The US Government is dysfunctional when it comes to budget matters. In the years that I worked for USG it seem that just about every year the budget would not be agreed to at the start of the fiscal year. So in order to keep the government running Congress would pass a Continuing Resolution to keep the government funded.
Continuing resolution/continuing appropriations – Legislation in the form of a joint resolution enacted by Congress, when the new fiscal year is about to begin or has begun, to provide budget authority for Federal agencies and programs to continue in operation until the regular appropriations acts are enacted.
So how does the government operate under a CR? What the CR does is hold spending levels to the previous year budget appropriation for that agency. However what usually happens is that money is released to the agencies on a quarterly basis waiting for that final budget number. The agencies will fund operations and existing contractual obligations that are not discretionary. What will not get funded are new efforts.
If a contract is fixed priced and payment is to occur under the CR, the obligation must be paid. That obligation is not discretionary. That obligation is usually funded using prior year funds and is not part of the CR, so the CR does not have an impact. Contractors need to continue to perform on that contract. What may happen is any modifications requiring funding using current year funds may get delayed.
Under a cost contract the government can chose to not fund parts of that contract. This can get complicated and confusing. For example if the contract called for new people to start based on an increase in funding that fiscal year, the government may not authorize the start of that work. That may have an impact to the companies ability to perform and that has to be made clear to the CO. Each case is unique and every agency handles the CR funding differently
I know in the DOD the one thing that will not occur is a new program. If funding is to be in the new budget then the CR will not authorize that funding and an agency cannot shift funding to start that program. That has impact to agencies completing their mission but those are the rules. Most agencies will not even issue the RFP until the budget is finalized.
In summation a CR really means that the government keeps working but new programs or increases in funding will not occur.