Revenue Recognition

3 Months Ended

Mar. 31, 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.  

Changes in the three months ended March 31, 2022 compared to the three months ended March 31, 2021 were driven primarily by an increase of $39.4 million and $6.2 million from U.S. federal government’s health, education, and social programs and energy, environment, and infrastructure client markets, respectively, $7.4 million and $0.5 million from U.S. state and local government’s health, education, and social programs and energy, environment, and infrastructure client markets, respectively, and $1.7 million from international government’s health, education, and social programs client market, offset by decreases of $11.1 million and $0.6 million from international government’s energy, environment, and infrastructure and safety and security client markets, respectively, $3.5 million, $2.6 million, and $1.2 million from commercial consumer and financial, energy, environment, and infrastructure, and health, education, and social programs client markets, respectively, and $1.2 million from U.S. federal government safety and security client market.

	Three Months Ended March 31,
	2022					2021
	Dollars		Percent			Dollars		Percent
Client Markets:
Energy, environment, and infrastructure	$	156,644		38	%	$	163,582		43	%
Health, education, and social programs		205,532		50	%		158,268		42	%
Safety and security		29,400		7	%		31,198		8	%
Consumer and financial		21,892		5	%		25,430		7	%
Total	$	413,468		100	%	$	378,478		100	%

	Three Months Ended March 31,
	2022					2021
	Dollars		Percent			Dollars		Percent
Client Type:
U.S. federal government	$	220,343		53	%	$	175,985		46	%
U.S. state and local government		64,833		16	%		56,878		15	%
International government		26,720		6	%		36,746		10	%
Total Government		311,896		75	%		269,609		71	%
Commercial		101,572		25	%		108,869		29	%
Total	$	413,468		100	%	$	378,478		100	%

	Three Months Ended March 31,
	2022					2021
	Dollars		Percent			Dollars		Percent
Contract Mix:
Time-and-materials	$	165,084		40	%	$	159,836		42	%
Fixed price		183,896		44	%		147,469		39	%
Cost-based		64,488		16	%		71,173		19	%
Total	$	413,468		100	%	$	378,478		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 March 31, 2022 and December 31, 2021:

	March 31, 2022			December 31, 2021			$ Change		% Change
Contract assets	$	189,147		$	137,867		$	51,280		37.2	%
Contract liabilities		(31,491	)		(39,665	)		8,174		(20.6	%)
Net contract assets (liabilities)	$	157,656		$	98,202		$	59,454		60.5	%

The net contract assets (liabilities) as of March 31, 2022 increased by $59.5 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. There were no material changes to contract balances due to impairments or credit losses during the period. During the three months ended March 31, 2022 and 2021, the Company recognized $20.9 million and $15.1 million in revenue related to the contract liabilities balance at December 31, 2021 and 2020, respectively.

Performance Obligations:

The Company had $1.1 billion in unfulfilled performance obligations as of March 31, 2022 which primarily entail the future delivery of services for which revenue will be recognized over time. The obligations relate to continued or additional services required on non-cancelable contracts 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, on average, in one to two years.