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Contract Asset and Liabilities
 9 Months Ended
Oct. 02, 2020
Revenue from Contract with Customer [Abstract]  
Contract Asset and Liabilities
Note 2–Revenues
Remaining Performance Obligations
Remaining performance obligations represent the expected value of exercised contracts, both funded and unfunded, less revenue recognized to date. Remaining performance obligations do not include unexercised option periods and future potential task orders expected to be awarded under indefinite delivery/indefinite quantity ("IDIQ"), General Services Administration Schedule or other master agreement contract vehicles, with the exception of certain IDIQ contracts where task orders are not competitively awarded and separately priced but instead are used as a funding mechanism, and where there is a basis for estimating future revenues and funding on future task orders is anticipated.
As of October 2, 2020, we had $15.3 billion of remaining performance obligations, which are expected to be recognized as revenues in the amounts of $3.3 billion, $5.7 billion and $6.3 billion for the remainder of fiscal 2020, fiscal 2021 and fiscal 2022 and thereafter, respectively.
Disaggregation of Revenues
We disaggregate revenues by customer-type, contract-type and geographic location for each of our reportable segments. These categories represent how the nature, timing and uncertainty of revenues and cash flows are affected.
Prior year segment results have been recast for the contracts that were reassigned from the Civil reportable segment to the Defense Solutions reportable segment.
Disaggregated revenues by customer-type were as follows:
Three Months Ended October 2, 2020Nine Months Ended October 2, 2020
Defense SolutionsCivilHealthTotalDefense SolutionsCivilHealthTotal
(in millions)
DoD and U.S. Intelligence Community
$1,411 $14 $137 $1,562 $4,058 $43 $384 $4,485 
Other government agencies(1)
292 628 358 1,278 675 1,787 980 3,442 
Commercial and non-U.S. customers
248 105 25 378 679 288 80 1,047 
Total$1,951 $747 $520 $3,218 $5,412 $2,118 $1,444 $8,974 

Three Months Ended September 27, 2019Nine Months Ended September 27, 2019
Defense SolutionsCivilHealthTotalDefense SolutionsCivilHealthTotal
(in millions)
DoD and U.S. Intelligence Community
$1,215 $13 $123 $1,351 $3,542 $47 $360 $3,949 
Other government agencies(1)
177 577 337 1,091 487 1,652 982 3,121 
Commercial and non-U.S. customers
202 88 45 335 615 255 112 982 
Total$1,594 $678 $505 $2,777 $4,644 $1,954 $1,454 $8,052 
(1) Includes federal government agencies other than the DoD and U.S. Intelligence Community, as well as state and local government agencies.
The majority of our revenues are generated from U.S. government contracts, either as a prime contractor or as a subcontractor. Revenues from the U.S. government can be adversely impacted by spending caps or changes in budgetary priorities of the U.S. government, as well as delays in program start dates or the award of a contract.
Disaggregated revenues by contract-type were as follows:
Three Months Ended October 2, 2020Nine Months Ended October 2, 2020
Defense SolutionsCivilHealthTotalDefense SolutionsCivilHealthTotal
(in millions)
Cost-reimbursement and fixed-price-incentive-fee
$1,160 $363 $77 $1,600 $3,359 $1,052 $206 $4,617 
Firm-fixed-price597 278 348 1,223 1,499 740 958 3,197 
Time-and-materials and fixed-price-level-of-effort
194 106 95 395 554 326 280 1,160 
Total$1,951 $747 $520 $3,218 $5,412 $2,118 $1,444 $8,974 

