Document:

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                                                                   EXHIBIT 10.36

                          MORRISON KNUDSEN CORPORATION
                     AMENDED AND RESTATED STOCK OPTION PLAN

                       NONQUALIFIED STOCK OPTION AGREEMENT

     THIS AGREEMENT (this "Agreement"), dated as of January 31, 2000, is made by
and between Morrison Knudsen Corporation, a Delaware corporation hereinafter
referred to as "Company," and Thomas H. Zarges, an employee of the Company or
Subsidiary of the Company, hereinafter referred to as "Optionee":

     WHEREAS, the Company wishes to afford the Optionee the opportunity to
purchase shares of its $.01 par value Common Stock; and

     WHEREAS, the Company wishes to carry out the Plan (as hereinafter defined),
the terms of which are hereby incorporated herein by reference and made a part
hereof; and

     WHEREAS, the execution of a Nonqualified Stock Option Agreement in the form
hereof has been duly authorized by a resolution of the Board of Directors of the
Company duly adopted on January 31, 2000, and incorporated herein by reference;
and

     WHEREAS, this Option is intended to be a nonqualified stock option and
shall not be treated as an "incentive stock option" within the meaning of that
term under Section 422 of the Code;

     NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     Wherever the following terms are used in this Agreement with initial
capital letters, they shall have the meanings specified in the Plan unless the
context clearly indicates otherwise.

Section 1.1 - Beneficiary
Section 1.2 - Code
Section 1.3 - Common Stock
Section 1.4 - Company
Section 1.5 - Employee
Section 1.6 - Exchange Act
Section 1.7 - Fair Market Value
Section 1.8 - Subsidiary
Section 1.9 - Termination of Employment

                                       1
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     Wherever the following terms are used in this Agreement with initial
capital letters, they shall have the meanings specified below unless the context
clearly indicates otherwise. The masculine pronoun shall include the feminine
and neuter, and the singular the plural, where the context so indicates.

Section 1.10 - Board
------------   -----

     "Board" shall mean the Board of Directors of the Company and shall include
any committee to which the Board of Directors may have delegated its authority
pursuant to Section 8.1 of the Plan.

Section 1.11 - Optionee
------------   --------

     "Optionee" shall mean the Employee named above to whom an Option is awarded
under this Agreement and the Plan.

Section 1.12 - Plan
------------   ----

     "Plan" shall mean The Morrison Knudsen Corporation Amended and Restated
Stock Option Plan, as amended and restated as of January 10, 1997, and as the
same may be further amended or restated.

Section 1.13 - Secretary
------------   ---------

     "Secretary" shall mean the Secretary of the Company.

Section 1.14 - Securities Act
------------   --------------

     "Securities Act" shall mean the Securities Act of 1933, as amended.

                                   ARTICLE II

                                 AWARD OF OPTION

Section 2.1 - Grant of Award
-----------   --------------

     In consideration of the Optionee's execution of this Agreement and for
other good and valuable consideration, on the date hereof the Company
irrevocably awards to the Optionee the option to purchase any part or all of an
aggregate of 60,000 shares of its $.01 par value Common Stock upon the terms and
subject to the conditions set forth in the Plan and in this Agreement.

                                       2
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Section 2.2 - Purchase Price
-----------   --------------

     The purchase price of the shares of stock covered by the Option shall be
$7.375 per share without commission or other charge.

Section 2.3 - Consideration to Company
-----------   ------------------------

     In consideration of the awarding of this Option by the Company, the
Optionee agrees to render faithful and efficient services to the Company or a
Subsidiary, with such duties and responsibilities as the Company shall from time
to time prescribe, for a period of at least one (1) year from the date this
Option is awarded. Nothing in this Agreement or in the Plan shall confer upon
the Optionee any right to continue in the employ of the Company or any
Subsidiary, or shall interfere with or restrict in any way the rights of the
Company and its Subsidiaries, which are hereby expressly reserved, to discharge
the Optionee at any time for any reason whatsoever, with or without cause.

