52.241-4
Change in Class of Service
When a contract’s service class changes, the contractor must charge the Government the lowest applicable rate for the new class—or negotiate a new rate only if no approved schedule exists.
Overview
- FAR 52.241-4, Change in Class of Service addresses how pricing must be handled when the utility or service class provided under a government contract changes.
- Its purpose is to ensure the Government receives the lowest available rate schedule applicable to the new class of service, while also allowing negotiated pricing when no approved rate schedule exists.
Key Rules
- Change in class of service
- If the class of service changes, the contractor must furnish the service under its lowest available rate schedule that applies to the class of service actually provided.
- No approved rate schedule on file
- If the contractor does not have a regulatory-body-approved rate schedule covering the service provided, the contract does not prevent the parties from negotiating an appropriate rate schedule for that class of service.
Responsibilities
- Contracting Officers: verify whether a class-of-service change has occurred and ensure billing reflects the lowest applicable approved rate, or negotiate a new rate schedule when none is on file.
- Contractors: apply the lowest available applicable rate after a service-class change and support any claim that no approved schedule exists.
- Agencies: oversee contract administration to confirm pricing remains aligned with the service class actually furnished.
Practical Implications
- This clause exists to protect the Government from paying more than necessary when service conditions change.
- It affects utility and similar regulated service contracts where rate classes may shift over time.
- A common pitfall is continuing to bill under an outdated class of service instead of updating to the correct, lowest applicable rate or documenting the need for negotiated pricing.