Change in Rates or Terms and Conditions of Service for Unregulated Services
This clause enables either party to request and negotiate changes to rates or terms for unregulated utility services, with all changes requiring formal contract modification and rate fairness ensured.
Overview
FAR 52.241-8 addresses procedures for changing rates or terms and conditions of service for utility services that are not regulated by a governmental regulatory body. This clause allows either the contractor or the government to request changes to rates or terms after a specified date, provided the request is made in writing and includes reasons for the change. Both parties are required to negotiate in good faith, and any agreed-upon changes must be formalized through a contract modification. If the parties cannot reach an agreement after a reasonable period, the matter is treated as a dispute under the contract's Disputes clause. The contractor is also obligated to ensure that negotiated rates do not exceed those charged to similar customers under comparable conditions.
Key Rules
- Applicability to Unregulated Services
- The clause only applies to utility services not subject to regulation by a regulatory body.
- Requesting Changes
- Either party may request changes to rates or terms after a specified date, with written justification.
- Negotiation Requirement
- Both parties must negotiate in good faith upon receiving a written request for changes.
- Rate Limitation
- Negotiated rates cannot exceed those charged to other similar customers.
- Dispute Resolution
- Unresolved negotiations after a reasonable time become a dispute under the contract's Disputes clause.
- Contract Modification
- All agreed changes must be incorporated into the contract via a formal modification.
Responsibilities
- Contracting Officers: Ensure the clause is included in applicable contracts, facilitate negotiations, and process contract modifications.
- Contractors: Submit written requests for changes, participate in negotiations, and ensure rate compliance.
- Agencies: Oversee compliance and resolve disputes as needed.
Practical Implications
- This clause provides flexibility for both parties to adjust rates or terms for unregulated utility services during contract performance. It ensures fairness by capping rates at those charged to similar customers and formalizes the process for making changes. Failure to agree on changes can lead to formal disputes, so clear documentation and good-faith negotiation are essential.