Senior Procurement Executive Message to the Department of State Contractor and Federal Assistance Community on the Lapse in Appropriations
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The Department of State’s Senior Procurement Executive has issued guidance to contractors and federal assistance recipients regarding the lapse in appropriations that began on October 1, 2025. Due to the lack of a fiscal year 2026 appropriation, the Antideficiency Act restricts the Department and USAID from incurring new financial obligations beyond certain exceptions. This impacts the capacity to purchase supplies, issue grants, and provide oversight, potentially leading to the cancellation, postponement, suspension, or termination of certain contracts and grants, as well as possible payment delays. If a contract or grant is directly affected by the funding lapse, contractors and recipients will be notified by their contracting or grant officer. If there is no notification, contractors must continue to fulfill all contract or grant requirements as specified. The Department will not issue notifications for contracts or grants that remain unaffected at the onset. When a Continuing Resolution or full-year appropriation is enacted, the Department will coordinate a return to normal operations and update impacted parties accordingly. The message concludes with appreciation for partners’ cooperation during this period of fiscal uncertainty.
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Arlington, VA, USASet-Aside
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Senior Procurement Executive Message to the Department of State Contractor and Federal Assistance Community on the Lapse in Appropriations
As the Department’s Senior Procurement Executive, I am reaching out to share guidance due to the lapse in appropriations that occurred on October 1, 2025.
This guidance relates to the handling of Department, including US Agency for International Development (USAID), contract and federal assistance (grants) awards, that is consistent with Department and Office of Management and Budget’s Guidance on Operations During a Lapse in Appropriations.
The Antideficiency Act prohibits agencies from incurring obligations that are in advance of, or that exceed, an appropriation, with certain limited exceptions.
As you are aware, a fiscal year 2026 appropriation is not yet enacted. For many Department accounts, this results in a lapse in funds designated to purchase certain supplies and services and issue grants and reduces the Department’s capacity to provide oversight on contracts and grants. As a result, certain planned procurements and grants may be cancelled, or postponed, and certain existing contracts and grants may be stopped, suspended, reduced in scope, or terminated. Additionally, payments may be delayed.
If the lapse directly affects a contract or grant, on or about October 1, 2025, the Department’s contracting officers and grant officers will notify contractors and recipients of the status of their contract or grant. If a contract or grant will not be affected at the onset of the lapse in appropriations, the Department does not plan to provide any separate notifications or communications of that fact. Unless the contracting officer or grants officer provides a formal notification to the contrary, all Department contractors and recipients must continue to comply with all terms, conditions, requirements and deliveries specified in their contracts or grants.
Once a Continuing Resolution or full-year appropriation is signed into law, the Department will begin implementing the plan to orderly resume activity and will notify contractors/recipients at that time.
Thank you for your continued partnership with the Department, and for your cooperation as we work together to manage this lapse in appropriations.