Section 2.4 - Adjustments in Option
-----------   ---------------------

     The Board may make or provide for such adjustments in the (a) number of
shares of Common Stock covered by outstanding Options awarded hereunder, (b)
prices per share applicable to such Options, and (c) kind of shares (including
shares of another issuer) covered thereby, as the Board in its sole discretion
may in good faith determine to be equitably required in order to prevent
dilution or enlargement of the rights of Optionees, that otherwise would result
from (x) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, (y)
any merger, consolidation, spin-off, split-off, split-up, reorganization,
partial or complete liquidation or other distribution of assets, issuance of
rights or warrants to purchase securities or (z) any other corporate transaction
or event having an effect similar to any of the foregoing. In the event of any
such transaction or event, the Board may provide in substitution for any or all
outstanding awards under this Agreement such alternative consideration as it may
in good faith determine to be equitable under the circumstances and may require
in connection therewith the surrender of all awards so replaced.

                                   ARTICLE III

                            PERIOD OF EXERCISABILITY

Section 3.1 - Commencement of Exercisability
-----------   ------------------------------

(a)  This Option shall become exercisable in four (4) cumulative installments as
     follows:

     (i)   The first installment shall consist of one-fourth (1/4) of the shares
           covered by the Option and shall become exercisable on the date that
           is one year from the date the Option was awarded.

                                       3
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     (ii)  The second installment shall consist of one-fourth (1/4) of the
           shares covered by the Option and shall become exercisable on the date
           that is two years from the date the Option was awarded.

     (iii) The third installment shall consist of one-fourth (1/4) of the shares
           covered by the Option and shall become exercisable on the date that
           is three years from the date the Option was awarded.

     (iv)  The fourth installment shall consist of one-fourth (1/4) of the
           shares covered by the Option and shall become exercisable on the date
           that is four years from the date the Option was awarded.

(b)  No portion of the Option which is unexercisable at Termination of
     Employment shall thereafter become exercisable.

Section 3.2 - Duration of Exercisability
-----------   --------------------------

     The installments provided for in Section 3.1 are cumulative. Each such
installment which becomes exercisable pursuant to Section 3.1 shall remain
exercisable until it becomes unexercisable under Section 3.3.

Section 3.3 - Expiration of Option
-----------   --------------------

(a)  The Option may not be exercised to any extent by anyone after the first to
     occur of the following events:

     (i)   The expiration of ten (10) years from the date the Option was
           awarded; or

     (ii)  Except as set forth in 3.3(a) (iii) and (iv), the expiration of three
           (3) months after the Optionee's Termination of Employment; or

     (iii) The expiration of twelve (12) months from the date of the Optionee's
           Termination of Employment by reason of permanent and total disability
           (within the meaning of Section 22(e) (3) of the Code) or by reason of
           retirement at or after age 65; or

     (iv)  If the Optionee dies while the Option is exercisable, the expiration
           of twelve (12) months from the date of the Optionee's death.

(b)  This Agreement shall amend that certain Employment Agreement dated as of
     January 1, 1994 between the Optionee and the Company (the "Employment
     Agreement"), in that, notwithstanding Article 4 of the Employment
     Agreement, no portion of this Option that is unvested as of the date the
     Optionee's employment with the Company is terminated for any reason shall
     be exercisable.

                                       4
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                                   ARTICLE IV

                               EXERCISE OF OPTION

Section 4.1 - Person Eligible to Exercise
-----------   ---------------------------

     During the lifetime of the Optionee, only he or his guardian or legal
representative may exercise the Option or any portion thereof. After the death
of the Optionee, any exercisable portion of the Option may, prior to the time
when the Option becomes unexercisable under Section 3.3, be exercised by his
personal representative or by any person empowered to do so under the Optionee's
will or under the then applicable laws of descent and distribution.

Section 4.2 - Partial Exercise
-----------   ----------------

     Any exercisable portion of the Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under Section 3.3;
provided, however, that each partial exercise shall be for not less than one
hundred (100) shares and shall be for whole shares only.

