Continuing Costs: The Impact of Continuing Resolutions on Federal Contracting

Are there unintended consequences from Congress’ use of continuing resolutions (CRs), which are designed as short-term funding to bridge the period before regular appropriations are completed? During a CR, agencies are restricted in their ability to issue contracts, and after the CR ends, agencies may rush to complete their contracting before the fiscal year ends. To expedite contracting, we hypothesize that CRs encourage agencies to use sole-source contracts, rather than on a competitive basis, as well as to use cost-reimbursement contract designs, rather than fixed-price contracts. The Obama Administration found that these contracting practices result in “wasted taxpayer resources, poor contractor performance, and inadequate accountability for results . . .” We anticipate that the longer a CR is in effect, the greater the incentive to use sole-source contracts and cost-reimbursement contract designs. There are implications both for future attempts at contracting reforms, as well as for efforts to establish automatic CRs.