Connection Charge
FAR 52.241-9 ensures the Government is fairly charged for new utility connections while holding contractors responsible for facility ownership, maintenance, and proper crediting or refunds.
Overview
FAR 52.241-9, Connection Charge, establishes the terms and conditions under which a contractor furnishing and installing new utility connection facilities for the Government is compensated. The clause details how connection charges are calculated, paid, credited, and handled in the event of contract termination. It also clarifies ownership, maintenance, and liability responsibilities for the installed facilities.
Key Rules
- Payment of Connection Charge
- The Government pays the contractor for new connection facilities via progress, advance, or lump sum payments, based on estimated or actual costs minus salvage value. Final payment requires the contractor to release claims against the Government.
- Ownership and Maintenance
- Despite payment, the contractor retains ownership and is responsible for operation, maintenance, repair, taxes, and liabilities related to the facilities.
- Credits to the Government
- The contractor must credit a percentage of each monthly bill to the Government until the connection charge is fully offset. If the facilities serve other customers, credits must be accelerated. If the contract ends before full credit, the contractor must refund the uncredited balance.
- Termination Provisions
- If the Government terminates before completion, the contractor is paid for work performed minus salvage value. If terminated after completion but before full credit, the contractor can either retain or remove the facilities, with options for Government purchase at salvage value. Alternate I applies if a nonrefundable charge is paid, removing credit provisions.
Responsibilities
- Contracting Officers: Ensure the clause is included, negotiate payment terms, and monitor compliance with credit and termination provisions.
- Contractors: Install facilities, maintain ownership and liability, provide required credits, notify the Government if serving others, and comply with termination and removal options.
- Agencies: Oversee contract administration and ensure proper application of credits and termination procedures.
Practical Implications
This clause protects the Government’s financial interests when paying for new utility connections, ensures contractors remain responsible for the facilities, and provides clear procedures for credits and contract termination. Contractors must carefully track costs, credits, and notifications to avoid disputes or financial penalties.