Section 4.3 - Manner of Exercise
-----------   ------------------

     The Option or any exercisable portion thereof, may be exercised solely by
delivery to the Secretary or his office of all of the following prior to the
time when the Option or such portion becomes unexercisable under Section 3.3:

(a)  Notice in writing signed by the Optionee or the other person then entitled
     to exercise the Option or portion, stating that the Option or portion is
     thereby exercised, such notice complying with all applicable rules
     established by the Board; and

(b)  Full payment for the shares with respect to which such option or portion is
     exercised, which payment shall be (i) in cash, (ii) through the delivery of
     shares of Common Stock owned by the Optionee for at least six months, duly
     endorsed for transfer to the Company with a Fair Market Value on the date
     of delivery equal to the aggregate exercise price of the Option or
     exercised portion thereof, or (iii) subject to the timing requirements of
     Section 5.3 of the Plan, through any combination of the consideration
     provided in the foregoing subparagraphs (i) or (ii); and

(c)  Such representations and documents as the Board deems necessary or
     advisable to effect compliance with all applicable provisions of the
     Securities Act of 1933, as amended, and any other federal or state
     securities laws or regulations.  The Board may also take whatever
     additional actions it deems appropriate to effect such compliance including
     (without limitation) placing legends on share certificates and issuing
     stop-transfer notices to agents and registrars;

                                       5
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(d)  Full payment to the Company (or other employer corporation) of all amounts
     which under federal, state or local tax law, it is required to withhold
     upon exercise of the Option; provided, however, the Company may permit the
                                  -----------------
     Optionee, upon delivery of a written election to the Secretary of the
     Company (or to such other person who may be designated by the Board) to
     elect to have the Company withhold shares of Common Stock otherwise
     issuable upon the exercise of the Option.  Shares of Common Stock so
     withheld will be credited against this tax obligation at their Fair Market
     Value; and

(e)  In the event the Option or portion shall be exercised pursuant to Section
     4.1 by any person or persons other than the Optionee, appropriate proof of
     the right of such person or persons to exercise the Option.

Section 4.4 - Conditions to Issuance of Stock Certificates
-----------   --------------------------------------------

     The shares of stock deliverable upon the exercise of the Option, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been repurchased by the Company. Such shares shall
be fully paid and non-assessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions:

(a)  The admission of such shares to listing on all stock exchanges on which
     such class of stock is then listed; and

(b)  The completion of any registration or other qualification of such shares
     under any state or federal law or under rulings or regulations of the
     Securities and Exchange Commission or of any other governmental regulatory
     body, which the Board shall deem necessary or advisable; and

(c)  The obtaining of any approval or other clearance from any state or federal
     governmental agency which the Board shall determine to be necessary or
     advisable; and

(d)  The payment to the Company (or other employer corporation) of all amounts
     which, under federal, state or local tax law, it is required to withhold
     upon exercise of the Option; and

(e)  The lapse of such reasonable period of time following the exercise of the
     Option as the Board may from time to time establish for reasons of
     administrative convenience.

Section 4.5 - Rights as Shareholder
-----------   ---------------------

     The holder of the Option shall not be, nor have any of the rights or
privileges of, a shareholder of the Company in respect of any shares purchasable
upon the exercise of any part of the Option unless and until certificates
representing such shares shall have been issued by the Company to such holder.

                                       6
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                                    ARTICLE V

                                OTHER PROVISIONS

Section 5.1 - Administration
-----------   --------------

     The Board shall have the power to interpret the Plan and this Agreement and
to adopt such rules for the administration, interpretation and application of
the Plan as are consistent therewith and to interpret, amend or revoke any such
rules. All actions taken and all interpretations and determinations made by the
Board in good faith shall be final and binding upon the Optionee, the Company
and all other interested persons. No member of the Board shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or the Option.

Section 5.2 - Option Not Transferable
-----------   -----------------------

     Options under the Plan may not be sold, pledged, assigned or transferred in
any manner other than by will or the laws of descent and distribution; provided,
                                                                       ---------
however, an Optionee may designate a Beneficiary to exercise his Option or other
-------
rights under the Plan after his death.  Neither the Option nor any interest or
right therein or part thereof shall be liable for the debts, contracts or
engagements of the Optionee or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; provided,
                                                                       ---------
however, that this Section 5.2 shall not prevent transfers by will or by the
-------
applicable laws of descent and distribution.  An Option shall be exercised
during the Optionee's lifetime only by the Optionee or his guardian or legal
representative.

