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Good Afternoon. Both chambers passed a stopgap before leaving town, and they passed different ones. Neither has taken up the other's bill. The Senate does not return until September 14, which leaves 11 working days to reconcile the two texts before the money runs out.
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🎯 THE SIGNAL
The House cleared H.R. 9770 on July 21 by 220 to 205. It runs through December 4 and contains no exceptions. The Senate wrote its own version and passed it 90-6 on August 8, running a week longer until December 11 and carrying a short list of carve-outs for defense.
OMB sent its list of requested exceptions after the House had already voted, so all arguments about what the Pentagon could do under a stopgap took place on the Senate side. Appropriators turned down most of it. They refused roughly $1 billion in advance procurement for nuclear propulsion work on the Trump-class battleship, and they refused obligation authority for five munitions lines drawn down during Operation Epic Fury, covering PAC-3, Tomahawk, AMRAAM and two SM-3 variants.
A $3.93 billion Columbia-class procurement request and long-lead materials for CVN-82 also failed to make the text, along with a sequestration exemption for reconciliation money.
What did survive funds work already underway. Section 126 releases about $2.6 billion in prior-year cost growth across 20 shipbuilding line items. Section 127 allows up to $2.853 billion in Procurement, Defense-Wide for National Security Systems.
Read the denials as a pattern, and the FY2027 planning problem gets clear. Not one request to begin something new got through, so Section 102 governs your first quarter in both bills. That section bars new production starts, bars raising production rates above prior-year levels, and bars initiating multiyear or economic order quantity buys with advance procurement funding.
Anyone still holding out for an exception should look at the base rate first. Agencies submitted 388 anomaly requests government-wide between FY2013 and FY2017. Thirteen made it into law.
There is a second problem behind the first. December 11 was chosen to push the real appropriations fight past the November midterms into a lame duck, possibly with a different Congress. The stopgap you plan around this fall expires into that.
What the Senate stopgap denied and granted. Denied: about $1 billion in advance procurement for the Trump-class battleship, $3.93 billion for Columbia-class procurement, obligation authority for five munitions lines, long-lead materials for CVN-82, and a sequestration exemption for reconciliation funds. Granted: $2.6 billion in Section 126 shipbuilding cost growth across 20 existing hulls, and $2.853 billion in Section 127 for National Security Systems.
Development | What It Means for You |
|---|---|
Two CRs, eleven Senate working days to reconcile | Rebuild your Q1 award forecast on prior-year rates rather than the request. Anything you booked off the FY2027 budget number needs a haircut. |
Every new-start anomaly denied | New production authority does not exist before December. Get cancellation liability and schedule slip data to your program office now so the case is built when the December package gets written. |
Section 126 funds cost growth on 20 existing hulls | Check whether your hull is on that list before you plan around a funding gap. If it is, the money is moving on work you are already performing. |
The December cliff follows a midterm election | Model cash for a second disruption in the first two weeks of December, not just for October 1. |
No new production starts before December, and the money Congress moved goes to ships already under construction.
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💰MONEY MOVES
The five largest of the 20 shipbuilding lines funded by Section 126 of the Senate stopgap, all covering cost growth on hulls already under construction.
Columbia-class, FY2021 line. $566.5M
Virginia-class, FY2019 line. $561.1M
CVN refueling overhauls. $379.2M
Carrier Replacement Program. $324.0M
LHA Replacement. $164.3M
The other 15 lines cover DDG-51 across three fiscal years, LPD Flight II, T-AO fleet oilers, LCS, ESB and EPF. None of the 20 buys a ship that is not already being built, which is the whole point of the section.
📡OPPORTUNITY RADAR
The reconciliation window — House and Senate
What happens: the House returns August 31 for three days and the Senate on September 14. One chamber adopts the other's bill, or staff writes a compromise, and it must reach the President before September 30.
Who should care: anyone with an award, an option exercise, or a proposal due in the first quarter.
