Revenue Recognition

9 Months Ended

Mar. 31, 2021

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 nine months ended March 31, 2021 and 2020 (in thousands):

	Three Months Ended						Nine Months Ended
	March 31, 2021						March 31, 2021
	Domestic		International		Total		Domestic		International		Total
Cost-plus-fee	$	905,774	$	—	$	905,774	$	2,572,967	$	—	$	2,572,967
Fixed-price		424,580		32,519		457,099		1,245,278		86,456		1,331,734
Time-and-materials		174,683		14,362		189,045		532,039		43,395		575,434
Total	$	1,505,037	$	46,881	$	1,551,918	$	4,350,284	$	129,851	$	4,480,135

	Three Months Ended						Nine Months Ended
	March 31, 2020						March 31, 2020
	Domestic		International		Total		Domestic		International		Total
Cost-plus-fee	$	852,700	$	—	$	852,700	$	2,418,891	$	—	$	2,418,891
Fixed-price		376,314		29,422		405,736		1,128,866		83,713		1,212,579
Time-and-materials		190,344		16,820		207,164		550,167		42,824		592,991
Total	$	1,419,358	$	46,242	$	1,465,600	$	4,097,924	$	126,537	$	4,224,461

Customer Group

The Company generated revenue from our primary customer groups as follows during the three and nine months ended March 31, 2021 and 2020 (in thousands):

	Three Months Ended						Nine Months Ended
	March 31, 2021						March 31, 2021
	Domestic		International		Total		Domestic		International		Total
Department of Defense	$	1,074,056	$	—	$	1,074,056	$	3,091,126	$	—	$	3,091,126
Federal Civilian agencies		405,855		—		405,855		1,186,068		—		1,186,068
Commercial and other		25,126		46,881		72,007		73,090		129,851		202,941
Total	$	1,505,037	$	46,881	$	1,551,918	$	4,350,284	$	129,851	$	4,480,135

	Three Months Ended						Nine Months Ended
	March 31, 2020						March 31, 2020
	Domestic		International		Total		Domestic		International		Total
Department of Defense	$	1,037,242	$	—	$	1,037,242	$	2,965,263	$	—	$	2,965,263
Federal Civilian agencies		361,320		—		361,320		1,067,342		—		1,067,342
Commercial and other		20,796		46,242		67,038		65,319		126,537		191,856
Total	$	1,419,358	$	46,242	$	1,465,600	$	4,097,924	$	126,537	$	4,224,461

Prime or Subcontractor

The Company generated revenue as either the prime or subcontractor as follows during the three and nine months ended March 31, 2021 and 2020 (in thousands):

	Three Months Ended						Nine Months Ended
	March 31, 2021						March 31, 2021
	Domestic		International		Total		Domestic		International		Total
Prime contractor	$	1,358,423	$	43,210	$	1,401,633	$	3,935,661	$	119,835	$	4,055,496
Subcontractor		146,614		3,671		150,285		414,623		10,016		424,639
Total	$	1,505,037	$	46,881	$	1,551,918	$	4,350,284	$	129,851	$	4,480,135

	Three Months Ended						Nine Months Ended
	March 31, 2020						March 31, 2020
	Domestic		International		Total		Domestic		International		Total
Prime contractor	$	1,298,073	$	42,788	$	1,340,861	$	3,723,024	$	119,597	$	3,842,621
Subcontractor		121,285		3,454		124,739		374,900		6,940		381,840
Total	$	1,419,358	$	46,242	$	1,465,600	$	4,097,924	$	126,537	$	4,224,461

Expertise or Technology

The Company generated revenue by providing expertise or technology solutions to our customers as follows during the three and nine months ended March 31, 2021 and 2020 (in thousands):

	Three Months Ended						Nine Months Ended
	March 31, 2021						March 31, 2021
	Domestic		International		Total		Domestic		International		Total
Expertise	$	745,440	$	18,979	$	764,419	$	2,184,449	$	52,929	$	2,237,378
Technology		759,597		27,902		787,499		2,165,835		76,922		2,242,757
Total	$	1,505,037	$	46,881	$	1,551,918	$	4,350,284	$	129,851	$	4,480,135

	Three Months Ended						Nine Months Ended
	March 31, 2020						March 31, 2020
	Domestic		International		Total		Domestic		International		Total
Expertise	$	744,997	$	18,339	$	763,336	$	2,180,498	$	47,225	$	2,227,723
Technology		674,361		27,903		702,264		1,917,426		79,312		1,996,738
Total	$	1,419,358	$	46,242	$	1,465,600	$	4,097,924	$	126,537	$	4,224,461

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 nine months ended March 31, 2021, we recognized an increase to income before income taxes of $10.7 million ($0.31 per diluted share) and $36.6 million ($1.06 per diluted share), respectively, compared with $8.3 million ($0.24 per diluted share) and $32.1 million ($0.93 per diluted share) for the three and nine months ended March 31, 2020, 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 $0.7 million and $2.3 million for the three and nine months ended March 31, 2021, respectively, compared with $(0.3) million and $9.9 million for the three and nine months ended March 31, 2020, 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 March 31, 2021 was $6.7 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.