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Revenue and Contract Balances | 3 Months Ended
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Jan. 01, 2023
Revenue from Contract with Customer [Abstract] |
Revenue and Contract Balances | Revenue and Contract Balances We disaggregate revenue by client sector and contract type, as we believe it best depicts how the nature, timing, and uncertainty of revenue and cash flows are affected by economic factors. The following tables present revenue disaggregated by client sector and contract type (in thousands):
| Three Months Ended |  |
| January 1, 2023 |  | January 2, 2022 |  |  |  |
Client Sector: |  |  |  |  |  |  |
U.S. federal government (1) | $ | 276,075 |  |  | $ | 266,797 |  |  |  |  |
U.S. state and local government | 153,195 |  |  | 159,008 |  |  |  |  |
U.S. commercial | 198,956 |  |  | 176,904 |  |  |  |  |
International (2) | 266,540 |  |  | 255,801 |  |  |  |  |
Total | $ | 894,766 |  |  | $ | 858,510 |  |  |  |  |
Contract Type: |  |  |  |  |  |  |
Fixed-price | $ | 327,737 |  |  | $ | 331,248 |  |  |  |  |
Time-and-materials | 420,570 |  |  | 395,648 |  |  |  |  |
Cost-plus | 146,459 |  |  | 131,614 |  |  |  |  |
Total | $ | 894,766 |  |  | $ | 858,510 |  |  |  |  |
(1) Includes revenue generated under U.S. federal government contracts performed outside the United States. (2) Includes revenue generated from foreign operations, primarily in Canada, Australia, the United Kingdom, and revenue generated from non-U.S. clients. Other than the U.S. federal government, no single client accounted for more than 10% of our revenue for the three months ended January 1, 2023 and January 2, 2022. Contract Assets and Contract Liabilities We invoice customers based on the contractual terms of each contract. However, the timing of revenue recognition may differ from the timing of invoice issuance. Contract assets represent revenue recognized in excess of the amounts for which we have the contractual right to bill our customers. Such amounts are recoverable from customers based upon various measures of performance, including achievement of certain milestones or completion of a contract. In addition, many of our time and materials arrangements are billed in arrears pursuant to contract terms that are standard within the industry, resulting in contract assets and/or unbilled receivables being recorded, as revenue is recognized in advance of billings. Contract retentions, included in contract assets, represent amounts withheld by clients until certain conditions are met or the project is completed, which may extend beyond one year. Contract liabilities consist of billings in excess of revenue recognized. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation and increase as billings in advance of revenue recognition occur. Contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. There were no substantial non-current contract assets or liabilities for the periods presented. Net contract assets/liabilities consisted of the following (in thousands):
| Balance at
| January 1, 2023 |  | October 2, 2022
Contract assets (1) | $ | 80,903 |  |  | $ | 92,405 |
Contract liabilities | 274,118 |  |  | 241,340 |
Net contract liabilities | $ | (193,215) |  |  | $ | (148,935) |
(1) Inclu des $17.2 million and $23.3 million of contract retentions at January 1, 2023 and October 2, 2022, respectively. In the first quarters of fiscal 2023 and 2022, we recognized revenue of approximately $81 million and $63 million, respectively, from amounts included in the contract liability balances at the end of fiscal 2022 and 20 21, respectively. We recognize revenue primarily using the cost-to-cost measure of progress method to estimate progress towards completion. Changes in those estimates could result in the recognition of cumulative catch-up adjustments to the contract’s inception-to-date revenue, costs and profit in the period in which such changes are made. As a result, we recognized net favorable revenue and operating income adjustments of $3.5 million and $2.8 million in the first quarters of fiscal 2023 and 2022, respectively. C hanges in revenue and cost estimates could also result in a projected loss, determined at the contract level, which would be recorded immediate ly in earnings. At January 1, 2023 and October 2, 2022, our consolidated balance sheets included liabilities for anticipated losses of $7.6 million and $10.0 million, respectively. The estimated cost to complete these related contracts at January 1, 2023 and October 2, 2022 was approximately $55 million and $80 million, respectively. Accounts Receivable, Net Net accounts receivable consisted of the following (in thousands):
| Balance at
| January 1, 2023 |  | October 2, 2022
Billed | $ | 486,027 |  |  | $ | 491,700 |
Unbilled | 313,782 |  |  | 267,161 |
Total accounts receivable | 799,809 |  |  | 758,861 |
Allowance for doubtful accounts | (3,937) |  |  | (3,749) |
Total accounts receivable, net | $ | 795,872 |  |  | $ | 755,112 |
Billed accounts receivable represent amounts billed to clients that have not been collected. Unbilled accounts receivable, which represent an unconditional right to payment subject only to the passage of time, include unbilled amounts typically resulting from revenue recognized but not yet billed pursuant to contract terms or billed after the period end date. Substantially all of our unbilled receivables at January 1, 2023 are expected to be billed and collecte d within 12 months. The allowance for doubtful accounts represents amounts that are expected to become uncollectible or unrealizable in the future. We determine an estimated allowance for uncollectible accounts based on management's consideration of trends in the actual and forecasted credit quality of our clients, including delinquency and payment history; type of client, such as a government agency or a commercial sector client; and general economic and industry conditions. Claims are amounts in excess of agreed contract prices that we seek to collect from our clients or other third parties for delays, errors in specifications and designs, contract terminations, change orders in dispute or unapproved as to both scope and price, or other causes of unanticipated additional costs. There were no claims included in our total accounts receivable at January 1, 2023 and October 2, 2022. We regularly evaluate all unsettled claim amounts and record appropriate adjustments to revenue when it is probable that the claim will result in a different contract value than the amount previously estimated. In the first quarters of fiscal 2023 and 2022, we recorded no gains or losses related to claims. Other than the U.S. federal government, no single client accounted for more than 10% of our accounts receivable at January 1, 2023 and October 2, 2022. Remaining Unsatisfied Performance Obligations (“RUPO”) Our RUPO represents a measure of the total dollar value of work to be performed on contracts awarded and in progress. We h ad $3.8 billion of RUPO at January 1, 2023. RUPO increases with awards from new contracts or additions on existing contracts and decreases as work is performed and revenue is recognized on existing contracts. RUPO may also decrease when projects are canceled or modified in scope. We include a contract within our RUPO when the contract is awarded and an agreement on contract terms has been reached. We expect to satisfy our RUPO at January 1, 2023 over the following periods (in thousands):
| Amount
Within 12 months | $ | 2,460,171 |
Beyond | 1,329,949 |
Total | $ | 3,790,120 |
Although RUPO reflects business that is considered to be firm, cancellations, deferrals or scope adjustments may occur. RUPO is adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals, as appropriate. Our operations and maintenance contracts can generally be terminated by the clients without a substantive financial penalty. Therefore, the remaining performance obligations on such contracts are limited to the notice period required for the termination (usually 30, 60, or 90 days).

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI https://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 + Details
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