(a) Not applicable in certain situations.--This subchapter shall not apply in the following situations:

(1) Section 3932 (relating to government agency's progress payment obligations) shall not apply when the Commonwealth agency's nonpayment on a particular project is caused by the failure of the General Assembly to enact a budget for the fiscal year of payment.

(2) Section 3932 shall not apply when a local government unit's nonpayment on a particular project is caused by failure of the Federal or State Government to pay funds due and payable to the local government unit.

(3) Section 3932 shall not apply when a government agency's nonpayment on a particular project is caused by the failure of the General Assembly to enact an operating budget for the fiscal year of payment or a capital budget for the capital project or by failure of the Federal, State or local government to pay funds designated or to be designated for the specific project.

(4) Nothing in this subchapter shall be construed to require payment of interest penalties by the Federal or State Government if the local government unit is liable for the interest.

(b) Not applicable to following entities.--This chapter shall not apply to any of the following:

(1) A municipality determined to be distressed under the act of July 10, 1987 (P.L.246, No.47), known as the Municipalities Financial Recovery Act.

(2) A school district which has been determined to be a distressed school district under section 691 of the act of March 10, 1949 (P.L.30, No.14), known as the Public School Code of 1949.

(3) A city of the first class that has entered into an intergovernmental cooperation agreement under the act of June 5, 1991 (P.L.9, No.6), known as the Pennsylvania Intergovernmental Cooperation Authority Act for Cities of the First Class, for so long as any deficit-reducing bonds issued by the authority pursuant to section 301(b)(1) of that act are outstanding and payable.

(4) A corporate entity or school district as defined in the Pennsylvania Intergovernmental Cooperation Authority Act for Cities of the First Class.

(5) A transportation authority organized or operating under 74 Pa.C.S. Ch. 17 (relating to metropolitan transportation authorities).