Fiscal year 2027 began on October 1 with the government open, which is more than contractors got a year ago. The 2025 lapse ran 43 days, from October 1 to November 12, and the Department of Defense did not see its full-year FY2026 appropriation until February 3, 2026, when Public Law 119-75 was signed. Against that record, a stopgap signed a full month early looks like good news, and for anyone whose cash depends on invoices being paid in October, it is.
For anyone whose pipeline depends on something new getting started, it is a 72-day hold. The Continuing Appropriations and Extensions Act, 2027, signed September 2 as Public Law 119-103, funds the government at FY2026 rates through December 11. The Congressional Research Service overview of the act, dated September 17, walks through the provisions a defense contractor should read before planning this quarter. For the next ten weeks, the government being open settles very little. The question that sorts a pipeline is whether the work you are chasing existed in FY2026.
The CR funds what already exists, and nothing more
Section 102 is the defense provision. It bars new production of items not funded for production in FY2026 or earlier, bars production rate increases above what FY2026 money sustained, bars initiating or resuming any activity without FY2026 funding, and bars starting a multiyear procurement that uses advance procurement for economic order quantity unless money is specifically appropriated later. CRS notes this language is similar to prior years' CRs. Section 104 carries the government-wide ban on new starts, and section 110 directs agencies to take only the most limited funding action needed to keep existing activities going.
There is one difference from last autumn that works in a contractor's favor. The test is FY2026 funding, and FY2026 ended with a real defense appropriations act rather than a stopgap. A program that got its first dollars in that act should read as a continuing activity under section 102, even if it is barely a year old. Confirm it with your contracting officer rather than assuming.
The pressure point is the other direction. If the effort you are positioned for appears for the first time in the FY2027 budget request, it waits for a full-year bill. As of the CRS report, the House Appropriations Committee had reported all twelve FY2027 bills and the House had passed three: Military Construction-VA, Agriculture, and National Security-State. Defense was not among them. The Senate Appropriations Committee had reported none. That is the record going into a December 11 deadline, and it should set expectations for how soon a new-start award can be signed.
Under this CR, an effort funded in FY2026 can keep going and an effort first requested for FY2027 waits for Congress.
What "most limited funding action" does to your cash
Existing work keeps moving, but it moves in smaller pieces. Agencies typically apportion a CR's money pro rata for the portion of the year it covers, and section 110 tells them to spend no faster than continuing an activity requires. Expect that to show up as option periods exercised with partial funding and incremental modifications sized to the CR window rather than to the year.
Two clauses decide how much of that risk lands on you, and both are worth rereading tonight. As the codified FAR at acquisition.gov states them (FAC 2026-01), 52.232-18, Availability of Funds, says the government incurs no legal liability for payment until funds are made available to the contracting officer and the contractor receives written notice of it. Work performed ahead of that notice is work you are financing. On cost-type contracts, 52.232-22, Limitation of Funds, requires written notice once you expect the next 60 days of costs, plus costs already incurred, to exceed 75 percent of the amount allotted, and the government is not obligated to reimburse costs above the allotment. From today, a 60-day look-ahead already runs past December 11. Check your own contract's clause text, because the FAR overhaul's deviations are renumbering parts of the regulation, but the arithmetic does not change.
The operational translation is short. Map every active contract to its funded amount and funded-through date, not its ceiling. Where the funded amount runs out before the end of December, send the notice early and in writing; a contracting officer working through a pile of CR modifications acts on the letters in front of them. Hold new hires and material buys that only make sense if a new start lands before Christmas. And if your line of credit is sized to a normal 30-day payment cycle, ask your bank now about the December case, while you are still asking from strength.
The other news, and the data you cannot see yet
Two other developments from the past three weeks matter, and both point the same way: this quarter rewards contractors who read primary sources over people who summarize them.
On September 18, the FAR Council published four more Revolutionary FAR Overhaul proposed rules in the Federal Register, covering Parts 8, 12, 13, 15, 38, 44, and 51; Parts 16, 17, and 35; Parts 9, 27, and 47; and Parts 14, 28, 36, and 52. Comments on all four close October 19. With the June batch, that is eight of the twelve rules the Council has said it will propose. Commercial buying, simplified procedures, negotiated procurement, contract types, options, responsibility, and subcontracting policy are all in this round, which makes it the batch a small business has the most standing to comment on. MacZine's earlier look at what the overhaul did to SDVOSB set-asides shows how much a single rewritten sentence can move.
The second is a warning about evidence. Anyone building a recompete list from DoD's year-end buying should wait. Pulled through MacTech's federal-market MCP server on October 8, USASpending shows DoD contract obligations of $92.3 billion dated September 2025 and essentially nothing for September 2026, because FPDS holds DoD contract data for 90 days before public release. Civilian agencies have no such delay, and their Septembers are already visible: Homeland Security at $11.4 billion against $12.1 billion a year earlier, Veterans Affairs at $9.4 billion against $10.1 billion, GSA at $5.5 billion against $4.2 billion. Those figures are a week old and may still rise as late actions post, but they are real, and a contractor with civilian customers can plan from them now. The DoD picture arrives around early January, after the CR has either been extended or replaced.
That timing is the whole quarter in miniature. The money that defines your next year was obligated in September and will not be visible until January; the authority to start new work arrives no earlier than December 11 and possibly later. Between those dates, the contractor who knows exactly which of its efforts were funded in FY2026, exactly how many dollars are on each contract, and exactly when it must put a limitation-of-funds letter on a contracting officer's desk is the one still billing in January. Put December 11 on the calendar, and put the date 60 days before your funding runs out right next to it. ◆