Funding Uncertainty, Clear Opportunity: Navigating the FY 26 Federal Budget Maze

Author: Harvey Morrison

The headlines are all about gridlock: the Senate racing to pass a three-bill “minibus,” the House waiting for the green light, and another short-term continuing resolution (CR) keeping the lights on only through January 30. It’s tempting to read this as a signal for technology companies to pause their government efforts.

That would be a mistake.

While Washington wrestles over process, the underlying mission priorities driving government IT, cybersecurity, and AI investments haven’t changed. Agencies are still under binding mandates from Zero Trust and post-quantum encryption to AI governance and data modernization that require continued action regardless of the budget dance on Capitol Hill.

At Marion Square, we see this as one of the best times to be positioning for growth.

What’s Actually in Play: The Three-Bill Minibus and the CR

The current “minibus” covers just three of the twelve annual appropriations bills funding for Agriculture, Veterans Affairs, and the Legislative Branch. Everything else, including the big technology-spending agencies such as DoD, DHS, DOE, Commerce, Treasury, and GSA, remains under a CR that expires at the end of January.

A CR keeps agencies funded at last year’s levels but prevents new program starts unless specifically authorized. That doesn’t stop modernization entirely it simply shifts spending toward ongoing programs, task orders, and existing contract vehicles.

Translation: Agencies are still buying, but they’re buying from vendors already embedded in mission workflows and those who have aligned their offerings with funded mandates.

Practical Translation for Vendors:
During a CR, agencies rely heavily on incumbent contract holders and existing vehicles. For emerging or commercial technology vendors, the fastest path to market is through partnerships teaming with primes, system integrators, or distributors such as Carahsoft who already have active vehicles like SEWP, ITES, or FirstSource. These partners provide immediate access to agency budgets that are still being spent, even under temporary funding. In short: if you’re not on contract, get on one through someone who is.

How Continuing Resolutions Reshape the Tech Sales Landscape

Under a CR:

• New programs requiring fresh funding are usually paused.

• Renewals and task orders move forward since they use existing appropriations.

• Multi-year or no-year funding accounts (DARPA, DOE labs, DIU, DHS S&T) keep operating as normal.

• Modernization efforts tied to national directives (e.g., Zero Trust, AI readiness, PQC) often continue because they’re considered mission-critical.

For vendors, this means prioritizing agencies and programs that can act even without new appropriations. CRs may compress procurement schedules later in the year, but they also create predictability around “must-fund” initiatives.

Signals of Stability: What’s Still Funded and Moving

Despite fiscal uncertainty, several technology priorities remain insulated:

Zero Trust and Cyber Modernization

Driven by EO 14028 and OMB M-22-09, agencies are still executing multi-year Zero Trust implementation plans. Funding is embedded across multiple accounts not a single line item meaning progress continues under a CR.

Post-Quantum Encryption (PQE)

OMB M-23-02 and NSM-10 require agencies to inventory cryptographic assets and begin migration planning now. Even if PQC pilot funding is delayed, agencies are issuing crypto-inventory assessments, discovery tools, and pilot RFIs that can be leveraged by companies already demonstrating readiness.

AI and Data Infrastructure

Executive Order 14158 and OMB M-25-21 have locked in agency-level AI governance frameworks. Agencies such as DoD, DOE, and Census are moving forward with AI readiness, model evaluation, and data-layer modernization. AI and analytics budgets remain partially protected because they underpin performance and compliance goals.

The Catch-Up Effect: What Happens When the CR Ends

When Congress eventually passes an omnibus or additional minibuses, agencies face a compressed window to obligate full-year funding. Historically, this results in a “catch-up” surge often a 25–40 percent increase in contract activity in the 60 days after final appropriations.

For technology vendors, that means:

• Be visible now. Agencies finalize vendor shortlists and internal justifications long before final appropriations hit.

• Line up partnerships early. Prime and integrator teaming agreements executed now will define who captures that post-CR surge.

• Emphasize agility. Procurement officers under time pressure favor proven vendors who can deliver quickly under existing vehicles.

Where Marion Square Adds Value

Budget volatility doesn’t change what we do it underscores why it matters.

Our analysts and advisors continuously map federal budget activity, legislative updates, and OMB mandates to identify “funded lanes” where agencies have both authority and motivation to spend. We then translate that intelligence into actionable go-to-market plays for technology vendors.

That includes:

• Market assessments linking your solution to specific agency priorities and appropriations accounts.

• Partner strategies leveraging distributors such as Carahsoft and primes/SIs with active vehicles.

• Execution support — from webinars to proposal development timed to capitalize on the budget surge once appropriations clear.

Our rule: When budgets stall, insight sells. Knowing where the money will move next quarter is what separates the winners from the watchers.

What Tech Leaders Should Do Now

1. Audit your federal relationships.
Identify which of your target agencies are under full-year appropriations versus the CR. Focus outreach on those with no-year or multi-year accounts.

2. Align to funded mandates.
If your solution supports Zero Trust, PQC, AI readiness, or data modernization, tie your message directly to OMB or EO-mandated requirements. These are politically insulated funding lanes.

3. Prepare for rapid execution.
Have pricing, teaming, and marketing assets ready for the February–March procurement surge. Agencies will favor vendors who can move quickly once the budget gates open.

The Bottom Line

Washington may look chaotic, but from a market perspective the FY 26 budget environment is familiar: slow, then fast. The current CR through January simply delays not diminishes the billions in technology modernization dollars Congress already signaled it will spend.

For technology companies, this is not the time to wait. It’s the time to clarify your message, lock in partners, and position around funded mandates so that when the omnibus passes, you’re already on the field.

At Marion Square, we help clients turn fiscal noise into focus. Because in federal sales, clarity isn’t a luxury it’s your competitive advantage.

Need to understand where your solution fits in FY 26 priorities?
Marion Square’s Market Assessment and Execution Programs identify high-probability agencies, partners, and funded initiatives so you can win faster even in uncertain budget cycles.