REVENUE RECOGNITION

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

REVENUE RECOGNITION

We account for revenue in accordance with ASC Topic 606, "Revenue from Contracts with Customers." The unit of account in ASC 606 is a performance obligation, which is a promise in a contract with a customer to transfer a good or service to the customer.

The majority of our revenue is recognized over time, as control is transferred continuously to our customers who receive and consume benefits as we perform. Revenue transferred to customers over time accounted for 89% and 96% of our revenue for the three months ended March 31, 2023 and 2022, respectively. All of our business groups earn services revenue under a variety of contract types, including time and materials, firm-fixed price, firm-fixed price level of effort, and cost-plus fixed fee contract types, which may include variable consideration.

For performance obligations in which control does not continuously transfer to the customer, we recognize revenue at the point in time in which each performance obligation is fully satisfied. This coincides with the point in time the customer obtains control of the product or service, which typically occurs upon customer acceptance or receipt of the product or service, given that we maintain control of the product or service until that point. Revenue transferred to customers at a point in time accounted for 11% and 4% of our revenue for the three months ended March 31, 2023 and 2022, respectively.

Orders for the sale of software licenses may contain multiple performance obligations, such as maintenance, training, or consulting services, which are typically delivered over time, consistent with the transfer of control disclosed above for the provision of services. When an order contains multiple performance obligations, we allocate the transaction price to the performance obligations based on the standalone selling price of the product or service underlying each performance obligation. The standalone selling price represents the amount we would sell the product or service to a customer on a standalone basis.

For certain performance obligations where we are not primarily responsible for fulfilling the promise to provide the goods or services to the customer, do not have inventory risk and have limited discretion in establishing the price for the goods or services, we recognize revenue on a net basis.

We provide for anticipated losses on contracts during the period when the loss is determined by recording an expense for the total expected costs that exceeds the total estimated revenue for a performance obligation. No contract losses were recorded during the three months ended March 31, 2023 and 2022.

Disaggregated Revenues

In addition to our segment reporting, as further discussed in Note 17 – Segment Information, we disaggregate our revenues by customer and contract types. We treat sales to U.S. customers as sales within the U.S. regardless of where the services are performed. Substantially most of our revenues are generated from U.S. customers, while international customers are de minimis; as such, the financial information by geographic location is not presented.

Table 3.1: Revenue by Customer Type
	For the Three Months Ended
	March 31, 2023			March 31, 2022
	Amount		%	Amount		%
	(dollars in thousands)
Federal	$	32,989	94 %	$	47,843	95 %
State & local, and commercial	2,233		6 %	2,317		5 %
Total revenue	$	35,222	100 %	$	50,160	100 %

Table 3.2: Revenue by Contract Type
	For the Three Months Ended
	March 31, 2023			March 31, 2022
	Amount		%	Amount		%
	(dollars in thousands)
Firm fixed-price	$	27,013	77 %	$	41,277	82 %
Time-and-materials	3,556		10 %	2,916		6 %
Cost plus fixed fee	4,653		13 %	5,967		12 %
Total revenue	$	35,222	100 %	$	50,160	100 %

Table 3.3: Revenue Concentration Greater than 10% of Total Revenue
	For the Three Months Ended
	March 31, 2023	March 31, 2022
U.S. Department of Defense ("DoD")	68 %	71 %
Civilian	26 %	24 %

Table 3.4: Contract Balances
	Balance Sheet Presentation	March 31, 2023		December 31, 2022
		(in thousands)
Billed accounts receivables (1)	Accounts receivable, net	$	18,297	$	13,521
Unbilled accounts receivable	Accounts receivable, net	4,658		11,657
Contract assets	Accounts receivable, net	11,747		14,891
Contract liabilities	Contract liabilities	7,203		6,444

(1) Net of allowance for credit losses.

The significant change in the Company's contract assets and contract liabilities during the current period was primarily the result of the timing differences between the Company's performance, invoicing and customer payments. Revenue recognized for the three months ended March 31, 2023 and 2022, that was included in the contract liabilities balance at the beginning of each reporting period was $2.5 million and $2.5 million, respectively.

As of March 31, 2023, we had approximately $77.4 million of remaining performance obligations, which we also refer to as funded backlog. We expect to recognize approximately 70% of our remaining performance obligations as revenue in 2023, an additional 29% in 2024, and the balance thereafter.