Revenue Recognition

9 Months Ended

Sep. 30, 2022

Revenue From Contract With Customer [Abstract]

Revenue Recognition

NOTE 8 – REVENUE RECOGNITION

Disaggregation of Revenue

The Company disaggregates revenue from clients, most of which is earned over time, into categories that depict how the nature, amount and uncertainty of revenue and cash flows are affected by economic and business factors. Those categories are client market, client type, and contract mix. Client markets provide insight into the breadth of the Company’s expertise. In classifying revenue by client market, the Company attributes revenue from a client to the market that the Company believes is the client’s primary market. The Company also classifies revenue by the type of entity for which it does business, which is an indicator of the diversity of its client base. The Company attributes revenue generated as a subcontractor to a commercial company as government revenue when the ultimate client is a government agency or department. Disaggregation by contract mix provides insight in terms of the degree of performance risk that the Company has assumed. Fixed-price contracts are considered to provide the highest amount of performance risk as the Company is required to deliver a scope of work or level of effort for a negotiated fixed price. Time-and-materials contracts require the Company to provide skilled employees on contracts for negotiated fixed hourly rates. Since the Company is not required to deliver a scope of work, but merely skilled employees, it considers these contracts to be less risky than a fixed-price agreement. Cost-based contracts are considered to provide the lowest amount of performance risk since the Company is generally reimbursed for all contract costs incurred in performance of contract deliverables with only the amount of incentive or award fees (if applicable) dependent on the achievement of negotiated performance requirements.

	Three Months Ended September 30,										Nine Months Ended September 30,
	2022					2021					2022					2021
	Dollars		Percent			Dollars		Percent			Dollars		Percent			Dollars		Percent
Client Markets:
Energy, environment, and infrastructure	$	166,956		36	%	$	156,384		40	%	$	483,415		37	%	$	486,945		42	%
Health, education, and social programs		249,034		53	%		182,292		46	%		663,739		51	%		508,161		43	%
Safety and security		33,760		7	%		28,311		7	%		96,568		7	%		89,130		8	%
Consumer and financial		18,027		4	%		27,073		7	%		60,633		5	%		80,827		7	%
Total	$	467,777		100	%	$	394,060		100	%	$	1,304,355		100	%	$	1,165,063		100	%

	Three Months Ended September 30,										Nine Months Ended September 30,
	2022					2021					2022					2021
	Dollars		Percent			Dollars		Percent			Dollars		Percent			Dollars		Percent
Client Type:
U.S. federal government	$	271,255		58	%	$	195,153		50	%	$	714,993		55	%	$	553,378		48	%
U.S. state and local government		65,613		14	%		58,792		15	%		195,791		15	%		174,446		15	%
International government		23,075		5	%		32,697		8	%		78,978		6	%		107,850		9	%
Total Government		359,943		77	%		286,642		73	%		989,762		76	%		835,674		72	%
Commercial		107,834		23	%		107,418		27	%		314,593		24	%		329,389		28	%
Total	$	467,777		100	%	$	394,060		100	%	$	1,304,355		100	%	$	1,165,063		100	%

	Three Months Ended September 30,										Nine Months Ended September 30,
	2022					2021					2022					2021
	Dollars		Percent			Dollars		Percent			Dollars		Percent			Dollars		Percent
Contract Mix:
Time-and-materials	$	188,758		40	%	$	157,627		40	%	$	523,635		40	%	$	479,712		41	%
Fixed price		210,810		45	%		166,053		42	%		580,738		45	%		473,810		41	%
Cost-based		68,209		15	%		70,380		18	%		199,982		15	%		211,541		18	%
Total	$	467,777		100	%	$	394,060		100	%	$	1,304,355		100	%	$	1,165,063		100	%

Contract Balances:

Contract assets consist primarily of unbilled amounts resulting from long-term contracts when revenue recognized exceeds the amount billed often due to billing schedule timing. Contract liabilities result from advance payments received on a contract or from billings in excess of revenue recognized on long-term contracts due to billing schedule timing.

The following table summarizes the contract balances as of September 30, 2022 and December 31, 2021:

	September 30, 2022			December 31, 2021			$ Change		% Change
Contract assets	$	196,811		$	137,867		$	58,944		42.8	%
Contract liabilities		(24,599	)		(39,665	)		15,066		(38.0	%)
Net contract assets (liabilities)	$	172,212		$	98,202		$	74,010		75.4	%

The net contract assets (liabilities) as of September 30, 2022 increased by $74.0 million as compared to December 31, 2021. The increase in net contract assets (liabilities) is primarily due to the timing difference between the performance of services and billings to and payments from customers. The increase of $58.9 million in contract assets includes $9.9 million at September 30, 2022 from SemanticBits which was acquired during 2022. There were no material changes to contract balances due to impairments or credit losses during the period. During the nine months ended September 30, 2022 and 2021, the Company recognized $27.1 million and $21.7 million in revenue related to the contract liabilities balance at December 31, 2021 and 2020, respectively.

Performance Obligations:

The Company had $1.4 billion in unfulfilled performance obligations as of September 30, 2022 which primarily reflect the future delivery of services for which revenue will be recognized over time. The obligations relate to continued or additional services required on contracts, including those that are either non-cancellable or have substantive termination penalties, and were generally valued using an estimated cost-plus margin approach, with variable consideration being estimated at the most likely amount. The amounts exclude marketing offers, which are negotiated but unexercised contract options and indefinite delivery/indefinite quantity (IDIQ) and similar arrangements that provided a framework for customers to issue specific tasks, delivery, or purchase orders in the future. The Company expects to satisfy these performance obligations in approximately two years.