
	2022	2021
Accrued compensation and employee benefit costs	$6,351	$6,037
737 MAX grounding customer concessions and other considerations	1,864	2,940
Other customer concessions and considerations	1,102	240
Environmental	752	605
Product warranties	2,275	1,900
Forward loss recognition	4,060	2,014

Accrued interest payable	599	641



Current portion of lease liabilities	276	268
Current portion of retiree healthcare and pension liabilities	494	536
Other	3,808	3,274
Total	$21,581	$18,455


	2022	2021
Beginning balance – January 1	$2,940	$5,537

Reductions for payments made	(1,031)	(2,535)
Reductions for concessions and other in-kind considerations	(29)	(48)
Changes in estimates	(16)	(14)
Ending balance – December 31	$1,864	$2,940

The liability balance of $1.9 billion at December 31, 2022 includes $1.6 billion of contracted customer concessions and other liabilities and $0.3 billion that remains subject to negotiation with customers. The contracted amount includes $0.8 billion expected to be liquidated by lower customer delivery payments, $0.7 billion expected to be paid in cash and $0.1 billion in other concessions. Of the cash payments to customers, we expect to pay $0.1 billion in 2023 and the remaining $0.6 billion in future years. The type of consideration to be provided for the remaining $0.3 billion will depend on the outcomes of negotiations with customers.

The liabilities recorded represent our best estimate or the low end of a range of reasonably possible costs expected to be incurred to remediate sites, including operation and maintenance over periods of up to 30 years. It is reasonably possible that we may incur charges that exceed these recorded amounts because of regulatory agency orders and directives, changes in laws and/or regulations, higher than expected costs and/or the discovery of new or additional contamination. As part of our estimating process, we develop a range of reasonably possible alternate scenarios that includes the high end of a range of reasonably possible cost estimates for all remediation sites for which we have sufficient information based on our experience and existing laws and regulations. There are some potential remediation obligations where the costs of remediation cannot be reasonably estimated. At December 31, 2022 and 2021, the high end of the estimated range of reasonably possible remediation costs exceeded our recorded liabilities by $1,058 and $1,094.


	2022	2021
Beginning balance – January 1	$1,900	$1,527
Additions for current year deliveries	202	116
Reductions for payments made	(403)	(241)
Changes in estimates	576	498
Ending balance – December 31	$2,275	$1,900

In conjunction with signing definitive agreements for the sale of new aircraft, we have entered into trade-in commitments with certain customers that give them the right to trade in used aircraft at a specified price. The probability that trade-in commitments will be exercised is determined by using both quantitative information from valuation sources and qualitative information from other sources. The probability of exercise is assessed quarterly, or as events trigger a change, and takes into consideration the current economic and airline industry environments. Trade-in commitments, which can be terminated by mutual consent with the customer, may be exercised only during the period specified in the agreement and require advance notice by the customer.

Trade-in commitment agreements at December 31, 2022 have expiration dates from 2023 through 2029. At December 31, 2022 and 2021, total contractual trade-in commitments were $1,117 and $612. As of December 31, 2022 and 2021, we estimated that it was probable we would be obligated to perform on certain of these commitments with net amounts payable to customers totaling $286 and $283, and the fair value of the related trade-in aircraft was $286 and $283.

Financing commitments related to aircraft on order, including options and those proposed in sales campaigns, and refinancing of delivered aircraft, totaled $16,105 and $12,905 as of December 31, 2022 and 2021. The estimated earliest potential funding dates for these commitments as of December 31, 2022 are as follows:

As of December 31, 2022, all of these financing commitments relate to customers we believe have less than investment-grade credit. We have concluded that no reserve for future potential losses is required for these financing commitments based upon the terms, such as collateralization and interest rates, under which funding would be provided.

We have entered into standby letters of credit and surety bonds with financial institutions primarily relating to the guarantee of our future performance on certain contracts and security agreements. Contingent liabilities on outstanding letters of credit agreements and surety bonds aggregated approximately $5,070 and $3,634 as of December 31, 2022 and 2021.

McDonnell Douglas Corporation insured its executives with Company Owned Life Insurance (COLI), which are life insurance policies with a cash surrender value. Although we do not use COLI currently, these obligations from the merger with McDonnell Douglas are still a commitment at this time. We have loans in place to cover costs paid or incurred to carry the underlying life insurance policies. As of December 31, 2022 and 2021, the cash surrender value was $376 and $374 and the total loans were $346 and $360. As we have the right to offset the loans against the cash surrender value of the policies, we present the net asset in Other assets on the Consolidated Statements of Financial Position as of December 31, 2022 and 2021.

In 2022, we adopted Accounting Standards Update (ASU) 2021-10, Government Assistance (Topic 832), which requires certain disclosures for those government assistance transactions for which we have applied a grant accounting model. Certain states and localities in which we operate offer or have offered various business incentives related to investment and/or job creation.

inventory, over the useful life of the Property, plant and equipment extending through 2052. During 2022, we amortized $11 to Inventory, and recorded a benefit of $5 in Cost of Sales. At December, 31, 2022, inventory included a benefit of $64 and Accrued liabilities included a balance of $106.

We are eligible to claim tax refunds from the State of Missouri and City of Irving, Texas primarily related to job creation and retention through 2031. During 2022, we received $30 in cash and recorded a benefit of $21 in Cost of sales. At December 31, 2022, Other current assets includes receivables of $20. As of December 31, 2022, $56 of refunds, plus interest, is subject to clawback if we fail to meet certain conditions, including employment levels.

