Downer EDI Limited (ASX: DOW) has scored a massive $3.05 billion contract to deliver base and estate services to the Australian Department of Defence, but that could be just the start of the lucrative deal.
And Service Stream Limited (ASX: SSM) shares have piled on double-digit gains after it announced it had also had a major tender win from Defence under the same bidding process.
Downer said on Thursday the new property and asset services (PAS) contract would start in February next year and would initially run until 2032.
However, there are two extension options in the contract, which could see Downer delivering the contract for up to 10 years.
PAS was the next generation of Defence's base and estate services contract, Downer said in a statement to the ASX.
Under the new contract, Downer will provide base and estate facilities maintenance operations, aerodrome operations, land management, training area and range management, and integration services across the combined New South Wales and Australian Capital Territory region, and Queensland region. This represents an increase in Downer's geographical footprint from the current estate maintenance and operations services contract to cover two of Defence's largest regions.
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Service Stream stock surging
Meanwhile, Service Stream said it had secured $1.6 billion worth of work to provide property and asset services across 113 Defence sites across South Australia and the Northern Territory.
"The business will perform and support estate upkeep, land management, aerodrome operations, and training area and range management services,'' the company said.
Macquarie is forecasting a 12-month total shareholder return of 14% for Downer EDI and 26% for Service Stream.
Service Stream shares piled on 13% to be trading at $2.26 on Thursday, while Downer stock was up 1.2% at $7.
