Overview
FAR Subpart 41.1 provides the foundational framework for the federal acquisition of utility services, including electricity, gas, water, and sewerage. It establishes the scope of "utility services," defines specialized industry terminology, and delineates the statutory authorities that allow agencies—primarily through the General Services Administration (GSA)—to enter into long-term utility contracts and participate in regulatory proceedings.
Key Rules
- Contract Duration: Under statutory authority (40 U.S.C. 501), utility contracts are generally limited to a maximum term of 10 years, though certain Department of Energy (DOE) installations may extend to 25 years.
- Preferred Methods: Agencies are encouraged to use GSA "Areawide Contracts" where available, which utilize a standardized "Authorization" form to streamline service requests.
- Exclusions: This subpart does not apply to:
- Telecommunications and Cable TV (CATV).
- Natural gas purchased as a commodity (rather than a utility service).
- Utility services acquired in foreign countries.
- Interagency acquisitions (e.g., buying power from a Federal Power Marketing Agency).
- Termination Liability: Contracts must account for "Termination Liability," which is the Government’s obligation to pay for the unamortized costs of connection facilities if a contract is ended prematurely.
- Service Expansion: While primarily for traditional utilities, Part 41 may be applied to services like snow or rubbish removal if they are not subject to the Service Contract Labor Standards.
Responsibilities
- General Services Administration (GSA): Holds the primary statutory authority to prescribe policies, manage utility services, and represent the Federal government in proceedings before regulatory bodies ("Intervention").
- Delegated Agencies (DoD, DOE, VA): These agencies have specific authority to contract for utilities. DoD and DOE have 10-year authority; the VA is limited to connection charges.
- Senior Procurement Executive (SPE): Must certify that their agency has technically qualified personnel and an established acquisition program before GSA will grant delegated contracting authority.
- Ordering Agencies: Responsible for executing "Authorizations" under existing areawide contracts to initiate or change services within a supplier's franchise territory.
- Contracting Officers: Must ensure that acquisitions of utility services over one year (but under ten) are supported by a specific delegation of authority from GSA if they are not within a pre-authorized agency.
Practical Implications
- Procurement Strategy: Contracting Officers must distinguish between buying a commodity (like natural gas on the open market) and a utility service (delivered through a regulated provider). Commodity gas is handled under different FAR parts, while the delivery service remains under Part 41.
- Financial Risk Management: The definitions of "Connection Charges" and "Termination Liability" are critical for budget planning. Agencies must be prepared to pay nonrecurring costs upfront or risk a significant "contingent obligation" if a facility closes before the utility provider recovers its infrastructure investment.
- Administrative Efficiency: Using the GSA Areawide Contract is the "path of least resistance" for most facility managers. It avoids the need to negotiate a "Separate Contract" and allows for easy adjustments to service through a simple Authorization form.
- Regulatory Compliance: Because utilities are often monopolies within a "Franchise Territory," the government cannot always rely on standard competition. Part 41 provides the legal workaround to manage these unique, non-competitive market conditions.