Event#434tier 2live in productionNew

`federal contract recompete risk`

cadence: Dailydata: mediumshort only

2017

Belo, F., Gala, V. D., Salomão, J., & Vitorino, M. A. (2017). "Government Spending, Political Cycles, and the Cross Section of Stock Returns." Review of Financial Studies, 30(2), 605-651.

Read the paper →

What it checks

When a big government contract is about to end and no renewal has landed yet, the contractor stock often drifts down on recompete risk.

Mechanism

Federal contract within 90 days of period-of-performance end without a follow-on award (>= 25% of expiring amount) creates recompete-cliff downside risk.

No production champion data for this family yet. Stats appear once the discovery pipeline promotes at least one strategy with this family tag, or once a multi-family blend that includes it earns a champion slot.

Signal rule

short focal when sum of unrenewed contract exposure >= $10M / $50M / $100M; hold 30/60/90d

Data dependencies

federal_contracts
Worker data table, see services/worker schema.
daily_prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.

Expected edge

Paper alpha: ~5-12% per recompete event
Paper Sharpe: ~0.7
Paper window: T+1 to T+90d

Belo et al. 2017 RFS: government spending cycles drive cross-section returns; this isolates the recompete-cliff downside.

Example tickers where this is likely to fire

LMT BA GD NOC RTX

Illustrative only, the signal fires based on the live data, not a fixed list.

Related families

federal contract award driftEvent-Driven

Federal contract awards lock in revenue visibility 30-60 days before the sell-side catches up. Strongest in defense primes (LMT, RTX, NOC, GD, BA, LHX, HII) and IT services (LDOS, SAIC, CACI, BAH). A contract award whose total_obligation lands in the top decile of the ticker's prior 5y award distribution opens a long T+1, held 30/60/90 days.

federal contract prime subcontractor momentumEntity-Graph / Government

Government contract winners earn positive abnormal returns; the effect propagates to subcontractor-class firms in the same NAICS but the market under-prices the second-order beneficiary.

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federal contract recompete risk