Monthly and annual review
Agencies must regularly review utility invoices and accounts to ensure accuracy and secure the most economical rates, requesting immediate changes when better rates are found.
Overview
FAR 41.401 requires federal agencies to conduct monthly and annual reviews of utility service invoices and accounts to ensure accuracy and cost-effectiveness. Monthly reviews focus on verifying the correctness of utility invoices, while annual reviews are mandated for accounts exceeding the simplified acquisition threshold and are discretionary for those at or below the threshold. The annual review aims to confirm that each facility is receiving utility services at the most economical rate and to assess whether more advantageous service offerings are available in the market. Agencies must base these reviews on the facility’s actual usage and service conditions over the past year. If a better rate is identified, agencies are required to request an immediate rate change from the utility supplier.
Key Rules
- Monthly Invoice Review
- Agencies must review all utility service invoices monthly to ensure their accuracy.
- Annual Account Review
- Agencies must annually review utility accounts with values above the simplified acquisition threshold; reviews for accounts at or below the threshold are discretionary.
- Economical Rate Assessment
- Annual reviews must determine if the facility is on the most economical, applicable rate and explore competitive market options.
- Immediate Rate Change Request
- If a more advantageous rate is found, agencies must request the supplier to implement the rate change immediately.
Responsibilities
- Contracting Officers: Ensure monthly and annual reviews are conducted, document findings, and request rate changes as needed.
- Contractors: Provide accurate usage data and cooperate with review processes.
- Agencies: Oversee compliance, maintain records, and pursue cost savings through market assessments.
Practical Implications
- This section ensures agencies do not overpay for utilities and leverage market competition for better rates.
- Regular reviews help detect billing errors and identify cost-saving opportunities.
- Common pitfalls include neglecting annual reviews for high-value accounts or failing to act on identified savings opportunities.