Section 5.3 - Shares to Be Reserved
-----------   ---------------------

     The Company shall at all times during the term of the Option reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of this Agreement.

Section 5.4 - Notices
-----------   -------

     Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary, and any notice to be
given to the Optionee shall be addressed to him at the address given beneath his
signature hereto. By a notice given pursuant to this Section 5.4, either party
may hereafter designate a different address for notices to be given to him. Any
notice which is required to be given to the Optionee shall, if the Optionee is
then deceased, be given to the Optionee's personal representative if such
representative has previously informed the Company of his status and address by
written notice under this Section 5.4. Any notice shall be deemed duly given
when enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.

                                       7
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Section 5.5 - Titles
-----------   ------

     Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.

Section 5.6 - Construction
-----------   ------------

     This Agreement shall be administered, interpreted and enforced under the
internal substantive laws of the State of Delaware.

Section 5.7 - Conformity to Securities Laws
-----------   -----------------------------

     The Optionee acknowledges that the Plan is intended to conform to the
extent necessary with all applicable federal and state laws, rules and
regulations, including provisions of the Securities Act and the Exchange Act and
any and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, including without limitation Rule 16b-3 under the
Exchange Act. Notwithstanding anything herein to the contrary, the Plan shall be
administered, and the Option is awarded and may be exercised, only in such a
manner as to conform to such laws, rules and regulations. To the extent
permitted by applicable law, the Plan and this Agreement shall be deemed amended
to the extent necessary to conform to such laws, rules and regulations.

                                       8
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     IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.

                              MORRISON KNUDSEN CORPORATION

                              By:   --------------------------------------------
                                    Alvia L. Henderson
                                    Vice President - Human Resources

                              OPTIONEE

                              --------------------------------------------------
                              Thomas H. Zarges

                                 Spousal Consent
                                 ---------------

     The undersigned has read and is familiar with the preceding Agreement and
the Plan and hereby consents and agrees to be bound by all the terms of the
Agreement and the Plan. Without limiting the foregoing, the undersigned
specifically agrees that the Company may rely on any authorization, instruction
or election made under the Agreement by the Optionee alone and that all of his
or her right, title or interest, if any, in the shares of Common Stock purchased
by the Optionee under the Agreement, whether arising by operation of community
property law, by property settlement or otherwise, shall be subject to all of
such terms.

                              --------------------------------------------------

                              --------------------------------------------------
                              Printed Name

Exhibit A:  Copy of the Plan

                                       9<PAGE>

                                                                 EXHIBIT 10.40.1
Westinghouse
Government Services Group
Morrison Knudsen Corporation
1500 West 3/rd/ Street
Cleveland, OHIO 44113-1406
Phone: (216) 523-3777

Thomas H. Zarges
Chairman

August 18, 1999

                         CONFIDENTIAL AND PROPRIETARY

Mr. Ambrose L. Schwallie
Westinghouse Savannah River Company
Building 703-A
Aiken, SC 29808

     Re: Employment Letter Agreement

Dear Ambrose:

     This letter agreement (the "Employment Agreement," or the "Agreement")
documents the terms of your employment.  The Employment Agreement is made
between you and Westinghouse Government Services Company LLC and is effective as
of August 1, 1999.  The Agreement covers the general terms of your employment as
well as special retention incentives related to the sale of the Westinghouse
businesses.

