H.R. 7137: Shutdown Fairness Act

The Shutdown Fairness Act aims to ensure that federal employees, contractors, and members of the Armed Forces continue to receive their regular pay and allowances during periods when government funding is not available, referred to as a lapse in appropriations. Here’s a breakdown of the key elements of the bill:

Definitions

The bill defines several terms relevant to its provisions, including:

• Agency: Any authority within the executive, legislative, or judicial branches of the U.S. government, including elements of the District of Columbia's public employer.
• Covered Contractor: A contractor that provides support to an agency and is required to perform work during a funding lapse based on a directive from the agency head.
• Covered Employee: Employees of an agency who are affected by the funding lapse, including active military members and reserve components performing duty.
• Lapse in Regular Appropriations: Any period when the agency lacks appropriations for its operations.

Appropriations for Employee Compensation

The bill provides that, for fiscal year 2026 and beyond, if there is a lapse in appropriations, the head of the affected agency can access necessary funds to:

• Pay standard employee compensation to covered employees for the duration of the lapse.
• Make payments to covered contractors for work performed during this lapse, as per their contract terms.

Timing of Payments

Agencies are required to disburse standard employee compensation to covered employees:

• Promptly, within 7 days of enactment, if a lapse is ongoing at that time.
• On scheduled pay dates for any subsequent lapses occurring after the act is enacted.

Limitations and Regulations

Funds provided under this bill cannot be used for any period where covered employees are already compensated through other means. It also specifies that these funds are limited to compensating employees and contractors as outlined in the bill.

Termination of Funding

The appropriations made under this bill will remain available until:

• Appropriations for the agency are enacted that address the purposes for which these funds were allocated.
• Appropriations for the agency are enacted without providing for these specific purposes.

Operational Implications for Agencies

During a lapse in appropriations, covered employees and contractors are expected to carry out their usual duties as much as possible, although the bill does not permit them to incur unauthorized obligations or expenditures.

Fiscal Year Specifics

The bill outlines that for fiscal year 2026, the compensation and payments made by an agency using the funds shall adhere to the same requirements as those applicable under previously enacted continuing appropriations.

Authorization for Fund Usage

Funds appropriated by this Act may be obligated and expended without regard to certain existing laws, facilitating their use during funding gaps.

Relevant Companies

• BA - Boeing: As a major defense contractor, any federal funding lapses could affect contracts related to military and government projects.
• RTX - Raytheon Technologies: Similar to Boeing, Raytheon depends on government contracts for defense spending, which could be impacted by funding issues.
• GS - Goldman Sachs: Financial services and consulting during government projects may be halted, affecting revenues related to federal employment.