FAR Part 41: Acquisition of Utility Services

In plain English

FAR Part 41 prescribes policies and procedures for acquiring utility services (electricity, water, gas, etc.) for federal agencies. It covers how agencies obtain these services, including the use of GSA areawide contracts, separate contracts, and interagency agreements, and requires ongoing review of utility invoices and rates. For contractors, it means that utility service contracts are subject to specific rules, including mandatory clauses and annual reviews to ensure the government pays the most economical rates.

Key rules

• Agencies must acquire utility services by bilateral written contract, except for acquisitions at or below the simplified acquisition threshold, and must include required clauses.
• Agencies should obtain utility services from sources most advantageous to the Government in terms of economy, efficiency, reliability, or service.
• Contracting officers must conduct market surveys and acquisition planning to promote full and open competition, considering GSA areawide contracts, separate contracts, and interagency agreements.
• Agencies must review utility service invoices monthly and conduct annual reviews of accounts exceeding the simplified acquisition threshold to ensure accuracy and the most economical rate. (41.401)
• When a utility proposes a rate change, the agency must promptly determine if it is reasonable, justified, and not discriminatory, and if approved by a regulatory body, incorporate it into the contract.
• The contracting officer must insert specific solicitation provisions and contract clauses for utility services, such as those for electric service territory compliance and order of precedence.
• If acquiring utility services outside an areawide contract, purchase order, or interagency agreement, the contracting officer must use Standard Form 33, 26, or 1447 and incorporate the applicable rate schedule.

Who does what

In practice

• If you supply utility services to the government, be aware that the contract will include specific FAR clauses and that your rates and terms may be subject to regulatory approval and annual review.
• The government may use GSA areawide contracts or separate contracts, so understand which vehicle applies to your situation.
• Invoices will be reviewed monthly for accuracy, and annual reviews may lead to requests for rate changes if a more economical rate is available.
• Rate changes proposed by the utility must be justified and non-discriminatory, and if approved by a regulatory body, will be incorporated into the contract.

Common pitfalls

• Assuming that the utility supplier's standard forms and clauses can be used without including the FAR-required provisions and clauses; this is prohibited.
• Failing to conduct required market surveys and acquisition planning, which could lead to non-compliance with competition requirements.
• Overlooking the need to review invoices monthly and accounts annually, which could result in paying incorrect or non-economical rates.
• Not promptly determining the reasonableness of proposed rate changes, which could lead to unjustified increases in costs.

Written by AI from this part's codified text (2026-10-04); cited sections are checked against the part. A guide, not legal advice: the regulation text, the solicitation and your contract rule.