5. Contracts in Process

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


	September 25, 2015			December 31, 2014
	(in millions)
Unbilled contract receivables, gross	$	2,626		$	2,280
Unliquidated progress payments		(1,057	)		(887	)

Unbilled contract receivables, net		1,569			1,393

Inventoried contract costs, gross		1,033			997
Unliquidated progress payments		(119	)		(95	)

Inventoried contract costs, net		914			902

Total contracts in process	$	2,483		$	2,295

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 25, 2015			September 26, 2014			September 25, 2015			September 26, 2014
	(in millions)
Amounts included in inventoried contract costs at beginning of the period	$	149		$	146		$	138		$	133
Contract costs incurred:
IRAD and B&P		70			70			210			213
Other G&A		219			230			640			645

Total		289			300			850			858

Amounts charged to cost of sales		(269	)		(300	)		(819	)		(845	)

Amounts included in inventoried contract costs at end of the period	$	169		$	146		$	169		$	146

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 included in cost of sales on the unaudited condensed consolidated statements of operations.


	Third Quarter Ended				Year-to-Date Ended
	September 25, 2015		September 26, 2014		September 25, 2015		September 26, 2014
	(in millions)
Selling, general and administrative expenses	$	53	$	72	$	198	$	225
Research and development expenses		13		15		40		51

Total	$	66	$	87	$	238	$	276