Overview
This section outlines the procedures federal agencies must follow when utility suppliers propose changes to rates or terms of service, addressing both regulatory intervention and the administrative processing of contract modifications.
Key Rules
- Agency Review: Agencies must promptly evaluate any proposed changes to ensure they are reasonable, justified, and non-discriminatory.
- GSA Coordination: If a rate change affects multiple federal agencies, the matter must be referred to the General Services Administration (GSA). Agencies may seek a delegation of authority from GSA to intervene in regulatory proceedings.
- Regulated Services: Rate changes approved by a regulatory body are incorporated into the contract via unilateral modification. The effective date is dictated by the regulatory body, and agencies must process payments quickly to avoid late fees.
- Unregulated Services: Changes for unregulated suppliers are subject to negotiation (per FAR 52.241-8) and must be documented through a formal contract modification.
- Administrative Notification: In all cases, copies of the executed modifications must be provided to the agency’s paying office or the office responsible for bill verification.
Practical Implications
- Administrative Efficiency: For regulated utilities, the government uses unilateral modifications to ensure contract rates stay current with public utility commission decisions without requiring a new signature from the contractor for every rate adjustment.
- Monitoring Requirements: Contracting Officers must actively monitor utility filings and regulatory approvals to ensure the government is paying the correct legal rate and avoiding interest penalties associated with late payments under the Prompt Payment Act.