The companies that do contract technology work for the US government sell almost nothing to anyone else. Their revenue arrives as billable hours and task orders paid for out of congressional appropriations, which makes the federal funding calendar a direct business input rather than background noise. In late July that calendar moved, and the shares moved first.

A funding bill, then results

The House passed a continuing resolution on 21 July, 220-205, extending federal funding at current levels through 4 December and removing the risk of a shutdown on 1 October. Over the four trading sessions ending 28 July, CACI International rose 9.1%, Leidos Holdings 10.4% and Science Applications International 4.9%. None had reported. Booz Allen Hamilton, a consulting peer outside this group, added 10.7% over the same stretch while the S&P 500 fell slightly. Senate appropriators released their own stopgap on 2 August, running to 11 December.

Then the results arrived, and two sessions did most of the remaining work. Remove each company's two best days from the month and the group's 25.5% advance falls to roughly 3.7% — CACI to 9.2%, Leidos to 10.4%, SAIC to 2.8%, and BigBear.ai to minus 7.5%.

CACI earned its session; the multiple went further

CACI, which builds signals-intelligence, cyber, electronic-warfare and counter-drone systems for the Pentagon and the intelligence agencies, reported fiscal 2026 results on 5 August. Fourth-quarter revenue of $2.71bn grew 17.6%, of which 11.6 points was organic, accelerating from 8.5% the quarter before. Funded backlog — the portion with appropriated money behind it — rose 28.6% to $5.4bn on $10.2bn of awards, a 1.1 times book-to-bill with a weighted-average duration near six years. Guidance for adjusted earnings of $32.96 to $33.86 a share sits above the $31.13 analysts model. The shares gained 22% the next day.

That is a real result. The price has run past it: 27.0 times trailing earnings and 21.1 times forward, against 21.0 times trailing in early May and a 19-24 range over the prior two years. CACI's durable advantage is incumbency on classified programs at the National Reconnaissance Office and National Security Agency, where cleared staff and long-tenured access are near-impossible to replicate — but that advantage was there at 21 times too.

Leidos is growing revenue and losing margin

Leidos, the largest here, runs national-security systems, air-traffic-control modernization for the Federal Aviation Administration and disability examinations for the Department of Veterans Affairs. Second-quarter revenue of $4.56bn grew 7.2%, free cash flow reached $761m, and full-year guidance went up to $18.20-18.40bn with backlog of $48.7bn. Book-to-bill was 1.1 times overall and 2.2 times in Defense, driven by hardware-like work: a containerized-munitions framework worth more than $1bn through 2030, a Navy unmanned surface vessel, a Golden Dome satellite payload order.

The cost is visible. Operating margin fell to 11.1% from 13.4% and operating income shrank 11.2%. Management flagged suspended incentive payments on the veterans' exam contract, a fourth vendor added to it, and the Defense Health Agency in-sourcing the MHS GENESIS integration work. At 11.6 times forward earnings and a 12.0% free-cash-flow yield, Leidos remains 19.4% below its level of a year ago while annual net income rose 16.1%.

SAIC turned, and lost a contract it had held

SAIC, the most exposed to civilian-agency and General Services Administration task orders, grew revenue 1.5% in the quarter to 1 May after four consecutive declines, with operating income up 39.2% and bookings of $2.1bn. Against that, it lost the $1.4bn CASTLE-NET Army Corps of Engineers modernization order to Accenture Federal Services, work it had held since 2021, and the Government Accountability Office denied its protest on 19 May. Consensus still models fiscal 2027 revenue down 1.2%. The stock is at 12.4 times forward earnings.

The AI name lagged the labor businesses

BigBear.ai, a 579-person decision-support software vendor in Columbia, Maryland, was the worst of the four over the month and is down over three months. Second-quarter revenue was $36.7m, up 13.2%, against an operating loss of $27.4m; adjusted losses before interest, tax, depreciation and amortization widened to $11.6m from $8.5m. Diluted shares outstanding reached 479m from 321m a year earlier. It trades at 11.4 times trailing sales, against 1.02 at Leidos and 0.73 at SAIC.

The demand story is genuine — the Pentagon's fiscal 2027 request of $1.5 trillion carries $29.5bn for command-and-control systems and $20.5bn for cyberspace. But a request is not an appropriation, and a stopgap funds agencies at last year's levels. Since 7 August the four have gone nowhere, averaging a quarter of a percent.

The setup

Where it stands — A stopgap bill and two earnings sessions produced a 25% month; the group has been flat since 7 August. Would confirm — CACI holds double-digit organic revenue growth in its September quarter with funded backlog above $5.4bn. Would invalidate — Leidos's operating margin stays near 11% or falls further as veterans' health revenue compresses. Watch next — Full-year appropriations or a further stopgap before the 4 December funding expiry. Valuation — CACI at 27.0x trailing and 21.1x forward, versus 21.0x in early May and a 19-24x two-year range.