Federal spending cycles, 2025 to 2026

Federal RFP cadence is not smooth. It is a function of the federal fiscal calendar, the presence or absence of continuing resolutions, and the shutdowns that sit at the edge of both. Any proposal function that bids federal work has to plan around the cycle, because the cycle decides when opportunities land, when evaluation moves fast, and when procurement itself pauses.

This post is a directional read on the last three fiscal years and a projection of what the next 12 to 18 months look like for federal opportunity cadence. It is a research note, not forecasting advice — the underlying data from SAM.gov and FPDS is what the claims are grounded in, and the pattern in the data is what the note surfaces.

How the federal fiscal year actually works

The federal fiscal year runs October 1 to September 30. Congress is supposed to pass 12 appropriations bills by October 1 funding the new year. In practice, Congress has not met that deadline in most of the last 30 years; instead, it passes continuing resolutions — short-term funding bills that keep the government running at prior-year levels until real appropriations are passed.

The Congressional Budget Office’s primer on continuing resolutions explains the mechanics cleanly. The operational impact on procurement is that agencies under a CR cannot start new contracts or expand existing ones beyond the prior year’s scope. They can re-compete expiring contracts. They can continue in-flight work. They cannot launch new initiatives.

The GAO has documented the repeated effects: delayed program starts, compressed windows for competition when appropriations finally pass, and a hockey-stick burst of obligations in the final weeks of the fiscal year when agencies try to spend remaining appropriated funds before they expire.

2025 — the pattern to remember

FY2025 (Oct 2024 to Sep 2025) ran on continuing resolutions for a significant portion of the year. The practical consequence on the vendor side: new-start opportunities were concentrated in the second half of the fiscal year, after appropriations finally landed. Q3 and Q4 of FY2025 saw a visible compression of RFP issuance into a short window, and an equivalently compressed evaluation-and-award window.

For proposal teams, that compression had two effects:

1. Bid capacity had to surge mid-year. Teams that staffed for smooth monthly cadence were overloaded when the CR ended and opportunities landed in bulk.
2. Evaluation timelines shrank. Agencies with appropriated funds and an approaching end-of-fiscal-year deadline awarded faster than their normal cadence, which meant proposal quality bars were the same but the turn-around from submission to award was shorter. Teams that waited for late-cycle customer engagement lost out to teams that had pre-positioned.

2025 — the shutdown factor

FY2026 (Oct 2025 to Sep 2025) had a short shutdown followed by a CR followed by partial appropriations. We are not going to get into the politics; we are going to describe what it did to procurement cadence.

During the shutdown, contracting officers at affected agencies were furloughed. Open solicitations paused. In-flight evaluations paused. The re-opening produced a visible backlog spike — some opportunities that had closing dates during the shutdown were extended, some were re-issued with new deadlines, and proposal teams had to track two versions of the same RFP to make sure they were responding to the current one.

The reopening also produced a “spend-it-before-expiration” dynamic. Agencies that had been throttled for weeks had funds they had to obligate before the next fiscal event. Opportunity velocity through late 2025 and early 2025 was elevated relative to the same window in a normal year.

VisibleThread has written that “changing rules, strict formats, and long checklists inside every RFP” are the things that trip up even experienced contractors. Shutdown-reopening cycles make those rules change mid-engagement, which is a specific flavor of hard that a normal fiscal year does not surface.

2026 to date — early signals

FY2027 (Oct 2025 to Sep 2026) started under a CR. Through late January, appropriations have not fully landed for every agency; some have received their full-year funding, others are still on the CR.

The practical read across the data in SAM.gov is that new-start RFP issuance has been uneven. Agencies with full appropriations are actively soliciting. Agencies still on the CR are mostly re-competing and extending. This splits the federal market in January 2026 into two tracks, and proposal teams that bid across multiple agencies need to know which track each target agency is on.

Secondary pattern — the August obligation bulge

A recurring pattern across FY2025 and FY2026 was an August-through-September obligation bulge. Agencies with remaining appropriated funds and a September 30 expiration used the final weeks of the fiscal year to obligate spend on contracts they had been sitting on. The procurement data in FPDS shows this clearly — the last six weeks of the fiscal year accounted for a disproportionate share of annual obligations, and that share grew in the two CR-heavy years.

For proposal functions, the August bulge has two operational effects. First, the compression of evaluation windows is not limited to post-CR periods; it happens again at end-of-fiscal-year regardless of the CR posture earlier in the year. Teams that are drawn-down in August after a busy spring have learned the hard way that summer is not the off-season it looks like on the calendar. Second, the quality of procurements released into the bulge is mixed — agencies under pressure to obligate sometimes release RFPs with compressed response windows or thin evaluation criteria, which are operationally harder to respond to credibly. Discerning which bulge opportunities are worth pursuing is itself capture work.

What the incumbent advantage actually looks like in a CR year

A CR year structurally favors incumbents because re-competes and contract extensions dominate new-start volume. What is sometimes missed in that summary is which kind of incumbent benefits. Incumbents on contracts that expire during the CR window and require re-compete benefit most clearly — the agency is buying from a familiar vendor on familiar terms and the decision is low-risk. Incumbents on contracts that are mid-term but up for option-year exercise benefit differently — the option is often exercised routinely, and the procurement does not re-open in the market.

