaken our
ability to win contracts, which could result in reduced revenues and profits.
Misconduct, fraud, non-compliance with applicable laws and regulations, or other improper activities
by one of our employees, agents or partners could have a significant negative impact on our business and
reputation. Such misconduct could include the failure to comply with anti-corruption, export control and
environmental regulations; federal procurement regulations, regulations regarding the pricing of labor and
other costs in government contracts and regulations regarding the protection of sensitive government
information; regulations on lobbying or similar activities; regulations pertaining to the internal control over
financial reporting; and, various other applicable laws or regulations. The precautions we take to prevent
and detect fraud, misconduct or failures to comply with applicable laws and regulations may not be
effective, and we could face unknown risks or losses. Our failure to comply with applicable laws or
regulations or acts of fraud or misconduct could subject us to fines and penalties, loss of security clearance
and suspension or debarment from contracting with government agencies, which could weaken our ability
to win contracts and have a material adverse impact on our revenues and profits.
Changes in our effective tax rate and tax positions may vary.
We are subject to income taxes in the United States and numerous foreign jurisdictions. A change in
tax laws, treaties or regulations, or their interpretation, in any country in which we operate could result in a
higher tax rate on our earnings, which could have a material impact on our earnings and cash flows from
operations. In addition, significant judgment is required in determining our worldwide provision for
income taxes. In the ordinary course of our business, there are many transactions and calculations where
the ultimate tax determination is uncertain. We are regularly under audit by tax authorities, and our tax
estimates and tax positions could be materially affected by many factors including the final outcome of tax
audits and related litigation, the introduction of new tax accounting standards, legislation, regulations and
related interpretations, our global mix of earnings, the realizability of deferred tax assets and changes in
uncertain tax positions. A significant increase in our tax rate could have a material adverse effect on our
profitability and liquidity.
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