Ike HolleyThe Continuing Appropriations and Extensions Act, 2027 (P.L. 119-103), signed September 2, funds the government from October 1 through December 11, 2026 at fiscal year 2026 rates. For a defense founder the practical effects are three: no new starts, no production increases, and slower contracting while offices wait for full-year numbers. Work already funded with prior-year money, especially two-year research money, can keep moving. Plan your runway as if new money arrives no earlier than January, and ask each program office which year’s money your effort depends on.
Every fall, founders hear the words “continuing resolution” and ask whether the government is shutting down. This year the answer is no, at least until December 11. The more useful question is what a continuing resolution does to the specific dollars you are waiting on, and the answer to that is narrower and more predictable than the headlines suggest.
What was actually enacted?
H.R. 6500 passed the House 370 to 48 on September 1 and was signed into law as P.L. 119-103 on September 2. Division A provides continuing appropriations for all twelve regular appropriations bills from October 1 through December 11, 2026, a 72-day period. If Congress does not pass full-year bills or another continuing resolution by then, a funding gap begins December 12.
Funding under a continuing resolution runs at the prior year’s rate, not the new request. For the Department that means operating at roughly fiscal year 2026 levels against a much larger fiscal year 2027 request. Congress added a handful of specific exceptions, called anomalies, mostly for shipbuilding programs such as Columbia-class and Virginia-class submarines. If your work is not named in an anomaly, it is operating under the standard rules.
What does a continuing resolution stop?
The standard defense restrictions are the part that matters to a technology company:
- No new starts. A program or project that did not have funding in fiscal year 2026 cannot begin with continuing resolution money. If your opportunity depends on a line that first appears in the 2027 request, it waits.
- No production increases. Items that were not funded for production in 2026 cannot start production, and rates cannot rise beyond what 2026 funding sustains.
- No new multiyear procurements relying on advance procurement or economic order quantity funding.
Notice what is not on that list. Research, development, test and evaluation that was already under way can continue. Contracts already awarded keep performing. Options on existing contracts can be exercised, though often in smaller increments than planned.
Which money still moves in October?
This is the question I would want every founder to ask, because it has a real answer. Federal money has a period of availability. Operation and maintenance funds are generally one-year money. Research, development, test and evaluation funds are two-year money. Procurement is generally three.
That means a program office that obligated only part of its fiscal year 2026 research funding by September 30 may still be holding usable 2026 dollars in October, November, and beyond. A continuing resolution does not touch that money. If your SBIR, your prototype, or your follow-on is funded from a prior-year research line that is still available, its timing depends far more on the contracting shop’s workload than on Congress.
If instead the effort depends on fiscal year 2027 money, you are waiting on two things: the continuing resolution rate, which is spread across the year, and each office’s decision about how much of it to commit before it knows its full-year number.
“Is this effort funded with prior-year money that is still available, or does it depend on fiscal year 2027 funds?” Program managers can usually answer that in one sentence, and the answer tells you whether October is a working month or a waiting month.
What actually happens inside a program office under a CR
Offices are rarely told to stop. They are told how much they can spend, and they spend it cautiously. Money under a continuing resolution is typically apportioned in portions tied to the length of the resolution, so an office gets a slice of its prior-year rate rather than its full-year plan. Nobody wants to commit that slice to something the full-year bill might not support.
So what you tend to see is not a freeze but a narrowing. Existing contracts get priority. Options get exercised for the minimum period. New awards that can wait, do. Contracting officers who just finished the September surge spend October closing out year-end actions, and the new-award pipeline restarts slowly.
None of this is personal, and none of it is a signal that your program office has lost interest. It is the ordinary behavior of people managing money they know is incomplete.
What should a founder do between now and December 11?
Now, before October 1. For every pursuit that matters to next quarter’s revenue, find out which year’s money it depends on. Sort your pipeline into prior-year funded, fiscal year 2027 dependent, and unknown. The unknowns are the conversations you have not had yet.
October. Use the quiet. The first weeks of a fiscal year are one of the best times to get a real conversation with a program office, because the September crush is over and nobody is being asked to spend new money yet. That is when the 2027 plan is being built, and it is where the next eighteen months are decided.
November. Watch for the next decision. By mid-November it is usually clear whether Congress is heading toward full-year bills, another continuing resolution, or a gap. Program offices will be reading the same signals you are, and they will tell you plainly how they plan to handle each case if you ask.
Runway. Plan cash as if fiscal year 2027 money for new work arrives no earlier than January. If it comes sooner, you have margin. If there is a second continuing resolution, and in recent years that has been common, you have not bet the company on a date nobody controlled.
What not to do
Do not tell your board the government is closed for business. It is not, and work funded with available money keeps moving. Do not tell them nothing has changed, either. A company whose next award is a new start in the 2027 request has a real timing problem, and it is better named in September than discovered in February.
And do not spend the quarter waiting. The companies that come out of a long continuing resolution in good shape are the ones who used it to get into next year’s plan, because a continuing resolution delays the money without delaying the decisions about where it will go.
For the underlying mechanics of how appropriations become obligations, our guide to the DoW budget cycle covers the full calendar.
Sources: Continuing Appropriations and Extensions Act, 2027 (H.R. 6500, P.L. 119-103), signed September 2, 2026; Congressional Research Service, Overview of Continuing Appropriations for FY2027 (R49353); House Appropriations Committee section-by-section summary, September 2026.