     For purposes of this Employment Agreement, the following terms have
specific meanings.  "Westinghouse" refers to the CBS Corporation operating unit
that contained the government and environmental services business (GESCO),
including the Westinghouse Savannah River Company, as it existed before the
Closing Date.  This operating unit, which is now primarily contained in
Westinghouse Government Services Company LLC, is referred to in this letter as
"WGS," and the Westinghouse Savannah River Company LLC is referred to as "WSRC."
"MK" refers to Morrison Knudsen Corporation and its affiliates.  "Related
Entity" refers to WGS, WSRC, MK, any at least 50%-owned subsidiaries of WGS or
MK and to Westinghouse Government Environmental Services Company LLC and
Westinghouse Electric Company LLC and any at least 50%-owned subsidiaries of
those entities.  "WGSG" refers collectively to WGS, Westinghouse Government
Environmental Services Company LLC and any at least 50%-owned subsidiaries of
those entities.  "Common Stock" refers to the common stock of MK, par value of
$.01 per share.  "Closing Date" means March 22, 1999, the date of the closing
formalizing the transfer of the Westinghouse assets from CBS Corporation to WGS.
<PAGE>

Mr. Ambrose Schwallie
August 20, 1999
Page 2

     1.  Position and Duties.  From August 1, 1999, through August 31, 1999, you
will be employed as the President of WSRC.  During that period, you will be the
senior executive of the Department of Energy Savannah River site and will be
accountable to the President of WGS.

     After August 31, 1999, you will be employed as an Executive Vice President
of MK and as Chief Executive Officer and President of WGSG.  In that capacity,
you will be accountable to the Chairman of the Board of WGS.

     During the term of this Agreement, you agree to devote your full attention
and time during normal business hours to the business and affairs of WSRC and/or
WGSG, as the case may be, and to use your reasonable best efforts to perform
faithfully and efficiently such responsibilities.

     2.  Term.  This Employment Agreement will have a term commencing August 1,
1999 and expiring March 31, 2000, except as otherwise mutually agreed by you and
WGS.

     3.  Compensation and Incentive Arrangements.

     a.  Base Salary.  Effective August 1, 1999, you will be entitled to a Base
Salary at the rate of $325,000 per year, payable monthly. (Although the increase
in Base Salary rate will be effective as of August 1, 1999, actual payment of
the increased rate will commence after August 31, 1999.)  Your Base Salary will
be subject to periodic review and adjustment by WGS.

     b.  Retention Bonus.  You will receive a retention bonus in the amount of
$191,500 upon the first anniversary of the Closing Date, conditioned upon your
continued employment through such anniversary and upon the satisfactory
performance of your job duties as determined by the Chairman of the WGS Board.

     c.  Annual Incentive.  You will receive Annual Incentive compensation
pursuant to a plan established by WGS.  Your initial award will be based on the
percentage of the annual Business Plan target that WGSG meets for the fiscal
year ending November 30, 1999.  Your award will be determined based on the
following chart (employing straight-line interpolation for the percentages not
shown on the chart):

        Percentage of Target Achieved             Award Amount
        -----------------------------             ------------

                      80%                           $ 48,750

                     100%                           $162,500 (target award)

                     130%                           $284,375
<PAGE>

Mr. Ambrose Schwallie
August 20, 1999
Page 3

     WGS may adjust the target award amount from time to time at its discretion,
including for the purpose of taking into account events beyond your control.
All awards are subject to final WGS Board approval.

     d.  Stock Options.  In connection with your election as an Executive Vice
President of MK, you will be granted options to purchase 50,000 shares of Common
Stock of MK at a price equal to the per share closing price of MK's Common Stock
as of the date of grant.  The option will be granted under, and be subject to,
the terms and conditions of the Morrison Knudsen Corporation Amended Restated
Stock Option Plan and will vest 25% each year for four years.  The option will
be granted in lieu of your participation in the Long-Term Incentive Compensation
Plan established by WGS.