Challengers in a CR year face a narrower window than they do in a normal year. Most of the new-start opportunities that would have surfaced in the first half of the fiscal year are pushed into the second half, and the second half is also when agencies under pressure prioritize continuity over competition. This does not mean challengers cannot win in a CR year — they can and do — but the capture investment required to displace an incumbent under CR conditions is higher than the same capture investment in a stable fiscal-year environment would be.

Proposal functions that bid as challengers in federal markets should factor this into their pipeline scoring. A pipeline built on “we will displace the incumbent” as its primary strategy will underperform during CR periods relative to the same pipeline in a fully-appropriated year. Being explicit about this during annual planning keeps the win-rate expectation honest.

What this means for proposal functions

Three practical implications for any team that touches federal bids through mid-2026:

1. Budget bid capacity around the cycle, not the quarter. If your target agencies come off the CR in Q2, Q3 bid volume will be higher than a smooth-projection model suggests. Staff for that. A team that is at 70% utilization in January may be at 130% utilization in June if the CR ends and opportunities bunch.

2. Watch the re-compete vs. new-start split. Re-competes favor incumbents. New-starts favor challengers with a strong capture story. If an agency you target is running re-competes through the first half of 2026 and new-starts through the second half, your capture posture should shift with it.

3. Track shutdown risk explicitly. A shutdown during an active bid window is a specific operational risk. Proposals mid-evaluation get paused. Deadlines get moved. Team schedules get disrupted. A capture lead watching the appropriations process is not being political — they are doing their job.

4. Plan an August contingency, not a summer draw-down. The fiscal-year-end obligation bulge is predictable. Proposal functions that schedule vacation-heavy summer coverage discover in September that they staffed the wrong weeks. The staffing plan for federal-touching functions should treat the final six weeks of the federal fiscal year as a high-intensity window, comparable to post-CR periods.

5. Segment the pipeline by appropriations posture. Agencies on full appropriations behave differently from agencies on CRs. A pipeline report that aggregates across both loses the signal. The weekly pipeline review should show bids segmented by the funding status of the buying agency, and the bid strategy should match.

How this connects to staffing and KB readiness

The fiscal-year-shaped cadence also has implications for the proposal function’s internal infrastructure. A team that knows its bid volume will compress into a specific window needs its KB to be current heading into that window, not partway through it. The January past-performance backfill exists partly because Q2 federal bid volume can surge in years where appropriations land on schedule, and a surge against a stale KB produces a lower win rate than the same surge against a refreshed KB. Teams that do not pre-position their content ahead of predictable volume windows give away win rate they could have kept.

Staffing is the other lever. A team running on a steady headcount across the year will be under-resourced during the post-CR spike and over-resourced during the CR-stable months. Some federal contractors manage this with a flexible resourcing model — embedded contractors or shared capacity across related functions — that expands and contracts with the cadence. The details of that flex model are industry-specific, but the underlying observation is general: the federal cycle is not a steady-state environment, and proposal-function staffing should not be built as if it were.

A note on state-level cadence

Federal cadence gets most of the attention, but state procurement runs on its own fiscal rhythms and the rhythms vary by state. Most states run fiscal years that end June 30, a full quarter earlier than the federal cycle. The practical consequence is that state RFP cadence has a summer-spike pattern rather than a fall-spike pattern, and proposal functions that bid both federal and state work see two distinct high-intensity windows per calendar year rather than one.

State funding is also less subject to continuing-resolution dynamics — most states have constitutional balanced-budget requirements and pass annual budgets more reliably than Congress does. That does not make state procurement smooth; it means the disruptions are different. Shifts in state legislative priorities, gubernatorial transitions, and mid-year revenue revisions produce their own procurement-cadence effects. Proposal functions that bid multi-state work learn to track these state-by-state, because a fully-staffed state procurement office in one state can be paired with a staff-shortage-driven procurement backlog in the adjacent one.

The interaction between federal and state cadence is worth noting: federal-adjacent state programs — Medicaid, transportation, workforce — often have procurement windows timed to when federal pass-through funding lands, which means federal CR activity cascades into state RFP timing on those programs. A team bidding a state Medicaid RFP cannot plan without knowing the federal funding posture that sits upstream of the state’s solicitation.

What the data does not tell us

The federal procurement data systems report obligations and solicitations. They do not report intent. An agency that is quietly pre-planning a major new-start release in Q3 will not show in FPDS until the solicitation posts. Directional intelligence about what is coming is the work of the capture function, not the data systems.

What the data does tell us, clearly, is the pattern of how the fiscal year shapes the rhythm. Teams that align their capacity to that rhythm do better than teams that do not. The cycle is not new, and it is not going away.

What we are watching for the rest of 2026

Three questions we will track in subsequent research notes:

• Does Q2 FY2027 produce the typical post-CR issuance burst we saw in FY2025 and FY2026?
• Do the agencies already on full appropriations accelerate new-starts before end-of-fiscal-year, or hold them for a smoother distribution?
• Does the proposal-function headcount at major federal contractors shift in response to the staffing volatility the last two cycles have produced?

These are worth watching. We will update this note quarterly through FY2027 with directional reads on each.