COMMITMENTS AND CONTINGENCIES

A substantial portion of the Company’s revenue and costs are generated from contracts with the U.S. Government that are subject to audit by the U.S. Defense Contract Audit Agency (DCAA). U.S. Agencies, including the DCAA, the Defense Contract Management Agency, and other various agencies, routinely audit contract cost and allocated indirect cost for compliance with federal procurement regulations, Cost Accounting Standards, and in accordance with contract specific terms and conditions. The DCAA has audited the incurred cost submissions of the Company through December 31, 2015. The results of such audits are not expected to have a material effect on the Company’s financial position, and as of December 31, 2018, the Company believes it has adequately reserved for potential adjustments from audits or review of contract costs.

The Company leases certain office equipment and operating facilities under non-cancellable operating leases that expire at various dates through 2030. Certain leases contain renewal options. Rental payments on certain leases are subject to annual increases based on escalation clauses and increases in the lessor's operating expenses. For the leases that require fixed rental escalations during their lease terms, rent expense is recognized on a straight-line basis resulting in deferred rent. The deferred rent included in other liabilities, both current and non-current, totaled $9.9 million and $11.2 million at December 31, 2018 and 2017, respectively, of which $7.0 million and $7.9 million related to the lease incentive liability at December 31, 2018 and 2017, respectively. Total net lease expense was $9.8 million, $10.9 million and $7.7 million for the years ended December 31, 2018, 2017 and 2016, respectively.

The schedule below shows the future minimum lease payments required under the operating leases as of December 31, 2018.



	(in thousands)
Type	2019		2020		2021		2022		2023		Thereafter		Total
Facilities/Office space	$	8,624	$	7,845	$	7,843	$	8,018	$	8,225	$	27,980	$	68,535
Office equipment	111		5		—		—		—		—		116
Operating Leases	$	8,735	$	7,850	$	7,843	$	8,018	$	8,225	$	27,980	$	68,651

In the normal course of business, the Company is involved in various legal matters. It is the opinion of management that none of the current legal matters would have a material adverse effect on the Company's financial statements.