Revenue Recognition

6 Months Ended

Dec. 31, 2020

Revenue From Contract With Customer [Abstract]

Revenue Recognition

6. Revenue Recognition

We disaggregate our revenue arrangements by contract type, customer, whether we perform on the contract as the prime or subcontractor, and whether the solution provided is primarily expertise or technology as defined herein.  We believe that these categories allow for a better understanding of the nature, amount, timing, and uncertainty of revenue and cash flows arising from our contracts.

Revenue by Contract Type

The Company generated revenue on our cost-plus-fee, fixed-price, and time-and-materials contracts as follows during the three and six months ended December 31, 2020 and 2019 (in thousands):

	Three Months Ended						Six Months Ended
	December 31, 2020						December 31, 2020
	Domestic		International		Total		Domestic		International		Total
Cost-plus-fee	$	843,584	$	—	$	843,584	$	1,667,193	$	—	$	1,667,193
Fixed-price		411,114		29,707		440,821		820,698		53,937		874,635
Time-and-materials		172,362		11,944		184,306		357,356		29,033		386,389
Total	$	1,427,060	$	41,651	$	1,468,711	$	2,845,247	$	82,970	$	2,928,217

	Three Months Ended						Six Months Ended
	December 31, 2019						December 31, 2019
	Domestic		International		Total		Domestic		International		Total
Cost-plus-fee	$	818,477	$	—	$	818,477	$	1,566,191	$	—	$	1,566,191
Fixed-price		361,016		27,851		388,867		752,552		54,291		806,843
Time-and-materials		174,300		13,825		188,125		359,823		26,004		385,827
Total	$	1,353,793	$	41,676	$	1,395,469	$	2,678,566	$	80,295	$	2,758,861

Customer Group

The Company generated revenue from our primary customer groups as follows during the three and six months ended December 31, 2020 and 2019 (in thousands):

	Three Months Ended						Six Months Ended
	December 31, 2020						December 31, 2020
	Domestic		International		Total		Domestic		International		Total
Department of Defense	$	1,012,875	$	—	$	1,012,875	$	2,017,070	$	—	$	2,017,070
Federal Civilian agencies		390,034		—		390,034		780,213		—		780,213
Commercial and other		24,151		41,651		65,802		47,964		82,970		130,934
Total	$	1,427,060	$	41,651	$	1,468,711	$	2,845,247	$	82,970	$	2,928,217

	Three Months Ended						Six Months Ended
	December 31, 2019						December 31, 2019
	Domestic		International		Total		Domestic		International		Total
Department of Defense	$	990,381	$	—	$	990,381	$	1,928,021	$	—	$	1,928,021
Federal Civilian agencies		342,029		—		342,029		706,022		—		706,022
Commercial and other		21,383		41,676		63,059		44,523		80,295		124,818
Total	$	1,353,793	$	41,676	$	1,395,469	$	2,678,566	$	80,295	$	2,758,861

Prime or Subcontractor

The Company generated revenue as either the prime or subcontractor as follows during the three and six months ended December 31, 2020 and 2019 (in thousands):

	Three Months Ended						Six Months Ended
	December 31, 2020						December 31, 2020
	Domestic		International		Total		Domestic		International		Total
Prime contractor	$	1,288,533	$	38,492	$	1,327,025	$	2,577,238	$	76,625	$	2,653,863
Subcontractor		138,527		3,159		141,686		268,009		6,345		274,354
Total	$	1,427,060	$	41,651	$	1,468,711	$	2,845,247	$	82,970	$	2,928,217

	Three Months Ended						Six Months Ended
	December 31, 2019						December 31, 2019
	Domestic		International		Total		Domestic		International		Total
Prime contractor	$	1,227,317	$	39,338	$	1,266,655	$	2,424,951	$	76,809	$	2,501,760
Subcontractor		126,476		2,338		128,814		253,615		3,486		257,101
Total	$	1,353,793	$	41,676	$	1,395,469	$	2,678,566	$	80,295	$	2,758,861

Expertise or Technology

The Company generated revenue by providing expertise or technology solutions to our customers as follows during the three and six months ended December 31, 2020 and 2019 (in thousands):

	Three Months Ended						Six Months Ended
	December 31, 2020						December 31, 2020
	Domestic		International		Total		Domestic		International		Total
Expertise	$	715,812	$	16,464	$	732,276	$	1,439,009	$	33,950	$	1,472,959
Technology		711,248		25,187		736,435		1,406,238		49,020		1,455,258
Total	$	1,427,060	$	41,651	$	1,468,711	$	2,845,247	$	82,970	$	2,928,217

	Three Months Ended						Six Months Ended
	December 31, 2019						December 31, 2019
	Domestic		International		Total		Domestic		International		Total
Expertise	$	726,476	$	15,558	$	742,034	$	1,435,501	$	28,886	$	1,464,387
Technology		627,317		26,118		653,435		1,243,065		51,409		1,294,474
Total	$	1,353,793	$	41,676	$	1,395,469	$	2,678,566	$	80,295	$	2,758,861

Significant Estimates

For many of our fixed price revenue arrangements and for revenue arrangements that have award or incentive fees, the Company uses an estimate at completion (EAC) to measure progress towards the complete satisfaction of its performance obligations.  For these revenue arrangements, revenue is recognized over time primarily using a cost-to-cost input method based on the ratio of costs incurred to date to total estimated costs at completion. The EAC process requires the Company to use professional judgment when assessing risks, estimating contract revenue and costs, estimating variable consideration, and making assumptions for schedule and technical issues.  The Company periodically reassesses its EAC assumptions and updates its estimates as needed.  When estimates of total costs to be incurred on a contract exceed total revenue, a provision for the entire loss on the contract is recorded in the period in which the loss is determined.

Based on changes in a contract’s EAC, a cumulative adjustment to revenue will be recorded.  For the three and six months ended December 31, 2020, we recognized an increase to income before income taxes of $18.1 million ($0.53 per diluted share) and $25.9 million ($0.75 per diluted share), respectively, compared with $17.2 million ($0.50 per diluted share) and $23.8 million ($0.69 per diluted share) for the three and six months ended December 31, 2019, respectively, from EAC adjustments.  The Company used its statutory tax rate when calculating the impact to diluted earnings per share.

Revenue recognized from previously satisfied performance obligations was $1.2 million and $1.6 million for the three and six months ended December 31, 2020, respectively, compared with $9.8 million and $10.2 million for the three and six months ended December 31, 2019, respectively.  The change in revenue generally relates to final true-up adjustments to our estimated award or incentive fees in the period in which we receive the customer’s final performance score or when we can determine that more objective, contractually-defined criteria have been fully satisfied.  

Remaining Performance Obligations

The Company’s remaining performance obligations balance as of period end represents the expected revenue to be recognized for the satisfaction of remaining performance obligations on our existing contracts.  This balance excludes unexercised contract option years and task orders that may be issued underneath an Indefinite Delivery/Indefinite Quantity (IDIQ) vehicle until such task orders are awarded.  The remaining performance obligations balance generally increases with the execution of new contracts and converts into revenue as our contractual performance obligations are satisfied.

The Company continues to monitor this balance as it is subject to change from execution of new contracts, contract modifications or extensions, government deobligations, or early terminations.  Based on this analysis, an adjustment to the period end balance may be required.  Our remaining performance obligations balance as of December 31, 2020 was $6.5 billion.

The Company expects to recognize approximately 90 percent of our remaining performance obligations balance as revenue over the next twelve months and the remaining 10 percent thereafter.