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Revenue and Contract Balances
 3 Months Ended
Jan. 02, 2022
Revenue from Contract with Customer [Abstract]  
Revenue and Contract Balances Revenue and Contract Balances
Disaggregation of Revenue

We disaggregate revenue by client sector and contract type, as we believe it best depicts how the nature, timing, and uncertainty of revenue and cash flows are affected by economic factors. The following tables present revenue disaggregated by client sector and contract type:
 Three Months Ended
 January 2,
2022		December 27,
2020
 (in thousands)
Client Sector:  
U.S. state and local government$159,008 $125,008 
U.S. federal government (1)
266,797 265,873 
U.S. commercial176,904 157,787 
International (2)
255,801 216,436 
Total$858,510 $765,104 
Contract Type:
Fixed-price$331,248 $274,406 
Time-and-materials395,648 355,270 
Cost-plus131,614 135,428 
Total$858,510 $765,104 
(1)     Includes revenue generated under U.S. federal government contracts performed outside the United States.
(2) Includes revenue generated from foreign operations, primarily in Canada, Australia, the United Kingdom, and revenue generated from non-U.S. clients.

Other than the U.S. federal government, no single client accounted for more than 10% of our revenue for the three months ended January 2, 2022 and December 27, 2020.

Contract Assets and Contract Liabilities

We invoice customers based on the contractual terms of each contract. However, the timing of revenue recognition may differ from the timing of invoice issuance.

Contract assets represent revenue recognized in excess of the amounts for which we have the contractual right to bill our customers. Such amounts are recoverable from customers based upon various measures of performance, including achievement of certain milestones or completion of a contract. In addition, many of our time and materials arrangements are billed in arrears pursuant to contract terms that are standard within the industry, resulting in contract assets and/or unbilled receivables being recorded, as revenue is recognized in advance of billings. Contract retentions, included in contract assets, represent amounts withheld by clients until certain conditions are met or the project is completed, which may extend beyond one year.

Contract liabilities consist of billings in excess of revenue recognized. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation and increase as billings in advance of revenue recognition occur. Contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. There were no substantial non-current contract assets or liabilities for the periods presented. Net contract assets/liabilities consisted of the following:

Balance at
January 2,
2022		October 3, 2021
(in thousands)
Contract assets (1)
$98,439 $103,784 
Contract liabilities(219,519)(190,403)
Net contract liabilities$(121,080)$(86,619)
(1)     Includes $13.5 million and $12.2 million of contract retentions as of January 2, 2022 and October 3, 2021, respectively.

In the first quarters of fiscal 2022 and 2021, we recognized revenue of approximately $63 million and $60 million, respectively, from amounts included in the contract liability balances at the end of fiscal 2021 and 2020, respectively.
We recognize revenue primarily using the cost-to-cost measure of progress to estimate progress towards completion. Changes in those estimates could result in the recognition of cumulative catch-up adjustments to the contract’s inception-to-date revenue, costs and profit in the period in which such changes are made. As a result, we recognized net favorable revenue and operating income adjustments of $2.8 million in the first quarter of fiscal 2022. For the first quarter of fiscal 2021, these net adjustments to our revenue and operating income were immaterial.

Changes in revenue and cost estimates could also result in a projected loss, determined at the contract level, which would be recorded immediately in earnings. As of January 2, 2022 and October 3, 2021, our consolidated balance sheets included liabilities for anticipated losses of $14.2 million and $12.7 million, respectively. The estimated cost to complete these related contracts as of January 2, 2022 and October 3, 2021 was approximately $116 million and $104 million, respectively.

Accounts Receivable, Net

Net accounts receivable consisted of the following:

Balance at
 January 2,
2022		October 3,
2021
(in thousands)
Billed$441,652 $432,814 
Unbilled259,918 240,536 
Total accounts receivable701,570 673,350 
Allowance for doubtful accounts(4,984)(4,352)
Total accounts receivable, net$696,586 $668,998 

Billed accounts receivable represent amounts billed to clients that have not been collected. Unbilled accounts receivable, which represent an unconditional right to payment subject only to the passage of time, include unbilled amounts typically resulting from revenue recognized but not yet billed pursuant to contract terms or billed after the period end date. Substantially all of our unbilled receivables at January 2, 2022 are expected to be billed and collected within 12 months. The allowance for doubtful accounts represents amounts that are expected to become uncollectible or unrealizable in the future. We determine an estimated allowance for uncollectible accounts based on management's consideration of trends in the actual and forecasted credit quality of our clients, including delinquency and payment history; type of client, such as a government agency or a commercial sector client; and general economic and industry conditions, including the potential impacts of the coronavirus disease 2019 ("COVID-19") pandemic, that may affect our clients' ability to pay.

Total accounts receivable at January 2, 2022 and October 3, 2021 included approximately $11 million for each period, related to claims, including requests for equitable adjustment, on contracts that provide for price redetermination. Claims are amounts in excess of agreed contract prices that we seek to collect from our clients or other third parties for delays, errors in specifications and designs, contract terminations, change orders in dispute or unapproved as to both scope and price, or other causes of unanticipated additional costs. Factors considered in determining whether revenue associated with claims (including change orders in dispute and unapproved change orders in regards to both scope and price) should be recognized include the following: (a) the contract or other evidence provides a legal basis for the claim, (b) additional costs were caused by circumstances that were unforeseen at the contract date and not the result of deficiencies in our performance, (c) claim-related costs are identifiable and considered reasonable in view of the work performed, and (d) evidence supporting the claim is objective and verifiable. This can lead to a situation in which costs are recognized in one period and revenue is recognized in a subsequent period when a client agreement is obtained, or a claims resolution occurs.

We regularly evaluate all unsettled claim amounts and record appropriate adjustments to revenue when it is probable that the claim will result in a different contract value than the amount previously estimated. In the first quarters of fiscal 2022 and fiscal 2021, we recorded no gains or losses related to claims.

Other than the U.S. federal government, no single client accounted for more than 10% of our accounts receivable at January 2, 2022 and October 3, 2021.
Remaining Unsatisfied Performance Obligations (“RUPO”)

Our RUPO represents a measure of the total dollar value of work to be performed on contracts awarded and in progress. We had $3.4 billion of RUPO as of January 2, 2022. RUPO increases with awards from new contracts or additions on existing contracts and decreases as work is performed and revenue is recognized on existing contracts. RUPO may also decrease when projects are canceled or modified in scope. We include a contract within our RUPO when the contract is awarded and an agreement on contract terms has been reached.

We expect to satisfy our RUPO as of January 2, 2022 over the following periods:
Amount
(in thousands)
Within 12 months$2,042,908 
Beyond 1,392,475 
Total $3,435,383 

Although RUPO reflects business that is considered to be firm, cancellations, deferrals or scope adjustments may occur. RUPO is adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals, as appropriate. Our operations and maintenance contracts can generally be terminated by the clients without a substantive financial penalty. Therefore, the remaining performance obligations on such contracts are limited to the notice period required for the termination (usually 30, 60, or 90 days).