Two of the biggest suppliers of technology services to the US government reported results in the first week of August that broke a year-long narrative of federal budget cuts, contract terminations and squeezed prices. CACI International, a Reston, Virginia firm of 25,000 people that builds signals-intelligence, cyber, electronic-warfare and secure enterprise computing systems for the Pentagon and the intelligence agencies, reported fiscal 2026 revenue of $9.57bn, up 10.9%, free cash flow up 68% per share to $735m, contract awards of $10.2bn and funded backlog — work with money actually appropriated against it — up 28.6% to $5.4bn. Guidance for fiscal 2027 of $10.65–10.85bn in revenue and $32.96–33.86 in adjusted earnings per share sits about 7% above the $31.13 analysts had modelled. The stock rose 22% in one session.

The day before, Leidos Holdings — a $17bn group of 47,000 employees running national-security systems, air-traffic-control modernisation for the Federal Aviation Administration and medical services for the Department of Veterans Affairs — posted adjusted earnings of $3.26 a share against $2.91 expected and raised its full-year revenue and profit guidance. It closed up 10%.

The move is led from the top, not the bottom

Over the 30 days to 7 August, CACI gained 30.5% and Leidos 28.4%; Science Applications International (SAIC), a $5.3bn engineering and IT-modernisation contractor also based in Reston, added 11.7%. BigBear.ai, a 579-person artificial-intelligence analytics company in Columbia, Maryland, fell 1.2% and did not participate at all. Weighting by size gives +25.6% against +17.4% equal-weighted — the two largest names led, which is the opposite of a low-quality, small-cap-driven bounce. The twelve-month picture is the mirror image: the group's -8.5% average year is almost entirely BigBear.ai, down 50.5%, against CACI up 28.9%.

Does the business explain it?

For CACI, CONFIRMS. Fourth-quarter revenue rose 17.6% with operating margin at 10.1% against 9.0% a year earlier, and roughly 83% of expected fiscal 2027 revenue comes from programmes already won, with 9% from recompetes.

For Leidos, CONFIRMS with a caveat. Revenue growth accelerated to 7.2% from 3.7% the prior quarter, the Defense segment booked 2.2x as much new work as it billed, and free cash flow set a record. But operating margin compressed to 11.1% from 13.4% and operating income fell 11.2%. Management flagged suspended incentive payments on veterans' disability examinations pending an administrative review, and the Defense Health Agency taking electronic-health-record integration work in-house. Top line accelerating while profit shrinks is not yet a clean recovery.

For SAIC, INCONCLUSIVE. Revenue rose 1.5% last quarter — the first increase after four declines — and net income jumped 69% on operating margin of 8.8% versus 6.4%. But bookings of $2.1bn produced a book-to-bill of just 1.1x, consensus still models revenue falling 1.2% this fiscal year, and the diluted share count has shrunk 13% in two years. This is margins and buybacks, not growth.

For BigBear.ai, CONTRADICTS in reverse: revenue grew 13% to $36.7m with gross margin up 7.8 points to 32.8% and backlog of $270m, and the shares kept falling — because operating margin is still -74% and the stock trades at 11.9x sales against Leidos at 0.98x and SAIC at 0.73x.

Where the multiples sit

Leidos is the only one whose valuation has not repaired: 12.7x trailing and 11.1x forward earnings, with a 12.5% free-cash-flow yield, against 15.6x at the end of 2024, 16.2x at the end of 2025 and 17.2x at its November peak. It remains about 31% below that high, after falling roughly 44% year-to-date into late June on soft results, a lost health-record integrator role and a Jefferies downgrade with a $140 target. CACI, at 26.5x trailing, has gone through the top of its own 19.2–23.9x range in three sessions; 20.7x forward is mid-range, so the case now rests on delivering the fiscal 2027 guide. SAIC at 14.2x trailing compares with 12.4x in late June and roughly 11.5x last November — on flat revenue.

The tape, and the overhang

The trend measures lag the news: Leidos's 50-day average has been below its 200-day since 6 March and still is, even though the shares are 33.6% off their 30 June low; CACI's crossed back only on 7 August; SAIC's has been positive since 29 May. The chart is confirming late, not early.

What none of the four has neutralised is procurement reform. The General Services Administration's OneGov programme directs agencies to buy as one customer with pre-negotiated pricing across some $490bn of annual spend, explicitly reducing bespoke contract opportunities, with about 1,600 contracts allowed to expire in fiscal 2025, while the Office of Management and Budget wants IT contractor pricing and utilisation data shared between agencies. And the money is not settled: the House Appropriations Committee approved a $1.07trn defence bill on 24 June, but no floor vote is scheduled and Senate appropriators are deadlocked ahead of the 30 September deadline, with experts warning the much-cited $1.5trn defence budget is unlikely to materialise.

The setup

Where it stands — Two beat-and-raise quarters have re-rated CACI and SAIC; Leidos has rallied 34% off its low but its multiple has not. Would confirm — Leidos holding full-year adjusted EPS at $12.20–12.50 with operating margin back above 12% next quarter. Would invalidate — CACI missing its $10.65–10.85bn fiscal 2027 revenue guide, or funded backlog reversing the 28.6% gain. Watch next — 30 September 2026 appropriations deadline; SAIC's next quarterly report in early September. Valuation — Leidos 12.7x trailing / 11.1x forward vs 16–17x in 2025; CACI 26.5x trailing vs a 19–24x two-year range.