     4. Other Benefits and Perquisites.

     a.  Other Benefits.  From August 1, 1999, through August 31, 1999, you will
be eligible for the benefit arrangements offered to WSRC executives generally,
including the pension plan, executive pension plan, 401(k) plan, annual
vacation, relocation allowance, and medical and dental, group life, accidental
death and dismemberment, business travel, and disability income coverages.
After August 31, 1999, you will be eligible for the benefit arrangements offered
to WGSG executives generally, including the pension plan, executive pension
plan, 401(k) plan, annual vacation, relocation allowance, and medical/and
dental, group life, accidental death and dismemberment, business travel, and
disability income coverages.

     b.  Perquisites.  You will receive an annual lump sum perquisite allowance
of $8,000.  This lump sum allowance is in lieu of all specific reimbursements,
except that we will provide you with certain AYCO Company financial planning
services, including estate planning, insurance planning, cash flow analysis,
income tax position planning, retirement planning, and capital planning.

     c.  Relocation Allowance.  If you are required to relocate during the term
of this Agreement to a job location more than 50 miles from your current job
location, you will receive a relocation allowance of $50,000 in addition to any
relocation allowance under the regular relocation program.  In return for
receiving this special relocation allowance, you agree to waive any severance
benefits to which you might otherwise become entitled by virtue of the
relocation.

     5. Termination.  Your employment is "at will" and may be terminated by
either you or WGS at any time and for any reason.  Upon your termination, you
will be entitled to the benefits described below.
<PAGE>

Mr. Ambrose Schwallie
August 20, 1999
Page 4

     a.  Benefits Upon Involuntary Separation.  You will receive certain
benefits upon your Involuntary Separation from employment prior to the first
anniversary of the Closing Date.  An Involuntary Separation occurs if your
employment is terminated by WSRC or WGS without Cause.

     "Cause" means any of the following: (1) misappropriating or embezzling
assets or committing an act of fraud or other dishonesty; (2) being convicted in
a court of law of, or entering a plea of nolo contendere to, (a) a felony or (b)
a crime involving moral turpitude; (3) engaging in any conduct that has caused
or may cause demonstrable and material injury or public embarrassment to WGS or
to its reputation, as determined by the WGS Board of Directors in its sole
discretion; (4) a significant or material failure to carry out your duties other
than by reason of incapacity; (5) intentionally violating in a material manner
any of the policies and/or procedures of WGS; (6) having and continuing to
maintain a conflict of interest with WGS which is not disclosed to WGS and
waived by the WGS Board of Directors; or (7) breaching your obligations under or
in connection with this Employment Agreement.

     If an Involuntary Separation occurs prior to the first anniversary of the
Closing Date, you will continue to receive your Base Salary for 12 months;
receive the target Annual Incentive award for the year of separation; receive
the retention bonus described in paragraph 3b but the retention bonus will be
prorated to reflect the portion of the one-year period after the Closing Date
that you were employed by WSRC and/or WGSG ; receive outplacement services
during the 12 months following such an Involuntary Separation; and be entitled
to purchase continued medical coverage for 12 months at your employee
contribution rate at the time of your Involuntary Separation.  Notwithstanding
the foregoing, any of the amounts or other benefits described in the preceding
sentence will be offset by any separation payments and other benefits received
from CBS Corporation as a result of such Involuntary Separation, and your rights
to such amounts or other benefits described in the preceding sentence arise only
to the extent that you have first exhausted the payments and other benefits
provided by CBS Corporation.

     Other than the payments and benefits described in this paragraph, no
additional severance or similar payments will be made to you.  Notwithstanding
the previous paragraphs, no payments or benefits will be provided upon an
Involuntary Separation unless you sign a waiver and release with respect to all
claims that you might make against WGS or any Related Entity.

     b.  Benefits Upon Other Termination of Employment.  If you terminate
employment but paragraph 5a above does not apply, (e.g., you have an Involuntary
Separation after the first anniversary of the Closing Date, you voluntarily
terminate employment, or you are terminated for Cause), you will be entitled to
any earned but unpaid Base Salary.
<PAGE>

Mr. Ambrose Schwallie
August 20, 1999
Page 5

     c.  Benefits upon Death or Disability.  If your employment terminates
because of your permanent disability or death, you or your estate or designated
beneficiary will be entitled to any earned but unpaid Base Salary.

