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Commitments and Contingencies | 9 Months Ended
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Jun. 30, 2017
Commitments and Contingencies |
Commitments and Contingencies | 14.Commitments and Contingencies The Company records amounts representing its probable estimated liabilities relating to claims, guarantees, litigation, audits and investigations. The Company relies in part on qualified actuaries to assist it in determining the level of reserves to establish for insurance-related claims that are known and have been asserted against it, and for insurance-related claims that are believed to have been incurred based on actuarial analysis, but have not yet been reported to the Company’s claims administrators as of the respective balance sheet dates. The Company includes any adjustments to such insurance reserves in its consolidated results of operations. The Company’s reasonably possible loss disclosures are presented on a gross basis prior to the consideration of insurance recoveries. The Company does not record gain contingencies until they are realized. In the ordinary course of business, the Company may not be aware that it or its affiliates are under investigation and may not be aware of whether or not a known investigation has been concluded. In the ordinary course of business, the Company may enter into various arrangements providing financial or performance assurance to clients, lenders, or partners. Such arrangements include standby letters of credit, surety bonds, and corporate guarantees to support the creditworthiness or the project execution commitments of its affiliates, partnerships and joint ventures. Performance arrangements typically have various expiration dates ranging from the completion of the project contract and extending beyond contract completion in certain circumstances such as for warranties. The Company may also guarantee that a project, when complete, will achieve specified performance standards. If the project subsequently fails to meet guaranteed performance standards, the Company may incur additional costs, pay liquidated damages or be held responsible for the costs incurred by the client to achieve the required performance standards. The potential payment amount of an outstanding performance arrangement is typically the remaining cost of work to be performed by or on behalf of third parties. Generally, under joint venture arrangements, if a partner is financially unable to complete its share of the contract, the other partner(s) may be required to complete those activities. At June 30, 2017 and September 30, 2016, the Company was contingently liable in the amount of approximately $495.8 million and $474.5 million, respectively, in issued standby letters of credit and $4.5 billion and $3.3 billion, respectively, in issued surety bonds primarily to support project execution. In the ordinary course of business, the Company enters into various agreements providing financial or performance assurances to clients on behalf of certain unconsolidated partnerships, joint ventures and other jointly executed contracts. These agreements are entered into primarily to support the project execution commitments of these entities. In addition, in connection with the investment activities of AECOM Capital, the Company provides guarantees of certain obligations, including guarantees for completion of projects, repayment of debt, environmental indemnity obligations and other lender required guarantees. DOE Deactivation, Demolition, and Removal Project Washington Group International, an Ohio company (WGI Ohio), an affiliate of URS, executed a cost-reimbursable task order with the Department of Energy (DOE) in 2007 to provide deactivation, demolition and removal services at a New York State project site that, during 2010, experienced contamination and performance issues and remains uncompleted. In February 2011, WGI Ohio and the DOE executed a Task Order Modification that changed some cost-reimbursable contract provisions to at-risk. The Task Order Modification, including subsequent amendments, requires the DOE to pay all project costs up to $106 million, requires WGI Ohio and the DOE to equally share in all project costs incurred from $106 million to $146 million, and requires WGI Ohio to pay all project costs exceeding $146 million. Due to unanticipated requirements and permitting delays by federal and state agencies, as well as delays and related ground stabilization activities caused by Hurricane Irene in 2011, WGI Ohio has been required to perform work outside the scope of the Task Order Modification. In December 2014, WGI Ohio submitted claims against the DOE pursuant to the Contracts Disputes Acts seeking recovery of $103 million, including additional fees on changed work scope. WGI Ohio has incurred and continues to incur additional project costs outside the scope of the contract as a result of differing site and ground conditions and intends to submit additional formal claims against the DOE. Due to significant delays and uncertainties about responsibilities for the scope of remaining work, final project completion costs and other associated costs will exceed $100 million over the contracted and claimed amounts. WGI Ohio assets and liabilities, including the value of the above costs and claims, were measured at their fair value on October 17, 2014, the date AECOM acquired WGI Ohio’s parent company, see Note 3, which measurement has been reevaluated to account for developments pertaining to this matter. WGI Ohio can provide no certainty that it will recover the claims submitted against the DOE in December 2014, any future claims or any other project costs after December 2014 that WGI Ohio may be obligated to incur including the remaining project completion costs, which could have a material adverse effect on the Company’s results of operations. Securities Litigation Matter On September 1, 2016, an AECOM stockholder filed a securities class action complaint in the United States District Court for the Central District of California alleging that the Company and its senior executives made materially false and misleading statements in violation of the federal securities laws. On March 6, 2017, the lead plaintiffs filed an amended complaint and on April 3, 2017, the Company filed a motion to dismiss on multiple grounds including the failure to adequately allege any material misrepresentations by the Company. On June 19, 2017, the District Court granted the Company’s motion to dismiss the lead plaintiffs’ amended complaint, with leave to amend, and on June 30, 2017, the lead plaintiffs filed a notice of voluntary dismissal, with prejudice, dismissing the matter. World Bank Review — Asia-Pacific The World Bank inspected two of our Asia-Pacific entities for compliance with the World Bank’s consultant guidelines finding conduct constituting sanctionable practices. On July 11, 2017, the Asia-Pacific entities resolved the matter by signing negotiated resolution agreements debarring one entity and its controlled affiliates from bidding on projects funded by the World Bank (and certain other development banks party to a cross-debarment agreement) for 18 months and the other entity and its controlled affiliate from bidding on projects funded by the World Bank for 6 months. In addition, one of the two entities will be required to adopt a corporate compliance program consistent with the World Bank Group’s integrity compliance guidelines.

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