This article was written in collaboration with President Kaamil Khan, whose leadership and insights helped shape its core themes and direction. 

With the GSA starting to roll out certain elements of FAR 2.0 for streamlining federal acquisition, Congress should take this moment to reexamine the annual appropriation cycle. A modernized funding approach would help agencies move beyond the entrenched “use it or lose it” mindset, curb year-end budget maneuvering, and create space for more sustained innovation.

For background context, the federal government’s annual appropriation cycle from Congress is framed as a necessary mechanism to allocate taxpayer dollars effectively. In theory, it allows Congress to provide structured oversight by ensuring that agencies receive funding based on priorities and performance. The Congressional Budget and Impoundment Control Act requires both chambers of Congress to agree on a concurrent budget resolution by April 15 for the upcoming fiscal year.

In practice, this rigid cycle often leads to systemic inefficiencies. Specifically, since 1975, Congress has met the April 15 deadline only six times.

Much of what DOGE identifies as wasteful spending and stalled innovation stems from the annual appropriation cycle. Congress’s repeated delays in passing timely budgets create pressure on agencies to spend inefficiently, avoid long-term investments, and navigate bureaucratic hurdles that block meaningful progress in government acquisition and procurement reform.

Congress must confront the consequences of continuously delayed budget cycles. If it cannot consistently pass annual funding on time, it should update the federal funding model to give executive agencies the flexibility to execute this Administration’s technical modernization goals: streamlining operations, reducing IT spend, and accelerating the AI boom within the US economy.

“Use It or Lose It” Creates A Culture of Inefficiency

One of the most glaring breakdowns in the current annual appropriation cycle is the “use it or lose it” spending mentality. Federal agencies, constrained by strict budget timelines, often rush to exhaust remaining funds before the fiscal year ends. The fear of budget cuts in the next funding cycle incentivizes unnecessary expenditures rather than strategic investments. Instead of rewarding prudent financial management, the system pressures agencies to prioritize short-term spending over long-term impact.

A 2019 report by the Senate Committee on Homeland Security and Governmental Affairs highlighted that the DoD spent approximately $61 billion in September 2018, the final month of the federal fiscal year, accounting for nearly 16% of its total annual budget. This surge in spending was significantly higher than the average monthly expenditure, indicating a substantial increase in Q4 spending. The same report noted that the GSA’s spending in September 2018 was about five times higher than its average monthly spending throughout the year, underscoring the pronounced spike in Q4 expenditures.

Unfortunately, these trends continue into this fiscal year. The House Budget Committee Report on the Fiscal Year 2025 Budget Resolution finds that the federal government is still engaged in enabling a “bloated bureaucracy” that creates “areas of wasteful spending that do not provide a high return on taxpayer investment.” This rush to spend remaining funds before the fiscal year-end exemplifies wasteful practices driven by the “use it or lose it” mindset.

Short-Term Thinking Undermines Long-Term Innovation

The rigid nature of annual appropriations discourages agencies from making bold, forward-looking investments. By the time funding is approved at the federal program level, new solutions have already outpaced government procurement cycles, leading to outdated or redundant acquisitions. Private-sector companies, particularly small and emerging innovators, find it difficult to navigate these constraints, further limiting fresh ideas from entering federal acquisition processes.

Innovation in government, particularly in technology and modernization efforts, requires sustained funding and the ability to pivot based on iterative progress. With funding tied to annual budgets, federal procurement processes turn cumbersome and bureaucratic. The yearly budget process forces agencies into a cycle of incremental, low-risk projects that align with short-term funding windows rather than transformative solutions that require multi-year commitments.

Agencies often struggle to secure contracts that align with rapidly evolving technological advancements. While FAR 2.0 will do much to improve this, the current federal budget process remains ill-equipped to respond to emerging challenges and technological advancements.

