5. Contracts in Process

The components of contracts in process are presented in the table below.


	September 27, 2013			December 31, 2012
	(in millions)
Unbilled contract receivables, gross	$	2,714		$	2,879
Unliquidated progress payments		(1,051	)		(1,265	)

Unbilled contract receivables, net		1,663			1,614

Inventoried contract costs, gross		1,093			1,090
Unliquidated progress payments		(65	)		(68	)

Inventoried contract costs, net		1,028			1,022

Total contracts in process	$	2,691		$	2,636

Inventoried Contract Costs. In accordance with contract accounting standards, the Company’s U.S. Government contractor businesses account for the portion of their general and administrative (G&A), independent research and development (IRAD) and bids and proposal (B&P) costs that are allowable and reimbursable indirect contract costs under U.S. Government procurement regulations on their U.S. Government contracts (revenue arrangements) as inventoried contract costs. G&A, IRAD and B&P costs are allocated to contracts for which the U.S. Government is the end customer and are charged to costs of sales when sales on the related contracts are recognized. The Company’s U.S. Government contractor businesses record the unallowable portion of their G&A, IRAD and B&P costs to expense as incurred, and do not include them in inventoried contract costs.

The table below presents a summary of G&A, IRAD and B&P costs included in inventoried contract costs and the changes to them, including amounts charged to cost of sales by the Company’s U.S. Government contractor businesses for the periods presented.


	Third Quarter Ended						Year-to-Date Ended
	September 27, 2013			September 28, 2012			September 27, 2013			September 28, 2012
	(in millions)
Amounts included in inventoried contract costs at beginning of the period	$	115		$	105		$	110		$	91
IRAD and B&P costs		66			83			219			254
Other G&A costs		218			213			655			647

Total contract costs incurred		284			296			874			901

Amounts charged to cost of sales		(273	)		(289	)		(858	)		(880	)

Amounts included in inventoried contract costs at end of the period	$	126		$	112		$	126		$	112

The table below presents a summary of selling, general and administrative expenses and research and development expenses for the Company’s commercial businesses, which are expensed as incurred and not included in inventoried contract costs.


.	Third Quarter Ended				Year-to-Date Ended
	September 27, 2013		September 28, 2012		September 27, 2013		September 28, 2012
	(in millions)
Selling, general and administrative expenses	$	68	$	58	$	212	$	196
Research and development expenses		17		18		62		63

Total	$	85	$	76	$	274	$	259