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Revenue Recognition
 3 Months Ended
Sep. 30, 2020
Revenue From Contract With Customer [Abstract]  
Revenue Recognition

6.

Revenue Recognition

We disaggregate our revenue arrangements by contract type, customer, whether we perform on the contract as the prime or subcontractor, and whether the solution provided is primarily expertise or technology as defined herein.  We believe that these categories allow for a better understanding of the nature, amount, timing, and uncertainty of revenue and cash flows arising from our contracts.

Revenue by Contract Type

The Company generated revenue on our cost-plus-fee, fixed-price, and time-and-materials contracts as follows during the three months ended September 30, 2020 and 2019 (in thousands):

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

September 30, 2020

 

 

September 30, 2019

 

 

 

Domestic

 

 

International

 

 

Total

 

 

Domestic

 

 

International

 

 

Total

 

Cost-plus-fee

 

$

823,609

 

 

$

—

 

 

$

823,609

 

 

$

747,714

 

 

$

—

 

 

$

747,714

 

Fixed-price

 

 

409,584

 

 

 

24,230

 

 

 

433,814

 

 

 

391,536

 

 

 

26,440

 

 

 

417,976

 

Time-and-materials

 

 

184,994

 

 

 

17,089

 

 

 

202,083

 

 

 

185,523

 

 

 

12,179

 

 

 

197,702

 

Total

 

$

1,418,187

 

 

$

41,319

 

 

$

1,459,506

 

 

$

1,324,773

 

 

$

38,619

 

 

$

1,363,392

 

Customer Group

The Company generated revenue from our primary customer groups as follows during the three months ended September 30, 2020 and 2019 (in thousands):

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

September 30, 2020

 

 

September 30, 2019

 

 

 

Domestic

 

 

International

 

 

Total

 

 

Domestic

 

 

International

 

 

Total

 

Department of Defense

 

$

1,004,195

 

 

$

—

 

 

$

1,004,195

 

 

$

937,640

 

 

$

—

 

 

$

937,640

 

Federal Civilian agencies

 

 

390,179

 

 

 

—

 

 

 

390,179

 

 

 

363,993

 

 

 

—

 

 

 

363,993

 

Commercial and other

 

 

23,813

 

 

 

41,319

 

 

 

65,132

 

 

 

23,140

 

 

 

38,619

 

 

 

61,759

 

Total

 

$

1,418,187

 

 

$

41,319

 

 

$

1,459,506

 

 

$

1,324,773

 

 

$

38,619

 

 

$

1,363,392

 

Prime or Subcontractor

The Company generated revenue as either the prime or subcontractor as follows during the three months ended September 30, 2020 and 2019 (in thousands):

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

September 30, 2020

 

 

September 30, 2019

 

 

 

Domestic

 

 

International

 

 

Total

 

 

Domestic

 

 

International

 

 

Total

 

Prime contractor

 

$

1,288,705

 

 

$

38,133

 

 

$

1,326,838

 

 

$

1,197,634

 

 

$

37,471

 

 

$

1,235,105

 

Subcontractor

 

 

129,482

 

 

 

3,186

 

 

 

132,668

 

 

 

127,139

 

 

 

1,148

 

 

 

128,287

 

Total

 

$

1,418,187

 

 

$

41,319

 

 

$

1,459,506

 

 

$

1,324,773

 

 

$

38,619

 

 

$

1,363,392

 

Expertise or Technology

The Company generated revenue by providing expertise or technology solutions to our customers as follows during the three months ended September 30, 2020 and 2019 (in thousands):

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

September 30, 2020

 

 

September 30, 2019

 

 

 

Domestic

 

 

International

 

 

Total

 

 

Domestic

 

 

International

 

 

Total

 

Expertise

 

$

723,197

 

 

$

17,486

 

 

$

740,683

 

 

$

709,025

 

 

$

13,328

 

 

$

722,353

 

Technology

 

 

694,990

 

 

 

23,833

 

 

 

718,823

 

 

 

615,748

 

 

 

25,291

 

 

 

641,039

 

Total

 

$

1,418,187

 

 

$

41,319

 

 

$

1,459,506

 

 

$

1,324,773

 

 

$

38,619

 

 

$

1,363,392

 

Significant Estimates

For many of our fixed price revenue arrangements and for revenue arrangements that have award or incentive fees, the Company uses an estimate at completion (EAC) to measure progress towards the complete satisfaction of its performance obligations.  For these revenue arrangements, revenue is recognized over time primarily using a cost-to-cost input method based on the ratio of costs incurred to date to total estimated costs at completion. The EAC process requires the Company to use professional judgment when assessing risks, estimating contract revenue and costs, estimating variable consideration, and making assumptions for schedule and technical issues.  The Company periodically reassesses its EAC assumptions and updates its estimates as needed.  When estimates of total costs to be incurred on a contract exceed total revenue, a provision for the entire loss on the contract is recorded in the period in which the loss is determined.

Based on changes in a contract’s EAC, a cumulative adjustment to revenue will be recorded.  For the three months ended September 30, 2020 and 2019, we recognized an increase to income before income taxes of $7.8 million ($0.22 per diluted share) and $6.5 million ($0.19 per diluted share), respectively, from EAC adjustments.  The Company used its statutory tax rate when calculating the impact to diluted earnings per share.

Revenue recognized from previously satisfied performance obligations was immaterial for the three months ended September 30, 2020 and 2019.  The change in revenue generally relates to final true-up adjustments to our estimated award or incentive fees in the period in which we receive the customer’s final performance score or when we can determine that more objective, contractually-defined criteria have been fully satisfied.  

Remaining Performance Obligations

The Company’s remaining performance obligations balance as of period end represents the expected revenue to be recognized for the satisfaction of remaining performance obligations on our existing contracts.  This balance excludes unexercised contract option years and task orders that may be issued underneath an Indefinite Delivery/Indefinite Quantity (IDIQ) vehicle until such task orders are awarded.  The remaining performance obligations balance generally increases with the execution of new contracts and converts into revenue as our contractual performance obligations are satisfied.

The Company continues to monitor this balance as it is subject to change from execution of new contracts, contract modifications or extensions, government deobligations, or early terminations.  Based on this analysis, an adjustment to the period end balance may be required.  Our remaining performance obligations balance as of September 30, 2020 was $7.0 billion.

The Company expects to recognize approximately 80 percent of our remaining performance obligations balance as revenue over the next twelve months and the remaining 20 percent thereafter.