52.241-3
Scope and Duration of Contract
For utility service contracts, performance and payment must follow approved tariffs for a defined contract term, and contractors must furnish current and updated rate schedules while recognizing that service obligations end at contract expiration.
Overview
- FAR 52.241-3 establishes the basic contractual framework for utility service contracts between the Government and a utility provider.
- It defines the service period, ties performance and pricing to applicable approved tariffs, and clarifies that neither party must continue service after the contract expires.
Key Rules
- Defined service period and utility service
- The contract must state the period of service and the type of utility service the contractor will furnish and the Government will purchase.
- Tariff-based performance and pricing
- Service must be provided in accordance with applicable tariffs, rules, and regulations approved by the relevant regulatory body and incorporated into the contract.
- No obligation beyond expiration
- Neither the contractor nor the Government is required to continue service under the contract after the stated expiration date.
- Rate documentation requirement
- The contractor must provide one complete set of rates, terms, and conditions in effect on the contract date, plus any later approved rates.
- Payment and minimum monthly charges
- The Government pays the applicable tariff rate and is liable for any contract-specified minimum monthly charge from the initial service period through contract term; minimum charges must be equitably prorated when service starts or ends mid-period.
Responsibilities
- Contracting Officers: identify the service period, service type, and any minimum monthly charge in the contract; ensure applicable tariffs are referenced.
- Contractors: furnish utility service under approved tariffs and provide current and subsequently approved rate schedules.
- Agencies: pay tariff-based charges and apply equitable proration for partial billing periods.
Practical Implications
- This clause ensures utility contracts align with regulated tariff structures rather than negotiated standalone pricing.
- Contractors should maintain current tariff documentation and promptly communicate approved rate changes.
- A common pitfall is failing to address minimum monthly charges and proration when service begins or ends during a billing cycle.