Assessment · Budget

What does the FY2027 continuing resolution block for defense contractors?

New starts and faster production. For 101 unclassified lines mostly reconciliation-funded in FY2026 whose FY2027 base request tops their FY2026 base, that base is about a quarter of the request.

October 8, 2026

The Continuing Appropriations Act, 2027, signed Sept. 2, funds the Department of War through Dec. 11 at the rates in its FY2026 appropriations acts.¹ Its Sec. 102 bars the department from using that money to produce items not funded for production in FY2026 or earlier. It also bars production rates above "those sustained with fiscal year 2026 funds" and any project or budget line that had no funds available in FY2026. New multiyear procurements that use advance procurement for economic order quantity are barred "unless specifically appropriated later".¹

The law continues 12 FY2026 appropriations acts, and the 2025 reconciliation law, P.L. 119-21, isn't among them.^1–2 We found 101 unclassified budget lines that got most of their FY2026 money from that law and ask for more base money in FY2027 than they had in FY2026. Together they request $53.2 billion of FY2027 base money. Their FY2026 base, the starting point the continuing resolution (CR) carries forward, is $13.1 billion a year, about a quarter of their request.³

Reconciliation funding does not reset the CR's base rate

Sec. 101 names each law it continues. For procurement and R&D lines, that's the Department of Defense Appropriations Act, 2026.¹ No section of the act mentions P.L. 119-21.² Seamus P. Daniels, a fellow for Defense Budget Analysis at the Center for Strategic and International Studies, analyzed the bill on Aug. 18. He wrote that "the CR would only provide funding for programs that received discretionary appropriations for FY 2026".⁴

Sec. 102 defines the projects it covers down to "a P-1 line item" and "an R-1 line item" within an appropriation account.¹ The distinction reaches individual programs. The department's FY2027 P-1 and R-1 exhibits list each line's FY2026 base appropriation and its FY2026 spend plan for P.L. 119-21 money side by side.³

Two sections exempt procurement accounts from Sec. 102.¹ Sec. 126 allows up to $2.6 billion for cost increases on 20 shipbuilding programs "funded in prior years". The largest single amount is $566.5 million, for the 2021 Columbia-class program.¹ The total equals the FY2027 request for the Navy's "Completion of PY Shipbuilding Programs" line.⁵ Sec. 127 allows up to $2.853 billion for National Security Systems in Procurement, Defense-Wide.¹

For the 15 largest gaps, the FY2026 base is 18% of the FY2027 request

F-15EX shows how the gap opens. The line's $1.8 billion in FY2025 came from base appropriations. For FY2026, base appropriations gave it $115 million, and the department's P.L. 119-21 spend plan put $2.8 billion on it.⁶ The 2025 law set aside $3.15 billion, available through FY2029, "to increase F-15EX aircraft production."⁷ Its FY2027 base request is $2.7 billion, so the FY2026 base is 4% of it.⁶

Of the 101 lines, 36 had no FY2026 base money at all, so they start FY2027 with no base rate.³ Golden Dome for America's Missile Defense Agency line is one: $3.6 billion from P.L. 119-21 in FY2026 and no base.⁸ "A CR doesn’t help me at Golden Dome because I don’t have a topline to fall back on," Gen. Michael Guetlein, who leads Golden Dome for America, said Aug. 11 at the Space and Missile Defense Symposium, as Payload reported.⁹

Take out shipbuilding and it's still about a quarter

Shipbuilding is the largest piece of the $40.1 billion gap between request and base, about a third. Without its 15 lines, 86 remain. They request $35.6 billion of base money and have an FY2026 base of $9.1 billion. That's 26%, about the same share as the full set. Without just the two largest gaps, Virginia-class submarines and DDG-51 destroyers, it's 23%.³

Weapons and drone lines start lower. For the 18 munitions and missile lines, the FY2026 base is 16% of the request. It's 7% for the 13 uncrewed and autonomy lines and zero for the two counter-small-drone lines.³

HII and General Dynamics carry the largest gaps, mostly on lines they share

We looked for the companies on the 57 lines with a gap of $100 million or more. They hold $38.4 billion of the $40.1 billion gap. We named at least one company on 22 of them. A line with more than one named company counts in full for each, so company totals overlap.¹⁰

HII is named on lines with $10.5 billion of gap, General Dynamics on $9.8 billion.^10–15 Virginia-class submarines and DDG-51 destroyers, which both companies build, are $7.9 billion of each.^11–12 Outside shipbuilding, Boeing has the most at $3.1 billion, mostly F-15EX.^{10, 16} All of Anduril's $1.7 billion is on two lines it shares: Collaborative Combat Aircraft with General Atomics, and the Family of Affordable Mass Missiles with CoAspire and Zone 5.^17–18

Thirteen of the 57 lines fund government offices, funds and test programs, with no contractor named. They hold $7.1 billion of gap and include the Defense Autonomous Warfare Group, the Defense Innovation Unit and Office of Strategic Capital loans.¹⁹

Unobligated reconciliation money stays available through FY2029

The CR doesn't write line amounts. The Congressional Research Service describes a rate for operations set "without specifying a dollar amount for individual programs, projects, and activities".²⁰ Our line totals are each line's FY2026 base, the starting point the CR carries forward.³

Sec. 102's limits apply to the money the CR provides.¹ P.L. 119-21 appropriated its defense money "to remain available until September 30, 2029".⁷ So a line still holding some can still obligate it. We found no line-by-line figure for how much is unobligated.

December brings another funding decision

Sec. 106 ends the CR on Dec. 11, 2026, or sooner, for a project, once its full-year FY2027 act is enacted. A full-year defense act would replace the FY2026 base rate for these lines.¹ The department's FY2027 request also seeks $350.0 billion in mandatory money, which the administration asked Congress to provide through reconciliation.^{4, 21} Nineteen of these lines carry $162.7 billion of it.³ By Dec. 11, the FY2026 base rate for these lines either ends or gets extended.

The 57 lines with a gap of $100 million or more