6. Contracts in Process

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


	September 26, 2014			December 31, 2013
	(in millions)
Unbilled contract receivables, gross	$	2,449		$	2,502
Unliquidated progress payments		(900	)		(1,035	)

Unbilled contract receivables, net		1,549			1,467

Inventoried contract costs, gross		1,069			1,044
Unliquidated progress payments		(72	)		(80	)

Inventoried contract costs, net		997			964

Total contracts in process	$	2,546		$	2,431

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 26, 2014			September 27, 2013			September 26, 2014			September 27, 2013
	(in millions)
Amounts included in inventoried contract costs at beginning of the period:	$	151		$	115		$	138		$	110
IRAD and B&P costs		70			66			215			219
Other G&A costs		239			216			658			653

Total contract costs incurred		309			282			873			872

Amounts charged to cost of sales		(309	)		(271	)		(860	)		(856	)

Amounts included in inventoried contract costs at end of the period	$	151		$	126		$	151		$	126

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 26, 2014		September 27, 2013		September 26, 2014		September 27, 2013
	(in millions)
Selling, general and administrative expenses	$	70	$	70	$	213	$	214
Research and development expenses		14		17		48		62

Total	$	84	$	87	$	261	$	276