Fiscal Year (Federal)

The federal fiscal year (FY) is the twelve-month accounting period used by the United States government for budgeting, appropriations, and financial reporting. It runs from October 1 through September 30 of the following calendar year and is designated by the calendar year in which it ends. For example, Fiscal Year 2025 runs from October 1, 2024 through September 30, 2025. This cycle governs when agencies receive spending authority, when contracts must be funded, and when unobligated balances expire. Understanding the federal fiscal year is essential for any contractor selling to the government because it directly shapes agency purchasing patterns throughout the year.

What is the Federal Fiscal Year?

Congress established the current October-to-September fiscal year through the Congressional Budget Act of 1974 (2 U.S.C. 631 et seq.), which also created the modern budget process. Before 1977, the federal fiscal year ran from July 1 to June 30.

The budget cycle leading up to each fiscal year follows a structured calendar. The President submits a budget request to Congress in early February, approximately eight months before the fiscal year begins. Congressional committees then hold hearings, mark up authorization and appropriations bills, and ideally pass twelve individual appropriations bills before October 1. In practice, Congress rarely completes all twelve bills on time, resulting in Continuing Resolutions (CRs) or omnibus spending packages that fund government operations past the start of the new fiscal year.

For annual appropriations (such as Operations and Maintenance funding), agencies may obligate funds only within the fiscal year for which they were appropriated. Once September 30 arrives, unobligated annual funds expire and enter a five-year adjustment period before cancellation. Multi-year appropriations such as RDT&E (two years) and procurement (three years for most DoD programs) follow different expiration schedules set by their authorizing legislation.

Why it matters for contractors

The federal fiscal year creates distinct patterns in contracting activity that experienced government contractors track carefully. The fourth quarter (Q4), covering July through September, consistently produces the largest volume of new contract awards as agencies race to obligate expiring annual funds before September 30. This Q4 surge is not a myth: Office of Management and Budget data and agency spending dashboards routinely show 30 to 40 percent of annual obligations occurring in the final quarter.

The first quarter (Q1, October through December) is often slow. If Congress has not passed appropriations before October 1, agencies operate under a CR, which limits new starts and holds spending to prior-year rates. Contractors who understand this dynamic plan their pipeline accordingly, front-loading proposal submissions to align awards with Q4 or positioning for early Q1 awards when full appropriations do pass.

New contractors should also note that many contract vehicles, including IDIQ and GWAC task orders, can be funded with any-year dollars provided the base contract was awarded in the correct fiscal year. The fiscal year in which a task order is funded, not the date of the base vehicle, determines which appropriation must be used.

Example

A federal IT services firm tracks agency procurement forecasts published each spring. It identifies that a particular civilian agency plans to award a major help desk services contract in Q4 of the current fiscal year, funded with annual O&M appropriations that will expire September 30. The firm schedules its capture and proposal activities to ensure a submission is ready by August so the agency has time to evaluate and award before the fiscal year closes.