52.241-7
Change in Rates or Terms and Conditions of Service for Regulated Services
Contractors must promptly notify the government of any regulated rate or service changes and ensure the government receives the most favorable rates available to similar customers.
Overview
FAR 52.241-7 addresses procedures and obligations for changes in rates or terms and conditions of service for utility services regulated by a governmental or regulatory body. This clause ensures that both contractors and the government are informed and protected when regulated rates or service terms change during the contract period. It requires contractors to notify the government of any applications for changes, pending changes, and regulatory approvals, and to provide documentation of such changes. The clause also mandates that the government receives the most favorable rates available to similar customers and that any changes are formally incorporated into the contract.
Key Rules
- Notification of Rate or Service Changes
- Contractors must provide written notice to the government when filing for changes in rates or terms, and of any pending changes at contract award.
- Submission of Regulatory Approvals
- Contractors must send copies of regulatory body-approved changes to the Contracting Officer within 15 days of their effective date.
- Most Favorable Rates
- Contractors cannot charge the government more than the lowest rates offered to similar customers under comparable conditions.
- Notification of Other Regulatory Changes
- Contractors must immediately notify the Contracting Officer of any new regulations affecting the contract, other than rates.
- Contract Modification Requirement
- All changes to rates or terms must be incorporated into the contract via modification, with effective dates as set by the regulatory body or as agreed by the parties.
Responsibilities
- Contracting Officers: Ensure receipt and review of all required notifications and documentation; issue contract modifications as needed.
- Contractors: Provide timely notifications, documentation, and ensure compliance with rate parity and regulatory requirements.
- Agencies: Oversee compliance and ensure government interests are protected in utility service contracts.
Practical Implications
- This clause protects the government from unexpected or unfair rate increases and ensures transparency in regulated utility contracts. Contractors must be diligent in tracking regulatory actions and communicating promptly. Failure to comply can result in payment disputes or contract issues. Common pitfalls include late notifications, failure to provide documentation, or charging rates higher than those offered to similar customers.