A New Fiscal Year Begins: Key Considerations for Government Contractors

The useful part

October 1 marks the beginning of the federal government's new fiscal year and, for government contractors, the start of a new cycle of contracting, funding, and compliance activity. Agencies may have new appropriations available, but those funds may not immediately translate into contract awards or funding modifications. This year, Congress has not enacted all regular FY 2027 appropriations, and the federal government instead is operating under a continuing resolution (CR) through December 11, 2026.

How it works

• Contractors thus should not assume that the arrival of October 1 necessarily means that all anticipated funding is immediately available.
• Review the Funding Status of Existing Contracts One of the first priorities for contractors should be reviewing the funding status of existing contracts and task orders.
• Regulation (FAR) provides that, when a contract is fully funded, the government generally obligates funds to cover the contract price or estimated cost and fee.
• Incrementally funded contracts, by contrast, are funded only to the amount allotted for the applicable increme...

Details worth keeping

The start of a new fiscal year may result in new funding becoming available for contracts that were previously funded through the end of the prior fiscal year, but the timing and amount of that funding will depend on the applicable appropriations and contract terms.