Revenue From Contracts With Customers

The Company’s primary service offerings are technology and business solutions, systems engineering and integration, cybersecurity, applied research and big data analytics, and investigative and risk mitigation services to the U.S. government and its agencies. Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

The Company determines revenue recognition through the five-step model as follows:


•	Identification of the contract, or contracts, with a customer


•	Identification of the performance obligations in the contract


•	Determination of the transaction price


•	Allocation of the transaction price to the performance obligations in the contract


•	Recognition of revenue when, or as, we satisfy a performance obligation

Disaggregated Revenue

The following tables present revenue disaggregated by contract type:



	Three Months Ended December 31, 2018
(in millions)	Defense and Intelligence		Civilian and Health Care		Total
Cost-reimbursable	$	240	$	25	$	265
Fixed-price	373		229		602
Time-and-materials	96		112		208
Total	$	709	$	366	$	1,075



	Nine Months Ended December 31, 2018
(in millions)	Defense and Intelligence		Civilian and Health Care		Total
Cost-reimbursable	$	580	$	66	$	646
Fixed-price	985		699		1,684
Time-and-materials	283		323		606
Total	$	1,848	$	1,088	$	2,936

The following tables present revenue disaggregated by prime or subcontractor:



	Three Months Ended December 31, 2018
(in millions)	Defense and Intelligence		Civilian and Health Care		Total
Prime contractor	$	663	$	329	$	992
Subcontractor	46		37		83
Total	$	709	$	366	$	1,075



	Nine Months Ended December 31, 2018
(in millions)	Defense and Intelligence		Civilian and Health Care		Total
Prime contractor	$	1,740	$	979	$	2,719
Subcontractor	108		109		217
Total	$	1,848	$	1,088	$	2,936

The following tables present revenue disaggregated by customer type:



	Three Months Ended December 31, 2018
(in millions)	Defense and Intelligence		Civilian and Health Care		Total
Federal, including independent agencies	$	707	$	302	$	1,009
Non-federal (state, local, other)	2		64		66
Total	$	709	$	366	$	1,075



	Nine Months Ended December 31, 2018
(in millions)	Defense and Intelligence		Civilian and Health Care		Total
Federal, including independent agencies	$	1,843	$	893	$	2,736
Non-federal (state, local, other)	5		195		200
Total	$	1,848	$	1,088	$	2,936

Performance Obligations

As of December 31, 2018, approximately $3.2 billion of revenue is expected to be recognized from remaining unsatisfied performance obligations on executed contracts. The Company expects to recognize revenue on these remaining performance obligations within approximately twelve months.

Contract Balances

Contract assets consist of unbilled receivables, which result from services provided under contracts when revenue is recognized over time, revenue recognized exceeds the amounts billed to the customer, and right to payment is not just subject to the passage of time. Amounts are invoiced as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Payment to employees and third parties for services provided to customers is generally immediate, while the related billing is generally within 90 days.

Contract liabilities include advance contract payments and billings in excess of costs incurred. Under certain contracts, the Company receives advances and milestone payments from its customers that exceed revenue earned to date, resulting in contract liabilities. Advances typically are not considered a significant financing component because it is used to meet working capital demands that can be higher in the early stages of a contract and to protect the Company from the customer failing to adequately complete some or all of its obligations under the contract.

Contract assets and contract liabilities were as follows:



		As of
(in millions)	Balance Sheet Line Item	December 31, 2018		April 1, 2018
Contract assets:
Unbilled receivables	Receivables, net of allowance for doubtful accounts	$	274	$	193

Contract liabilities:
Current portion of deferred revenue and advance contract payments	Deferred revenue and advance contract payments	$	28	$	27
Non-current portion of deferred revenue and advance contract payments	Other long-term liabilities	1		7

Contract assets increased $81 million during the nine months ended December 31, 2018, primarily due to the Mergers. There were no significant impairment losses related to the Company’s contract assets during the nine months ended December 31, 2018.

Contract liabilities decreased $5 million during the nine months ended December 31, 2018, primarily due to revenue recognized in excess of payments received, partially offset by the Mergers. During the three and nine months ended December 31, 2018, the Company recognized $2 million and $24 million, respectively, of the deferred revenue and advance contract payments at April 1, 2018 as revenue.