Continuing Resolutions: How Federal Budget Uncertainty Affects Your Contracts

Congress hasn't passed all 12 annual appropriations bills on time since 1996. That's not a typo — the last time the federal government entered a new fiscal year with fully enacted spending authority for every agency was 29 years ago, for FY1997. Since then, every fiscal year has begun with at least some agencies operating on borrowed time, funded by a continuing resolution rather than a real budget.

The numbers from the Peter G. Peterson Foundation are stark: since FY1998, Congress has passed an average of five continuing resolutions per fiscal year. The government has operated under a CR for an average of 117 days — roughly four months — before full-year appropriations finally get signed. In 13 of the past 15 fiscal years, Congress has passed zero appropriations bills by October 1.

This isn't dysfunction you can outrun. It's the operating environment. And if you don't understand exactly what a CR does to the contracting pipeline — what agencies can and cannot do, which contracts stall and which continue — you're building your GovCon business on a foundation you haven't inspected.

Those are big-program statistics. The story for small businesses is sharper. You have less capital, thinner margins, and no enterprise-wide revenue base to absorb a multi-month contract freeze. A CR that makes a large prime contractor's fiscal year complicated makes a small business's fiscal year dangerous.

A continuing resolution is an appropriations law in the form of a joint resolution that provides temporary budget authority to federal agencies when Congress hasn't passed the full-year spending bills by the start of the fiscal year on October 1. The CR doesn't appropriate a specific dollar amount. It provides a formula — the "rate for operations" — calculated from what was enacted in the prior fiscal year.

Think of it as the government's equivalent of rolling over an expired contract rather than signing a new one. The agency keeps running at roughly the prior year's pace. It doesn't get new money for new programs. It doesn't get certainty about the future. It just gets permission to continue what it was already doing, for as long as the CR lasts.

CRs can also include anomalies — targeted exceptions written directly into the CR legislation that allow specific programs to spend at rates higher or lower than the formula. A new ship class, a defense modernization program, a specific agency initiative: if Congress wants to protect it from the CR restrictions, they add an anomaly. Without one, every program gets the same formula treatment.

The rules under a CR are set by the CR legislation itself, OMB Circular A-11 (Section 123), and the apportionment bulletins OMB issues at the start of each CR period. Contracting officers aren't making judgment calls — they're constrained by explicit legal authority.

The phrase "new start" is key. Under a CR, if a program didn't exist — or wasn't funded — in the prior year, it cannot begin. That's a hard stop, not a suggestion. It kills procurement timelines on new initiatives regardless of how well-funded they would be in a full-year appropriation.

There's a counterintuitive flip side: agencies also generally cannot terminate existing contracts during a CR period, even inefficient ones. The law that prevents them from starting new things also locks in much of what they're already doing. Your existing contracts are protected by inertia.

The new-starts prohibition is the single biggest pipeline killer. When agencies enter a CR, every solicitation for a program that doesn't have prior-year funding either gets delayed or killed. That includes new task orders under existing IDIQs for novel requirements, fresh indefinite-delivery vehicles covering expanded scope, and any capability the agency is trying to add for the first time this year.

But the impact doesn't stop at new starts. Even for programs that ARE eligible to proceed under a CR, contracting officers slow down. When they don't know how long the CR will last, they're hesitant to obligate funds they might need to return later if the final appropriation comes in lower than the prior-year rate. The result is a voluntary slowdown on top of the mandatory restrictions.

For small businesses pursuing new work, the practical effect is that the award cycle extends unpredictably. A solicitation that was scheduled for release in October might not go out until March. An award that was expected in November might slip to April. You can't bill for delays. You can't staff up for work that hasn't been awarded. The pipeline you tracked in September looks nothing like the pipeline you see in January.

SBIR and STTR programs face an additional complication: their statutory authorities are subject to separate reauthorization. During the October 2025 government shutdown, both SBIR and STTR authorities lapsed entirely, making new SBIR/STTR awards impossible regardless of an agency's CR status — a layered impact that hit small R&D firms especially hard.

If you already have a contract in place, a CR doesn't terminate it. But it does complicate it in ways that create real operational risk.

The apportionment math also creates a hidden risk when final appropriations come in lower than the prior-year rate. If an agency was spending at the prior-year rate during a CR — say $10 million per month — and the final appropriation comes in at $90 million for the year rather than $120 million, the agency has over-obligated by $30 million against what it's actually authorized. The scramble to reconcile that gap means halting further obligations, often abruptly, late in the fiscal year.

The past two fiscal years illustrate how severe CR disruption has become. FY2025 was funded entirely by continuing resolutions — the last option year on a very long government contract. FY2026 opened with the longest government shutdown in U.S. history.

The combined impact on FY2026 procurement was severe. For approximately four months — October 1 through January 30 — most agencies could not conduct normal contract award activity. The Congressional Budget Office estimated that the 43-day shutdown alone caused $11 billion in cumulative GDP loss.

Large prime contractors absorb CR disruptions. They have enterprise-wide revenue streams across multiple agencies, substantial lines of credit, and financial teams dedicated to managing apportionment cycles. They prepare for CRs the way airlines prepare for weather delays — with redundancy, reserves, and contingency protocols.

Small businesses don't have that infrastructure. Government contractors typically operate on profit margins around 8%. A two-month billing disruption doesn't compress your margin — it eliminates it and starts drawing down reserves you may not have.

The structural answer to these vulnerabilities isn't to avoid government contracting — it's to understand which certifications, vehicles, and agency relationships give you the most protection during budget uncertainty. A quick eligibility check can reveal set-aside programs that keep you active even when new-start contracts freeze. An 8(a) sole-source relationship, for instance, lets you pursue work outside the competitive award cycle that CRs most severely disrupt.

Surviving a CR period isn't about luck or waiting it out. The contractors who weather budget uncertainty well are the ones who planned for it before it arrived. Here's what that looks like in practice.

The contractors who navigate CR periods best aren't necessarily the ones with the most cash reserves — they're the ones with the best information. Knowing which agencies have enacted appropriations versus which are operating under CR authority changes everything about where you should focus your BD energy during a disruption.

During a period when most of the government is frozen, some agencies have money to spend and the authority to spend it. Agencies covered by enacted appropriations — often because their bills moved first through Congress or because they received anomalies — can continue awarding contracts at normal pace while others stall. Knowing which accounts are live versus frozen isn't intuitive; it requires tracking the specific legislative history of each appropriations bill.

CapturePilot's Intelligence features give you this picture across your target agencies — updated in near real-time as spending patterns shift. You can see which agencies are actively awarding contracts, which are frozen, and where spending is accelerating in advance of a fiscal year-end crunch. That intelligence turns CR uncertainty from a passive threat into something you can actually navigate.

Your pipeline management should reflect your CR exposure. Opportunities at agencies operating under CR authority carry higher timeline risk than opportunities at agencies with enacted appropriations. If your pipeline weights heavily toward CR-frozen agencies, the bid/no-bid decision calculus changes — pursuit cost is the same, but timeline certainty is far lower.

The bigger picture: the contractors who thrive across multiple CR cycles treat budget uncertainty as a permanent market condition, not an anomaly. They build agency diversification into their three-year plan, size their cash reserves against CR scenarios rather than optimistic award timelines, and use market intelligence to shift BD energy dynamically as appropriations status changes throughout the year.