Three Months Ended September 27, 2019Nine Months Ended September 27, 2019
Defense SolutionsCivilHealthTotalDefense SolutionsCivilHealthTotal
(in millions)
Cost-reimbursement and fixed-price-incentive-fee
$1,038 $409 $57 $1,504 $3,025 $1,177 $173 $4,375 
Firm-fixed-price406 161 333 900 1,181 452 930 2,563 
Time-and-materials and fixed-price-level-of-effort
150 108 115 373 438 325 351 1,114 
Total$1,594 $678 $505 $2,777 $4,644 $1,954 $1,454 $8,052 
Cost-reimbursement and fixed-price-incentive-fee contracts are generally lower risk and have lower profits. Time-and-materials ("T&M") and fixed-price-level-of-effort contracts are also lower risk but profits may vary depending on actual labor costs compared to negotiated contract billing rates. Firm-fixed-price ("FFP") contracts offer the potential for higher profits while increasing the exposure to risk of cost overruns.
Disaggregated revenues by geographic location were as follows:
Three Months Ended October 2, 2020Nine Months Ended October 2, 2020
Defense SolutionsCivilHealthTotalDefense SolutionsCivilHealthTotal
(in millions)
United States
$1,731 $708 $520 $2,959 $4,804 $2,018 $1,444 $8,266 
International
220 39 — 259 608 100 — 708 
Total$1,951 $747 $520 $3,218 $5,412 $2,118 $1,444 $8,974 

Three Months Ended September 27, 2019Nine Months Ended September 27, 2019
Defense SolutionsCivilHealthTotalDefense SolutionsCivilHealthTotal
(in millions)
United States
$1,388 $663 $505 $2,556 $4,053 $1,909 $1,454 $7,416 
International
206 15 — 221 591 45 — 636 
Total$1,594 $678 $505 $2,777 $4,644 $1,954 $1,454 $8,052 
Our international business operations, primarily located in Australia and the U.K., are subject to additional and different risks than our U.S. business. Failure to comply with U.S. government laws and regulations applicable to international business, such as the Foreign Corrupt Practices Act or U.S. export control regulations, could have an adverse impact on our business with the U.S. government.
In some countries, there is an increased chance for economic, legal or political changes that may adversely affect the performance of our services, sales of products or repatriation of profits. International transactions can also involve increased financial and legal risks arising from foreign exchange variability, imposition of tariffs or additional taxes and restrictive trade policies and delays or failure to collect amounts due to differing legal systems.
Revenues by customer-type, contract-type and geographic location exclude lease income of $24 million and $71 million for the three and nine months ended October 2, 2020, respectively, and $58 million and $88 million for the three and nine months ended September 27, 2019, respectively (see "Note 7–Leases").
Note 3–Contract Assets and Liabilities
Performance obligations are satisfied either over time as work progresses or at a point in time. FFP contracts are typically billed to the customer using milestone payments while cost-reimbursable and T&M contracts are typically billed to the customer on a monthly or bi-weekly basis as indicated by the negotiated billing terms and conditions of the contract. As a result, the timing of revenue recognition, customer billings and cash collections for each contract results in a net contract asset or liability at the end of each reporting period.
Contract assets consist of unbilled receivables, which is the amount of revenue recognized that exceeds the amount billed to the customer, where right to payment is not just subject to the passage of time. Unbilled receivables exclude amounts billable where the right to consideration is unconditional. Contract liabilities consist of deferred revenue.
The components of contract assets and contract liabilities consisted of the following:
Balance sheet line itemOctober 2,
2020		January 3,
2020
(in millions)
Contract assets - current:
Unbilled receivablesReceivables, net$829 $735 
Contract liabilities - current:
Deferred revenue
Accounts payable and accrued liabilities$578 $400 
Contract liabilities - non-current:
Deferred revenueOther long-term liabilities$21 $9 
The increase in unbilled receivables was primarily due the acquisitions of L3Harris Technologies' ("L3Harris") security detection and automation businesses (the "SD&A Businesses") and Dynetics, Inc ("Dynetics").
Revenue recognized for the three and nine months ended October 2, 2020 of $41 million and $267 million, respectively, was included as a contract liability at January 3, 2020. Revenue recognized for the three and nine months ended September 27, 2019 of $11 million and $200 million, respectively, was included as a contract liability at December 28, 2018.