Continuing Resolution (CR)

How It Works

Continuing Resolutions have become the norm rather than the exception, Congress has failed to enact all 12 regular appropriations bills before the October 1 start of the fiscal year every year since FY1997. CRs typically fund agencies at the previous year's enacted level (sometimes with a small across-the-board reduction) and extend from a few days to as long as a full fiscal year. Under a CR, agencies generally cannot start new programs, increase production rates, or enter new contracts above prior-year scope, the "anomalies" section of each CR lists specific exceptions that Congress grants for particular programs. For federal contractors the effects are significant: new contract awards slow or stop, option exercises may be delayed, and agencies default to short-duration extensions of existing vehicles rather than commit to multi-year deals they cannot fund. The longest CR in recent history covered most of FY2013 and dragged into March 2013; full-year CRs also covered parts of FY2007 and FY2011. When CRs lapse without replacement (because Congress cannot agree on extension), the government shuts down, the December 2018-January 2019 shutdown at 35 days is the longest in U.S. history and cost an estimated $11 billion in lost economic output per the CBO, of which roughly $3 billion was permanently lost. The 2013 shutdown (16 days) affected roughly 850,000 federal workers and most federal contractors tied to shutdown agencies. Under CRs, agencies generally cannot exercise options that represent increases over prior-year scope, cannot enter new contracts above prior-year levels, and cannot make multi-year commitments beyond the CR end date, restrictions that cause contract award volume to slump during extended CRs and surge in the post-omnibus quarter once full-year funding is enacted. Contractors in IT, professional services, and construction are most affected because their new-start obligations are concentrated in the first quarter of the fiscal year.

Related Terms

• Appropriation, A law passed by Congress that authorizes federal agencies to spend a specific amount of money for a specific purpose during a defined period.
• Government Shutdown, A funding gap that occurs when Congress fails to pass appropriations or a continuing resolution, forcing "non-essential" federal employees to be furloughed and many services to halt.
• Omnibus Appropriation, A single massive spending bill that combines multiple regular appropriations bills, passed late in the budget cycle to avoid a government shutdown.