We are eligible to claim cash grants through 2032 of up to $62, related to operations in Queensland, Australia. During 2022, $7 cash was received and recorded as a benefit in Cost of Sales. At December 31, 2022, $4 is subject to clawback if we fail to meet certain conditions, including employment levels.

Industrial Revenue Bonds (IRB) issued by St. Louis County were used to finance the purchase and/or construction of real and personal property at our St. Louis site. Tax benefits associated with IRBs include a twelve-year property tax abatement and sales tax exemption from St. Louis County. We record these properties on our Consolidated Statements of Financial Position. We have also purchased the IRBs and therefore are the bondholders as well as the borrower/lessee of the properties purchased with the IRB proceeds. The liabilities and IRB assets are equal and are reported net in the Consolidated Statements of Financial Position. As of December 31, 2022 and 2021, the assets and liabilities associated with the IRBs were $271.

Our final incurred costs for each year are subject to audit and review for allowability by the U.S. government, which can result in payment demands related to costs they believe should be disallowed. We work with the U.S. government to assess the merits of claims and where appropriate reserve for amounts disputed. If we are unable to satisfactorily resolve disputed costs, we could be required to record an earnings charge and/or provide refunds to the U.S. government.

Substantially all contracts at BDS and the majority of contracts at BGS Government are long-term contracts. Long-term contracts that are contracted on a fixed-price basis could result in losses in future periods. Certain of the fixed-price contracts are for the development of new products, services and related technologies. This development work scope is inherently uncertain and subject to significant variability in estimates of the cost and time required to complete the work by us and our suppliers. The operational and technical complexities of fixed-price development contracts create financial risk, which could trigger additional earnings charges, termination provisions, order cancellations, or other financially significant exposure.

The Company’s firm fixed-price contract for the Engineering, Manufacturing, and Development (EMD) effort on the U.S. Air Force’s (USAF) VC-25B Presidential Aircraft, commonly known as Air Force One, is a $4.3 billion program to develop and modify two 747-8 commercial aircraft. During the year ended December 31, 2022, we increased the reach-forward loss on the contract by $1,452 primarily driven by increases to cost estimates associated with factory modification labor and support engineering resources due to labor instability and inefficiencies that we now estimate will persist longer than previously anticipated, higher supplier cost estimates based on ongoing supplier negotiations and higher levels of engineering design changes due to technical requirements which are driving increased rework and schedule delays. Risk remains that we may record additional losses in future periods.

In 2011, we were awarded a contract from the USAF to design, develop, manufacture, and deliver four next generation aerial refueling tankers as well as priced options for 13 annual production lots totaling 179 aircraft. This EMD contract is a fixed-price incentive fee contract and involves highly complex designs and systems integration. Since 2016, the USAF has authorized eight low rate initial production (LRIP) lots for a total of 109 aircraft. The EMD contract and authorized LRIP lots total approximately $21 billion as of December 31, 2022. As of December 31, 2022, we had approximately $209 of capitalized precontract costs and $292 of potential termination liabilities to suppliers related to unexercised future lots.

During the year ended December 31, 2022, we increased the reach-forward loss on the KC-46A Tanker program by $1,374 primarily reflecting higher production and supply chain costs partially driven by labor instability and supply chain disruption, most of which was recorded during the third quarter of 2022. The increase in production costs was primarily driven by factory unit time performance expectations that assume continued production disruption due to labor instability and supply chain disruption. Factory unit time estimates also reflect reduced benefits from prior investments in productivity enablers and higher factory unit time to produce aircraft for the remaining life of the program. The current year losses also reflect increased estimated change incorporation costs for flight test aircraft as well as schedule delays to complete the Remote Vision System. Risk remains that we may record additional losses in future periods.

In the third quarter of 2018, we were awarded the MQ-25 EMD contract by the U.S. Navy. The contract is a fixed-price contract that now includes development and delivery of seven aircraft and test articles at a contract price of $890. In connection with winning the competition, we recognized a reach-forward loss of $291 in the third quarter of 2018. During the year ended December 31, 2022, we increased the MQ-25 reach-forward loss by $579 primarily driven by higher than anticipated costs to manufacture the EMD units reflecting recent performance which is resulting in additional factory resources and increased engineering costs to address design and supplier quality issues. We also increased costs associated with engineering design challenges, additional testing and certification activities, and flight test support. Risk remains that we may record additional losses in future periods.

In 2018, we were awarded the T-7A Red Hawk program. The EMD portion of the contract is a $860 fixed-price contract and includes five aircraft and seven simulators. During the year ended December 31, 2022, we recorded earnings charges of $203 related to the T-7A Red Hawk fixed-price EMD contract, which has a reach-forward loss at December 31, 2022. Current year losses were primarily due to supply chain and hardware qualification issues, as well as schedule delays in achieving Military Flight Release and additional cost growth to resolve technical issues and other engineering design changes identified during 2022. EMD aircraft flight testing is now estimated to start in 2023.

The production portion of the contract includes 11 production lots for aircraft and related services. In 2018, we recorded a loss of $400 associated with the 11 production lots and associated support options for 346 T-7A Red Hawk aircraft that we believe are probable of being exercised. The first production and support contract option is expected to be exercised in 2024. We increased the estimated reach-forward loss by $552 during the year ended December 31, 2022 primarily driven by ongoing supply chain negotiations (which are impacted by supply chain constraints and inflationary pressures), and design revisions, as well as an increase in the number of expected units in the initial production lots. Risk remains that we may record additional losses in future periods. At December 31, 2022, we had approximately $56 of capitalized precontract costs and $283 of potential termination liabilities to suppliers related to future production lots.