The work involves widening and straightening a 1.3km stretch of trunk road through the community of Glandyfi in Montgomeryshire.
Carillion will work in the environmentally sensitive area of the Afon Dyfi, adjacent to the Cambrian Coast main railway and Glandyfi Castle.
Two major rock cuttings up to 14m in depth and a number of retaining walls are to be constructed all to be clad in stone.
Work is scheduled to begin next month to finish in late 2012.
The Deputy First Minister said, “There has been much interest in these improvements and I am delighted to announce this much needed scheme to improve road conditions between Aberystwyth and Machynlleth.”