Policy
Federal agencies must acquire utility services through written contracts that comply with both federal and state requirements, ensuring best value and legal compliance.
Overview
FAR 41.201 establishes the Federal Government's policy for acquiring utility services, emphasizing that agencies must obtain these services from sources that offer the best value in terms of economy, efficiency, reliability, or service. For acquisitions above the simplified acquisition threshold, agencies are required to use bilateral written contracts that include all mandatory FAR clauses, regardless of whether the utility's rates or terms are regulated. Agencies cannot use supplier forms to bypass these requirements. The section also addresses compliance with state laws regarding the purchase of electricity, especially under Section 8093 of the Department of Defense Appropriations Act of 1988, and outlines exceptions for certain energy contracts and circumstances. Before acquiring electric utility services competitively, contracting officers must ensure that such competition does not violate state law, and alternative suppliers must certify compliance with relevant statutes.
Key Rules
- Best Value Sourcing
- Agencies must obtain utility services from the most advantageous sources considering cost, efficiency, reliability, and service quality.
- Written Contract Requirement
- For acquisitions above the simplified acquisition threshold, a bilateral written contract with required FAR clauses is mandatory.
- State Law Compliance
- Agencies must comply with state laws and utility commission rulings when purchasing electricity, with specific exceptions for certain federal and military contracts.
- Competitive Acquisition Restrictions
- Contracting officers must confirm that competitive procurement of electric utility services does not conflict with state law, and suppliers must certify compliance.
Responsibilities
- Contracting Officers: Must ensure contracts include required clauses, verify compliance with state law, and obtain legal counsel as needed.
- Contractors: Must provide representations of compliance with state law and federal statutes when offering electric utility services.
- Agencies: May set internal procedures but must adhere to statutory and regulatory requirements, and cannot use supplier forms to avoid FAR clauses.
Practical Implications
- This section ensures federal utility acquisitions are cost-effective, legally compliant, and transparent.
- It prevents agencies from bypassing federal requirements by using supplier forms and enforces adherence to both federal and state regulations.
- Common pitfalls include failing to include required clauses, not verifying state law compliance, or improperly using supplier documentation.