52.241-3 Scope and Duration of Contract
Source: FAR 52.241-3 on acquisition.gov
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.
As prescribed in 41.501(c)(2), insert a clause substantially the same as the following:
Scope and Duration of Contract (Feb 1995)
(a) For the period _______________________, [insert period of service] the Contractor agrees to furnish and the Government agrees to purchase _____________________ [insert type of service] utility service in accordance with the applicable tariff(s), rules, and regulations as approved by the applicable governing regulatory body and as set forth in the contract.
(b) It is expressly understood that neither the Contractor nor the Government is under any obligation to continue any service under the terms and conditions of this contract beyond the expiration date.
(c) The Contractor shall provide the Government with one complete set of rates, terms, and conditions of service which are in effect as of the date of this contract and any subsequently approved rates.
(d) The Contractor shall be paid at the applicable rate(s) under the tariff and the Government shall be liable for the minimum monthly charge, if any, specified in this contract commencing with the period in which service is initially furnished and continuing for the term of this contract. Any minimum monthly charge specified in this contract shall be equitably prorated for the periods in which commencement and termination of this contract become effective.
(End of clause)