"They" (bethesda) use the Gamebryo and Havok Engines (at least for Oblivion and Fallout 3 & NV) which is made by someone else, so I assume they started building the game on the latest viable release, there is talk of them ditching Gamebryo though, which makes perfect sense as 1) Gamebryo is out-dated and buggy 2) Bethesda bought ID software, so it's very likely going to be on the ID tech-5 engine:
http://www.youtube.com/watch?v=dbgZJPVbFAg
It looks awesome
http://www.youtube.com/watch?v=dbgZJPVbFAg
It looks awesome
.