     6.  Restrictive Covenants.  You agree to comply with the following
restrictive covenants during the term of this Agreement and thereafter for the
terms described below.  All payments and contributions for benefits provided for
in this Employment Agreement are made in consideration of, and are subject to,
among other things, your compliance with the following provision.

     a.  Noncompetition.  During the term of this Agreement and for a period of
18 months after your voluntary termination of employment, you must not (1)
acquire an ownership interest exceeding five percent in or (2) become employed
by, enter into a consulting arrangement with, or otherwise agree to perform
personal services for any business organization which is engaged in or intends
to become engaged in any business activity with respect to which you were
engaged in the course of your employment with Westinghouse, WSRC and WGSG
(including activities of any Related Entity).

     b.  Nonsolicitation.  During the term of this Agreement and for a period of
18 months after your voluntary termination of employment, you must not solicit
or endeavor to entice away from  WGS  or any Related Entity (1) any person who
is employed by WSRC or any Related Entity; (2) any customer or client of  WGS or
any Related Entity, unless (a) the person is no longer a customer or client of
WGS  or such Related Entity at the time of the solicitation, or (b) the business
activity for which you are soliciting the business of a customer or client does
not compete to any extent with the business activity of  WGS or any Related
Entity or in any manner interfere with the business activity of  WGS or any
Related Entity or in any manner interfere with the business relationship between
the customer or client and  WGS or such Related Entity.

     c.  Assistance in Litigation.  You will, upon reasonable notice and at our
expense, furnish such information and proper assistance to  WGS or any Related
Entity as we reasonably may require in connection with any litigation in which
we or any of our affiliates are, or may become, a party (other than litigation
in which you and we (or our affiliates) are opposing parties).  Notwithstanding
any other provision of this Employment Agreement, the obligation described in
this paragraph 6c continues at all times during and after the term of this
Agreement.

     d.  Confidentiality.  You must not knowingly disclose or reveal to any
unauthorized person, or make personal use of, any confidential information or
other trade secret relating to  WGS or any Related Entity.  Such confidential
information includes, but is not limited to, financial information about  WGS or
any Related Entity, contract terms with vendors, suppliers, and other parties,
customer and supplier lists and data, trade secrets, books, records, plans,
designs, systems, methods, programs, procedures, and other competitively-
<PAGE>

Mr. Ambrose Schwallie
August 20, 1999
Page 6

sensitive information and any notes or analyses related thereto, including
without limitation information and documentation prepared or developed by you.
Upon your termination of employment, you agree to return any such confidential
information in your possession.  However, you are not prohibited from disclosing
any information that is reasonably necessary in the performance of your duties
for WSRC or WGSG nor shall you be prohibited from disclosing information that
is requested by an order of a court or administrative agency if, in the opinion
of counsel, you are required to do so.  Notwithstanding any other provision of
this Employment Agreement, the obligation described in this paragraph 6d
continues at all times during and after the term of this Agreement.

     7.  Miscellaneous.

     a.  Agreement Interpretation and Amendment.  This Agreement is governed by
and construed in accordance with the laws of the State of Delaware without
reference to any jurisdiction's choice of law principles.  This Agreement
constitutes the entire agreement between the parties and supersedes all prior
proposals and agreements, written or oral, and all other communications between
the parties related to the express subject matter of this Agreement.  The
headings in this Agreement are for convenience only and are not part of the
provisions of the Agreement and have no force or effect.  The invalidity or
unenforceability of any provision or portion of any provision of this Agreement
shall not affect the validity or enforceability of the remaining part of such
provision or of any other provision of this Agreement.  This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties to this Agreement or their respective successors and legal
representatives.

     b.  Notice.  All notices and other communications required under this
Agreement must be made in writing and given by hand delivery to the other party
or sent by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

     If to you:
     ---------
     Ambrose L. Schwallie
     Building 703-A
     Aiken, SC 29808

     If to WGS:
     ---------
     Craig G. Taylor
     Morrison Knudsen Corporation
     P.O. Box 73
     720 Park Blvd.
     Boise, ID 83729
<PAGE>

Mr. Ambrose Schwallie
August 20, 1999
Page 7

     With copy to:
     ------------
     Alvia L. Henderson
     Morrison Knudsen Corporation
     P.O. Box 73
     720 Park Blvd.
     Boise, ID 83729

or to such other person or address as may be designated by either party in
writing in accordance with the provisions of this paragraph.  Notice will be
effective when actually received by the addressee.

