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Contracts with Customers
 9 Months Ended
Sep. 30, 2023
Revenue from Contract with Customer [Abstract]  
Contracts with Customers
5.
Contracts with Customers

Disaggregation of Revenue

The Company’s contracts contain both fixed-price and cost reimbursable components. Contract types are based on the component that represents the majority of the contract. The following table presents revenue disaggregated by contract type (in thousands):

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

 

September 30, 2022

 

 

September 30, 2023

 

 

September 30, 2022

 

Fixed-Price

 

$

452,606

 

 

$

334,853

 

 

$

1,233,712

 

 

$

854,835

 

Time-and-Materials

 

 

355,689

 

 

 

302,236

 

 

 

998,037

 

 

 

836,881

 

Cost-Plus

 

 

610,276

 

 

 

497,281

 

 

 

1,716,774

 

 

 

1,400,444

 

Total

 

$

1,418,571

 

 

$

1,134,370

 

 

$

3,948,523

 

 

$

3,092,160

 

 

See “Note 18 – Segments Information” for the Company’s revenues by business lines.

Contract Assets and Contract Liabilities

Contract assets and contract liabilities balances at September 30, 2023 and December 31, 2022 were as follows (in thousands):

 

 

 

September 30, 2023

 

 

December 31, 2022

 

 

$ change

 

 

% change

 

Contract assets

 

$

756,630

 

 

$

634,033

 

 

$

122,597

 

 

 

19.3

%

Contract liabilities

 

 

277,249

 

 

 

213,064

 

 

 

64,185

 

 

 

30.1

%

Net contract assets (liabilities) (1)

 

$

479,381

 

 

$

420,969

 

 

$

58,412

 

 

 

13.9

%

 

(1)
Total contract retentions included in net contract assets (liabilities) were $73.7 million as of September 30, 2023, of which $34.7 million are not expected to be paid in the next 12 months. Total contract retentions included in net contract assets (liabilities) were $73.5 million as of December 31, 2022. Contract assets at September 30, 2023 and December 31, 2022 include $105.6 million and $95.7 million, respectively, related to net claim recovery estimates. For the three and nine months ended September 30, 2023 and September 30, 2022, there were no material losses recognized related to the collectability of claims, unapproved change orders, and requests for equitable adjustment.

During the three months ended September 30, 2023 and September 30, 2022, the Company recognized revenue of $8.9 million and $10.1 million, respectively, and $116.6 million and $91.8 million during the nine months ended September 30, 2023 and September 30, 2022, respectively, that was included in the corresponding contract liability balances at December 31, 2022 and December 31, 2021, respectively. Certain changes in contract assets and contract liabilities consisted of the following:

 

 

September 30, 2023

 

 

December 31, 2022

 

Acquired contract assets

 

$

2,729

 

 

$

25,397

 

Acquired contract liabilities

 

 

2,980

 

 

 

2,080

 

 

There was no significant impairment of contract assets recognized during the nine months ended September 30, 2023 and September 30, 2022.

Revisions in estimates, such as changes in estimated claims or incentives, related to performance obligations partially satisfied in previous periods that individually had an impact of $5 million or more on revenue resulted in the following changes in revenue:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

 

September 30, 2022

 

 

September 30, 2023

 

 

September 30, 2022

 

Revenue impact, net

 

$

-

 

 

$

-

 

 

$

4,748

 

 

$

-

 

During the nine-month period ended September 30, 2023, there was a change in estimate to direct costs of contracts related to a write-down on a contract in the Critical Infrastructure segment. This change in estimate combined with changes to estimates to revenue resulted in a net decrease of $3.1 million to operating income, $2.3 million to net income and $0.02 to diluted earnings per share for the nine months ended September 30, 2023.

Accounts Receivable, net

Accounts receivable, net consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands):

 

 

 

2023

 

 

2022

 

Billed

 

$

587,160

 

 

$

502,411

 

Unbilled

 

 

323,592

 

 

 

218,945

 

   Total accounts receivable, gross

 

 

910,752

 

 

 

721,356

 

Allowance for doubtful accounts

 

 

(4,011

)

 

 

(4,011

)

   Total accounts receivable, net

 

$

906,741

 

 

$

717,345

 

 

Billed accounts receivable represents amounts billed to clients that have not been collected. Unbilled accounts receivable represents amounts where the Company has a present contractual right to bill but an invoice has not been issued to the customer at the period-end date.

The allowance for doubtful accounts was determined based on consideration of trends in actual and forecasted credit quality of clients, including delinquency and payment history, type of client, such as a government agency or commercial sector client, and general economic conditions and particular industry conditions that may affect a client’s ability to pay.

Transaction Price Allocated to the Remaining Unsatisfied Performance Obligations

The Company’s remaining unsatisfied performance obligations (“RUPO”) as of September 30, 2023 represent a measure of the total dollar value of work to be performed on contracts awarded and in-progress. The Company had $6.2 billion in RUPO as of September 30, 2023.

RUPO will increase with awards of new contracts and decrease as the Company performs work and recognizes revenue on existing contracts. Projects are included within RUPO at such time the project is awarded and agreement on contract terms has been reached. The difference between RUPO and backlog relates to unexercised option years that are included within backlog and the value of Indefinite Delivery/Indefinite Quantity (“IDIQ”) contracts included in backlog for which delivery orders have not been issued.

RUPO is comprised of: (a) original transaction price, (b) change orders for which written confirmations from our customers have been received, (c) pending change orders for which the Company expects to receive confirmations in the ordinary course of business, and (d) claim amounts that the Company has made against customers for which it has determined that it has a legal basis under existing contractual arrangements and a significant reversal of revenue is not probable, less revenue recognized to-date.

The Company expects to satisfy its RUPO as of September 30, 2023 over the following periods (in thousands):

 

 Period RUPO Will Be Satisfied

 

Within One Year

 

 

Within One to
Two Years

 

 

Thereafter

 

 Federal Solutions

 

$

1,620,465

 

 

$

335,848

 

 

$

240,563

 

 Critical Infrastructure

 

 

1,893,315

 

 

 

1,076,331

 

 

 

1,011,917

 

    Total

 

$

3,513,780

 

 

$

1,412,179

 

 

$

1,252,480