52.241-4
Change in Class of Service
When the class of utility service changes, contractors must apply the lowest available rate or negotiate a new rate if no approved schedule exists, ensuring fair pricing for the government.
Overview
FAR 52.241-4, "Change in Class of Service," addresses how changes in the class of utility service under a government contract are to be handled. The clause ensures that if the class of service changes during contract performance, the contractor must provide the new service at the lowest available rate schedule for that class. If the contractor does not have an approved rate schedule on file with the regulatory body, the clause allows the parties to negotiate a new rate schedule for the changed class of service. This provision is designed to protect the government from paying excessive rates and to provide flexibility when standard rates are not established.
Key Rules
- Lowest Available Rate Schedule
- When the class of service changes, the contractor must charge the lowest available rate for the new class of service.
- Negotiation of Rate Schedule
- If no approved rate schedule exists with the regulatory body, the government and contractor may negotiate a mutually acceptable rate for the new class of service.
Responsibilities
- Contracting Officers: Ensure the clause is included in applicable contracts and verify that rate changes comply with the clause.
- Contractors: Apply the lowest available rate schedule for any new class of service or negotiate rates if no approved schedule exists.
- Agencies: Oversee compliance and ensure fair and reasonable rates are applied.
Practical Implications
- This clause prevents overcharging when the government’s utility service needs change.
- It provides a clear process for rate determination, reducing disputes.
- Contractors must be prepared to justify rate schedules or engage in negotiations if none exist, which can impact contract administration timelines.