Note 5. Revenue and Accounts Receivable

Revenue resulting from contracts and subcontracts with the U.S. Government accounted for 96.7%, 97.3%, and 96.1% of consolidated revenue in 2016, 2015, and 2014, respectively. As our primary customer base includes agencies of the U.S. Government, we have a concentration of credit risk associated with our accounts receivable, as 98.0% of our billed accounts receivable were directly with U.S. Government customers. While we acknowledge the potentially material and adverse risk of such a significant concentration of credit risk, our past experience of collecting substantially all of such receivables provide us with an informed basis that such risk, if any, is manageable. We perform ongoing credit evaluations of all of our customers and generally do not require collateral or other guarantee from our customers. We maintain allowances for potential losses.

On July 15, 2016, the Company entered into an accounts receivable purchase agreement under which the Company sells certain accounts receivable to a third party, or the "Factor", without recourse to the Company. The Factor initially pays the Company 90% of U.S. Federal government receivables or 85% of certain commercial prime contractors. The remaining payment is deferred and based on the amount the Factor receives from our customer, less a discount fee and a program access fee that is determined by the amount of time the receivable is outstanding before payment. The structure of the transaction provides for a true sale of the receivables transferred. Accordingly, upon transfer of the receivable to the Factor, the receivable is removed from the Company's consolidated balance sheet, a loss on the sale is recorded and the residual amounts remains a deferred payment as an accounts receivable until payment is received from the Factor. The balance of the sold receivables may not exceed $10 million. During the year ended December 31, 2016, the Company sold approximately $35.3 million of receivables, and recognized a related loss of approximately $0.2 million in selling, general and administrative expenses for the same period. As of December 31, 2016, the balance of the sold receivables was approximately $1.0 million, and the related deferred price was approximately $0.1 million.

The components of accounts receivable are as follows (in thousands):

	December 31,
	2016			2015
Billed accounts receivable	$	13,164		$	15,340
Unbilled receivables		6,352			4,190
Allowance for doubtful accounts		(429	)		(485	)
	$	19,087		$	19,045

The activities in the allowance for doubtful accounts are set forth below (in thousands):

	Balance Beginning of Year		Bad Debt Expenses (1)			Recoveries (2)		Balance End of Year

Year Ended December 31, 2016	$	485	$	(56	)	$	--	$	429
Year Ended December 31, 2015	$	372	$	113		$	--	$	485
Year Ended December 31, 2014	$	321	$	51		$	--	$	372

(1) Accounts receivable reserves and reversal of allowance for subsequent collections, net

(2) Accounts receivable written-off and subsequent recoveries, net

Revenue by Major Market and Significant Customers

We derived substantially all of our revenues from contracts and subcontracts with the U.S. Government. Revenue by customer sector for the last three fiscal years is as follows:

	2016				2015				2014
					(dollar amounts in thousands)

Federal	$	130,415	96.7	%	$	117,328	97.3	%	$	122,549	96.1	%
State & Local, and Commercial		4,453	3.3	%		3,306	2.7	%		5,013	3.9	%

Total	$	134,868	100.0	%	$	120,634	100.0	%	$	127,562	100.0	%