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. After the heightened procurement activity that often accompanies the September 30 fiscal year-end, contractors should use the beginning of the new fiscal year to assess their existing contracts, monitor new procurement opportunities, and confirm that their performance and compliance practices are aligned with the government’s new fiscal-year requirements.

The beginning of a fiscal year also can present a different set of challenges from those contractors face at year-end. 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. 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. 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.

The Federal Acquisition 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 increment. Contractors working under incrementally funded arrangements should therefore closely monitor the amount of funding currently obligated and the applicable limitations on performance.

Contractors also should review provisions addressing the availability of future-year funds. FAR 32.703-2 permits certain contract actions to be initiated before funds for the new fiscal year are available when the contract contains the appropriate availability-of-funds clause and specified conditions are satisfied. The government generally may not accept supplies or services under a contract conditioned on the availability of funds until the contracting officer provides the required notice that funds are available.

The practical lesson is that contractors should distinguish between anticipated funding and funding that has actually been obligated and made available under the contract. Program personnel may expect funding to become available, but contractors should confirm the contractual status of that funding before incurring costs or proceeding with work that depends on it.

Watch for Continuing Resolutions

The beginning of the fiscal year can be particularly complicated when Congress has not enacted regular appropriations for one or more agencies. That is the case for FY 2027, with the federal government currently operating under a CR that provides temporary funding through December 11, 2026.

A continuing resolution is not necessarily equivalent to a full-year appropriation. The terms of the particular CR control and the available funding may be limited in amount, duration, or scope. Federal acquisition regulations recognize that funding under a CR may be insufficient to support the full amount of a contract action that an agency ultimately intends to undertake.

Contractors should therefore pay close attention to the funding authority applicable to their customers and to any agency guidance issued during a CR. Planned procurements may be delayed, contract actions may be structured differently, and anticipated increases in funding may not occur until regular appropriations are enacted.

Revisit Periods of Performance and Options

The beginning of a fiscal year is also an appropriate time to review contract periods of performance and upcoming option dates. Contractors should identify contracts with options that may be exercised during the new fiscal year and assess whether the government has provided any indication regarding its plans.

The relationship between contract performance and fiscal-year funding can be particularly important for service contracts. FAR 37.106 generally provides that service contracts funded by annual appropriations may not extend beyond the end of the fiscal year of the appropriation unless an applicable statutory authority permits the contract to cross fiscal years. The FAR also permits certain severable service contracts, options, and orders to begin in one fiscal year and end in the next when the applicable requirements are satisfied.

Contractors should therefore review whether upcoming options and extensions are properly structured and funded, rather than assuming that the government’s continued need for the services automatically permits performance into the new fiscal year.

Assess the New Procurement Pipeline

The beginning of the fiscal year can also be an important period for business development. Agencies and contracting offices begin implementing their acquisition plans for the new fiscal year, and contractors may see new solicitations, requests for information, sources-sought notices, and other procurement activity.

Contractors should review agency procurement forecasts and identify opportunities that align with their capabilities. They also should monitor solicitations for changes in requirements, evaluation criteria, contract structure, and applicable clauses. A new fiscal year can bring a fresh procurement cycle, but it can also bring changes in agency priorities and acquisition strategies.

For contractors that participated in competitions at the end of the prior fiscal year, October also may be when bid protest deadlines, debriefings, corrective actions, or reevaluations are occurring. Contractors should continue to monitor those procurements rather than assuming that the close of the fiscal year ends the matter.

Reevaluate Pending Claims and Contract Changes

The beginning of a new fiscal year is a natural point to review unresolved contract matters carried over from the prior year. Contractors should evaluate pending requests for equitable adjustment, claims, delays, constructive changes, differing site conditions, and other matters affecting contract price or schedule.

This review can be particularly important where the government has issued a year-end modification or funding action. Contractors should confirm that outstanding claims and potential entitlements have not inadvertently been waived or released and that any required notices have been preserved.

A new fiscal year also may bring new government personnel or changes in contracting office responsibilities. Contractors should ensure that important contract issues are adequately documented so that changes in personnel do not result in the loss of institutional knowledge.

Review Compliance Requirements

Contractors also should use the beginning of the fiscal year to review their compliance obligations. New statutes, regulations, agency policies, and contract clauses may become applicable during the new fiscal year, and existing contracts may be modified to incorporate new requirements.

Depending on the contractor and its contracts, this review may include cybersecurity requirements, supply-chain restrictions, domestic sourcing requirements, labor requirements, small-business subcontracting obligations, organizational conflicts of interest, ethics requirements, and reporting obligations.

Contractors should avoid assuming that every new federal requirement automatically applies to every existing contract. Applicability can depend on the specific statute or regulation, the effective date, the contract type, and the terms of the particular contract.

Reconcile Accounting and Contract Data

The beginning of the fiscal year is also a good time to reconcile contract and accounting records. Contractors should confirm that prior-year billings have been submitted, outstanding receivables are being tracked, and contract funding information is consistent with internal financial records.

For cost-reimbursement contractors in particular, maintaining accurate records at the beginning of the new fiscal year can help establish a reliable baseline for tracking costs, indirect expenses, funding, and billings throughout the year.

Contractors should also distinguish between the government’s fiscal year and their own fiscal year. Many accounting and indirect cost obligations are tied to the contractor’s fiscal year rather than the government’s fiscal year, so internal compliance calendars should reflect both.

Preserve Documentation from the Prior Fiscal Year

Finally, contractors should make sure that the transition into a new fiscal year does not result in the loss of important records from the prior year. Communications concerning government direction, funding, modifications, performance issues, schedule impacts, invoices, and potential claims may become relevant months or years later.

This is especially important where the government has requested performance while funding or a modification remains pending. The contractor’s records should clearly establish what was requested, what contractual authority existed, what funding was available, and what costs or performance impacts resulted.

Conclusion

The beginning of the federal fiscal year presents contractors with an opportunity to reset and plan for the year ahead. Contractors should review funding and periods of performance, monitor developments and plan for the December 11 expiration of the current CR, evaluate new procurement opportunities, revisit pending claims and contract changes, and confirm that compliance and accounting systems are prepared for the new fiscal year.

Just as the September 30 deadline creates a need for careful year-end planning, October 1 should prompt contractors to look ahead. A proactive review at the beginning of the fiscal year can help contractors identify funding issues early, preserve contractual rights, prepare for new procurement opportunities, and reduce the risk that administrative or compliance issues become more significant later in the year.

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