Whether it’s cybersecurity threats, AI advancements, or infrastructure needs, agencies are locked into inconsistent funding allocations that do not align with evolving priorities. The result is delayed responses to critical issues and missed opportunities to integrate cutting-edge solutions into government acquisition strategies.

Rethinking Federal Budgeting to Support the New Procurement Model

To curb waste and foster innovation, the federal government should explore more flexible budgeting models. The Peter G. Peterson Foundation highlights two promising approaches: biennial budgeting and permanent appropriations.

• Biennial budgeting would shift appropriations to a two-year cycle, allowing more time for oversight and long-term planning.
• Permanent appropriations would maintain funding levels unless Congress passes new legislation to adjust allocations, reducing the risk of government shutdowns and eliminating the end-of-year spending rush.

These approaches could provide agencies the agility needed to allocate resources more efficiently while promoting fiscal responsibility and innovation across all government procurement activities.

Biennial Budgeting

Switching to biennial budgeting to create a two-year federal budget cycle would directly reinforce GSA’s FAR 2.0 procurement reforms by providing a more stable, business-like planning horizon for government acquisition.With appropriations available for 24 months, agencies could align procurement plans with a longer funding horizon, avoiding the annual upheaval of funding gaps or continuing resolutions that delay contracts. This stability shortens overall procurement cycle times by eliminating repetitive budget reapproval and the year-end “use it or lose it” spending rush, thereby improving time-to-award metrics.

Permanent Appropriations

Adopting a permanent funding approach (e.g., no-year appropriations or revolving funds that remain available until expended) would further accelerate and strengthen the FAR 2.0 objectives of agility and innovation in federal procurement. Unlike annual funds that expire each year, permanent budget authority empowers agencies to carry funds forward and reallocate resources as needs evolve, which is critical for emerging technologies like artificial intelligence and quantum systems. These fast-changing fields often don’t fit neatly into one-year budget cycles. Requirements can shift and breakthroughs may arise unpredictably, meaning money appropriated on a strict yearly use-it-or-lose-it basis can end up “obsolete by the time the technology is delivered,” or get “lost at the end of the fiscal year” if not spent in time.

Permanent funding tackles this problem by enabling continuous, adaptive investments. For example, experts have called for no-year “Technology Fund” appropriations for AI so agencies can flexibly fund research, prototyping, procurement, and sustainment in one stream, speeding delivery of AI capabilities to users. This kind of stable funding environment mirrors private-sector R&D and capital investment practices, where companies maintain ongoing innovation budgets rather than resetting to zero each year.

Change Introduces New Challenges

These approaches are not without their drawbacks. Biennial budgeting hinders the government’s ability to respond promptly to unforeseen events. The Center on Budget and Policy Priorities (CBPP) notes that budgeting so far in advance can result in outdated decisions, as agencies would begin preparing budgets for the second year of a cycle up to 40 months before it ends. This extended lead time makes it difficult to adjust to new information or changing circumstances, leading to inefficiencies and a lack of responsiveness to emerging needs.

The argument against permanent appropriations is that it could reduce congressional oversight and flexibility. This approach might lead to a “set it and forget it” mentality, where programs continue to receive funding without regular review or adjustment. Such a system could make it challenging to reallocate resources in response to shifting priorities or address existing programs’ inefficiencies.

Let’s Use FAR 2.0 as an Opportunity to Revisit the Annual Congressional Appropriation Cycle

The annual appropriation cycle, while intended to support oversight and fiscal discipline, breeds inefficiency and stagnation. To drive progress, Congress and federal agencies must adopt more adaptive and flexible funding mechanisms that empower longer-term planning and timely innovation aligned to modern federal procurement practices. These approaches provide the financial stability needed to support initiatives like FAR 2.0, enabling shorter government acquisition cycles, greater vendor accountability, and more flexible acquisition of emerging technologies. By shifting the focus from short-term expenditure to strategic investment, the federal government can embed commercial best practices into federal acquisition reform, unlock innovation at scale, and deliver measurable value for taxpayers and mission stakeholders.