It’s no surprise the federal government is operating under a continuing resolution (CR)—timely passage of appropriation bills has been a rarity for decades. The burning question is, what will happen when the current CR ends during this lame-duck congressional session? Will any of the 12 federal appropriations be passed before the CR expires on December 16? Will Congress pass another CR? Or will the government shut down just in time for the holidays? In this post, we’ll look at why this matters to resource management professionals and the contracting workforce and explore historical trends to predict the outcome of FY2023 federal appropriations.
When Congress fails to pass legislation to fund the government in any of the 12 federal appropriation bills, they usually pass a CR to keep the government operating at the previous year’s funding levels for a specific period of time. Most CRs prohibit current year spending levels from exceeding spending levels from the previous year and prevent agencies from using funding for projects or activities that were not funded during the previous fiscal year. From an operational and resource management standpoint, CRs are burdensome to federal agencies. A 2018 study by the Government Accountability Office (GAO) found that CRs create inefficiencies in operations and resource management functions. Agencies reported that extended CRs resulted in contracting delays that prevented them from fully competing and awarding contracts in the fiscal year that the appropriation was received. Additionally, CRs create repetitive and additional work because shorter term contracts may be awarded during CR periods that result in multiple spending plan revisions. Longer CRs may also create irregularities in agency-reported rates of spending, a critical metric in future budget formulation processes, as agencies rush to obligate funds before the fiscal year ends once appropriations are finally passed.
In addition to harming federal agencies’ internal processes, CRs cause problems for the federal contractors supporting the agencies. Because spending is capped at prior year levels, CRs make it difficult for contracting companies to account for inflationary price increases. Companies incur increased costs in workforce, materials, supplies, and transportation, which could result in financial loss. Putting new government contract awards, bids, and proposals on hold can significantly impact contracting companies’ revenues and profits.
When a CR occurs during a lame duck congressional session, the risk of funding shortfalls in agencies is amplified. Lame duck congressional sessions occur between a congressional election in November and the following January 3 when the new session of Congress, with newly elected officials, begins. Lame duck sessions enable sitting members of Congress to more freely make what might be considered “unpopular” decisions because their constituents have already voted. In a lame duck session where the power of either side of Congress will or may change, members of Congress may try to get party priorities quickly passed before the end of session. Many unfinished legislative priorities can be added to consolidated spending bills by departing members or a party losing power. Potential add-ons for the 2022 lame duck session include hurricane relief money, more military aid for Ukraine, a water resources bill, flood insurance renewal, COVID and monkey pox aid money, and annual extensions of targeted tax breaks. Many of these are contentious issues across party lines.
In the past 10 lame duck sessions dating back to the 2002 election, only the 2004 and 2020 lame duck sessions resulted in all 12 appropriations being passed. During the most recent lame duck session of 2020, the entire government was funded with the passage of the enormous $2.3 trillion Consolidated Appropriations Act, 2021. The other eight lame duck sessions ended with a portion of the 12 appropriations still in CR status to allow the new congressional session to take up the bills.
If the past predicts the future, federal appropriations are unlikely to be passed during this lame duck congressional session. Our resource management workforce will remain critical assets for agencies that will be required to restructure spending plans. At LMI, we apply a strategy-driven fiscal resource management model that adapts to the funding challenges created by the CR process. Our methodology quickly addresses problem areas and identifies resourcing solutions, empowering our clients to accomplish missions efficiently and effectively. LMI’s team of trained and experienced resource management professionals stands ready to guide our clients through these times of budget uncertainty.
Jill CahillConsultant, Financial Advisory
Ms. Cahill is an experienced resource management professional who served for 22 years as an Army Finance officer, contributing to the Planning, Programming, Budgeting & Execution (PPBE) process for Headquarters, Department of the Army, and several subordinate Army commands.