41.402 Rate changes and regulatory intervention
Source: FAR 41.402 on acquisition.gov
Agencies must promptly evaluate and properly document all utility rate or service changes, ensuring contract modifications and coordination with GSA when necessary.
Overview
FAR 41.402 outlines the procedures and requirements for handling changes to rates or terms and conditions of utility services provided to the Government. It addresses both regulated and unregulated utility suppliers and establishes the process for evaluating, documenting, and implementing such changes in government contracts. The section also covers agency responsibilities for regulatory intervention and coordination with the General Services Administration (GSA) when changes may impact multiple federal agencies.
Key Rules
- Evaluation of Proposed Changes
- Agencies must promptly assess whether proposed changes to rates or terms are reasonable, justified, and non-discriminatory.
- Regulatory Intervention
- If a proposed change could affect other agencies and regulatory intervention is warranted, the matter should be referred to GSA, which may delegate authority for agency intervention.
- Regulated Utility Rate Changes
- For regulated services, approved rate changes must be incorporated into the contract via unilateral modification or documented per agency procedures, with effective dates set by the regulatory body.
- Unregulated Utility Rate Changes
- For unregulated services, negotiated rate changes must be incorporated into the contract by modification, with proper notification to the agency’s paying or billing verification office.
Responsibilities
- Contracting Officers: Must evaluate proposed changes, ensure proper contract modifications, and distribute documentation to relevant offices.
- Contractors: Must comply with contract modification procedures for rate changes and provide necessary documentation.
- Agencies: Must coordinate with GSA for regulatory intervention and ensure timely payment of approved rates.
Practical Implications
- Ensures transparency and fairness in utility rate changes for government contracts.
- Requires prompt action and documentation to avoid late payment penalties.
- Highlights the importance of coordination between agencies and GSA for regulatory matters.
(a) When a change is proposed to rates or terms and conditions of service to the Government, the agency shall promptly determine whether the proposed change is reasonable, justified, and not discriminatory.
(b) If a change is proposed to rates or terms and conditions of service that may be of interest to other Federal agencies, and intervention before a regulatory body is considered justified, the matter shall be referred to GSA. The agency may request from GSA a delegation of authority for the agency to intervene on behalf of the consumer interests of the Federal executive agencies (see 41.301).
(c) Pursuant to 52.241-7, Change in Rates or Terms and Conditions of Service for Regulated Services, if a regulatory body approves a rate change, any rate change shall be made a part of the contract by unilateral contract modification or otherwise documented in accordance with agency procedures. The approved applicable rate shall be effective on the date determined by the regulatory body and resulting rates and charges shall be paid promptly to avoid late payment provisions. Copies of the modification containing the approved rate change shall be sent to the agency’s paying office or office responsible for verifying billed amounts (see 41.401).
(d) If the utility supplier is not regulated and the rates, terms, and conditions of service are subject to negotiation pursuant to the clause at 52.241-8, Change in Rates or Terms and Conditions of Service for Unregulated Services, any rate change shall be made a part of the contract by contract modification, with copies sent to the agency’s paying office or office responsible for verifying billed amounts.