FY2027 begins October 1, 2026, and as of September, Congress had not enacted full-year appropriations, so the year will most likely open under a continuing resolution rather than final funding. That typically means slower new-award activity, cautious handling of option years, and continuity purchases moving first. Contractors who confirm their SAM registration, track expiring contracts, and watch the simplified acquisition lane can still compete in this window.
Congress had not passed full-year FY2027 appropriations as of September 2026. The House passed a continuing resolution funding the government through December 4, and the Senate passed its own version through December 11. Those two versions still need to be reconciled before September 30, and neither had been signed as of this writing.
This pattern is not unusual. The federal government has operated under at least one continuing resolution in nearly every fiscal year since 1999. Budget analysts generally expect a continuing resolution to carry the opening of FY2027, with a funding lapse possible but not the likely outcome. Either way, contractors should plan around a temporary-funding start rather than assume full-year appropriations will be in place by October 1.
A continuing resolution generally holds agency spending to prior-year levels and restricts new starts. The Government Accountability Office has found that continuing resolutions cause real delays and real costs. In one documented case, a facilities contract that was expected to cost about $579,000 rose to roughly $1.45 million after continuing-resolution-related delays pushed it later into the year.
Option years carry particular risk during this stretch. An option generally cannot be exercised if it requires new funding beyond what a continuing resolution provides, and an unexercised option can lapse at the fiscal year boundary. Agencies also tend to push new contract start dates later in the year to avoid delaying awards outright, which is part of why federal contracting has historically been slower in the first quarter and busiest in the fourth.
Continuity is the theme. Agencies keep essential services running, exercise option years where funding allows, and continue purchases through existing contract vehicles and schedules. Recompetes on contracts that are already funded and proven tend to move forward as well.
The simplified acquisition lane stays active too. The simplified acquisition threshold is $350,000 and the micro-purchase threshold is $15,000, both unchanged going into FY2027, and small business set-asides remain required for purchases in that range whenever two or more qualified small businesses are likely to bid. That combination keeps a meaningful amount of federal buying accessible to small businesses even while larger, more discretionary awards wait on final funding.
Get positioned now rather than waiting to see what happens on October 1.
Will the government shut down when FY2027 begins?
It's possible but not the expected outcome. As of September, the House and Senate had each passed a continuing resolution, though on different terms, and both chambers still needed to reconcile the differences before September 30.
What happens to my existing contract if FY2027 opens under a continuing resolution?
Work that's already funded generally continues. Continuing resolutions are designed to keep current operations running, so active contracts, especially those not needing new money, typically proceed without interruption.
Can my option year still be exercised under a continuing resolution?
It depends on funding. An option that requires new money beyond what the continuing resolution provides generally cannot be exercised until full-year funding or a later continuing resolution covers it, and an unexercised option can lapse at the fiscal year boundary. Raise the question with your contracting officer early.
Is now a bad time to pursue new federal opportunities?
Not for every opportunity. Larger discretionary awards tend to wait for full-year funding, but continuity purchases, recompetes, and simplified acquisitions under $350,000 keep moving. Positioning now for the work that does move puts you ahead of contractors who wait until funding clears.
Use the next few weeks to get ready rather than wait and see. Confirm your SAM registration, flag any option years or recompetes coming due early in FY2027, and start tracking the opportunities most likely to move during a slower first quarter. USFCR has guided over 500,000 businesses since 2010, and the USFCR Advantage helps contractors track expiring contracts, award history, and forecasted opportunities in one place, so you can see what's moving first instead of finding out after the fact.