What to do: ask your contracting officer in writing how each active contract will be funded under a stopgap, specifically whether the money is non-expiring or subject to availability. Confirm the option exercise timing about three weeks before each date, since that is when funds must be obligated.
FY2027 NDAA (S. 4784) — Senate floor
Where it stands: cloture on the motion to proceed failed 50 to 46 on July 14. Thune switched his vote to no to preserve a motion to reconsider, which is the only reason the bill still has a path forward. The House passed its version 216-212 on July 26.
Who should care: anyone counting on a multiyear procurement authorization, since that authority comes only through the NDAA under 10 U.S.C. 3501.
What to do: treat conference as unscheduled. It cannot begin until the Senate passes something, and nothing has moved since July 14.
🧭PEOPLE & POSTURE
Appropriators wrote the defense carve-outs, not the armed services committees. Collins released the Senate text, and Murray publicly took credit for trimming what the Pentagon asked for. That is the room where program exceptions live or die when the December package gets drafted, and it is a different set of staffers from the ones most program offices spend their time with. The House bill text shows what a stopgap looks like with no carve-outs at all.
The munitions denial came with a cancellation liability argument that failed. OMB's stated justification was that the government may incur liability on multiyear contracts if it does not order negotiated quantities. Appropriators passed anyway. Anyone planning to make that same argument in December now knows it needs more to back it than an assertion.
📊READER PULSE
Results from Tuesday. We asked whether you have priced a bid against class deviation text rather than the FAR. Four responses. Two said yes and flagged the risk to the customer, two said their deals have not touched the rewritten parts yet, and nobody picked either of the other two options.
Four is not a sample, and this is the third issue running where the count has come back in single digits. I am treating that as a problem with how the poll is reaching you rather than a verdict on the question, and the buttons get tested in Outlook before this one goes out.
If they render for you and you have skipped past them anyway, reply and tell me why. That is more useful to me right now than the answers are.
This issue's question. One tap, anonymous, results Tuesday.
How much of your FY2027 revenue depends on work that has not started yet?
🔮PREDICTIONS
Record: 1–1.
Resolves tomorrow. Our August 13 call that OFPP misses the Section 3(b) FAR amendment deadline. No proposed rule has been issued, and no case has been opened. We check the Federal Register in the morning and grade it Tuesday.
New call, made today. No lapse in appropriations on October 1. Members want to be home campaigning; the distance between December 4 and December 11 is one week rather than a matter of principle, and the 43-day shutdown that opened FY2026 left nobody looking for a rerun five weeks out from an election. If any appropriations lapse occurs on October 1, we missed. Confidence is high, which also makes it a cheap call, so December is the one worth watching.
⭐TIP OF THE SPEAR PRO
The FY2027 CR Survival Guide lands tomorrow morning.
One finding from it. GAO reported in January that the Pentagon had begun all but four of the last 49 fiscal years under a continuing resolution, then reissued the report on February 4 to correct the number to twelve. Most trade coverage still runs the original figure. If you are citing CR frequency in a proposal or a board deck, use twelve.
The report covers what Section 102 actually prohibits and who decides, how the anomaly process works and why it so rarely does, how option exercises and incremental funding behave when money is annualized, and what happens to a source selection that turns the fiscal year mid-evaluation. Pro members get it Friday.
THE LAST WORD
The part of this I keep turning over is the 388 anomaly requests. Thirteen of them made it into law. Somebody wrote every one of those 375 losing packages, and the program office that asked for it presumably believed it had a case, and the whole exercise consumed real weeks of real people's time on both ends.
I do not know whether the ones that failed were bad requests or good requests that arrived in the wrong week. That distinction matters if you are deciding whether to spend September building a case for December.
So if you have an anomaly request in the system now, or if you have watched one die, tell me what happened.
Anonymity guaranteed, and I will use what comes back when we cover the December package.
Semp Fi,
— Justin