Continuing Resolution

A Continuing Resolution (CR) is a type of appropriations legislation passed by Congress to temporarily fund federal government operations, typically at the prior fiscal year's spending rate, when the regular appropriations bills have not been enacted before the start of the new fiscal year on October 1.

What is a Continuing Resolution?

The federal government requires congressional appropriation before agencies can legally obligate funds. When Congress fails to pass appropriations bills by October 1, it has two choices: allow a government shutdown (agencies stop operating, only functions funded outside the annual appropriations process continue) or pass a CR to extend prior-year funding temporarily while negotiations continue.

CRs have become the practical norm in federal budgeting. In only a handful of years since the 1980s has Congress enacted all 12 appropriations bills before October 1. CRs range from brief weeks-long stopgaps to extended continuing resolutions lasting months. A "full-year CR" funds agencies for the entire fiscal year at prior-year rates, effectively freezing spending at the previous year's level.

For government contractors, CRs create meaningful constraints. Under a CR, agencies typically may not start new programs, significantly expand existing contracts, or award contracts that would obligate funds at rates exceeding prior-year levels. Agencies operating under a CR can generally extend or incrementally fund existing contracts, but beginning large new contracts, especially ones that did not exist in the prior year, is legally constrained without specific CR exceptions.

The practical effect is that CR periods see slower contract award activity. Agencies may delay releasing RFPs, delay awarding new contracts, and operate cautiously to avoid legal exposure under the Antideficiency Act. Once a full appropriation passes, a surge of pent-up contract awards typically follows as agencies rush to execute programs delayed during the CR period.

Why Continuing Resolutions matter for government contractors

CRs directly affect the timing and volume of federal contract awards. Contractors who track CR status and understand agency-specific funding sensitivities can avoid submitting proposals into CR-constrained award periods and adjust their pipeline timing expectations accordingly.

Example

Congress enters FY2026 without completing appropriations on October 1, 2025, passing instead a 90-day CR at FY2025 rates. A contractor scheduled to receive a $12M new task order award in October learns that the contracting agency cannot initiate a new task order that did not exist in FY2025 under the CR. The award is delayed until the full-year appropriation passes in January 2026. The contractor adjusts its revenue forecast and notifies its recruitment team that a planned hiring wave needs to shift to Q1 2026.

Frequently Asked Questions

Can the government still award contracts during a CR?

Yes, but with significant restrictions. Agencies may continue awarding task orders against existing IDIQ contracts, exercising existing option years, and incrementally funding ongoing contracts. What is generally prohibited is starting entirely new programs or award actions that would obligate funds at rates exceeding what was appropriated in the prior fiscal year, without specific CR authority.

What is the difference between a CR and a government shutdown?

A CR is a legislative solution that avoids a shutdown, it provides appropriations authority to keep agencies funded. A government shutdown occurs when neither a CR nor regular appropriations bills are enacted and appropriations authority lapses; agencies must furlough non-essential employees and halt most operations. The two are distinct events: a CR prevents a shutdown; the absence of a CR causes one.

How does a CR affect a contractor already under contract?

Existing contracts typically continue to be funded and performed during a CR, assuming the funding was already obligated before the CR period began. Contracts being incrementally funded may receive additional incremental funding during a CR period. The contractor's obligation is to perform; the government's obligation is to fund performance according to contract terms. Disputes about contractor rights during CR periods may invoke the Changes clause.

How long do CRs typically last?

CRs range from days to the entire fiscal year. Short CRs ("bridge CRs") last days to weeks, buying time for appropriations negotiations. Medium CRs last one to three months. Full-year CRs fund agencies for the entire fiscal year when Congress cannot reach agreement on regular appropriations bills. The average CR duration has lengthened over the past two decades as budget negotiations have become more protracted.