     c.  Waiver.  The failure of WGS to insist upon strict compliance with any
of the provisions of this Agreement shall not be deemed to be a waiver of such
provision, nor shall WGS's waiver of a right under this Agreement at any
particular time be deemed to be a waiver of such right at any other time.

     d.  Assignment; Successors.  This Agreement shall be binding upon and inure
to the benefit of  you, WGS, and their respective heirs, executors,
administrators, and any permitted assigns.  This Agreement may not be assigned
in whole or in part by either party without the consent of the other, except
that WGS may assign this Agreement, without your consent, to any corporation,
general partnership, limited partnership, limited liability company, or limited
liability partnership, into which or with which it shall merge or consolidate or
to which it shall transfer substantially all of its assets.

                                     *****

     If the Agreement is acceptable to you, please sign the original copy of the
Agreement and return it to Craig G. Taylor at Morrison Knudsen Corporation, P.O.
Box 73, 720 Park Blvd., Boise, ID 83729.  You should keep a copy of this
Agreement for your records.  By signing and returning the unmodified original
copy of the Agreement, you acknowledge that you understand and accept the terms
and conditions set forth above.

Regards,

Westinghouse Government Services Company LLC

By:        /s/ Tom Zarges
       -----------------------------
       Thomas H. Zarges
       Chairman

Date:  August 19, 1999
<PAGE>

Mr. Ambrose Schwallie
August 20, 1999
Page 8

ACCEPTANCE

     I acknowledge that I have read, understand, and agree to the terms and
conditions stated in this Agreement.  By my signature, I acknowledge that the
consideration set forth in the Agreement is adequate compensation for all of the
obligations set forth in the Agreement, that I have had the opportunity to
consult with counsel of my own choosing regarding the Agreement, and that in
signing the Agreement, I intend to be legally bound by it.

/s/ A. L. Schwallie                      August 30, 1999

_______________________________          ___________________________
Ambrose L. Schwallie                     Date
<PAGE>

                                                                 Exhibit 10.40.2

                       AMENDMENT TO EMPLOYMENT AGREEMENT

     This Amendment to Employment Agreement (the "Amendment) is made as of this
5/th/ day of October, 1999 by and between Morrison Knudsen Corporation, a
Delaware corporation (the "Company") and Ambrose L. Schwallie, an executive
employee of the Company ("Executive").

     WHEREAS, the Company and Executive are parties to a certain Employment
Agreement made as of August 1, 1999 (the "Agreement"); and

     WHEREAS, under the Agreement, if Executive is required to relocate to a job
location more than 50 miles from his current job location prior to March 31,
2000, Executive is entitled to receive a Relocation Allowance of $50,000 in
addition to any relocation allowance under the Company's regular relocation
program; and

     WHEREAS, the Company has agreed that the Agreement  should be amended to
extend the term of the Relocation Allowance portion of the Agreement to March
31, 2001;

     NOW, THEREFORE, the Agreement is hereby amended by deleting paragraph c of
Section 4 in its entirety and replacing it with the following:

          c.   Relocation Allowance.  If you are required to relocate on or
     before March 31, 2001 to a job location more than 50 miles from your
     current job location, you will receive a relocation allowance of $50,000 in
     addition to any relocation allowance under the regular relocation program.
     In return for receiving this special relocation allowance, you agree to
     waive any severance benefits to which you might otherwise become entitled
     by virtue of the relocation.

     Except for the foregoing, the Agreement remains unamended and in full force
and effect.

     IN WITNESS WHEREOF, the Executive and the Company have executed this
Amendment this 5th day of October, 1999.

                              MORRISON KNUDSEN CORPORATION

                              By:  /s/ S. G. Hanks
                                 ---------------------------------
                                 Stephen G. Hanks
                                 Executive Vice President

                              EXECUTIVE

                              /s/  Ambrose L. Schwallie
                              ------------------------------------
                              Ambrose L. Schwallie
                                                     10/24/99

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