FAR 41.102—Applicability.
Plain-English Summary
FAR 41.102 explains when FAR Part 41 applies to utility service acquisitions and when it does not. In general, it covers the Government’s purchase of utility services, including related connection charges and termination liabilities, so contracting personnel know when Part 41 procedures govern the buy. It also lists important exclusions: utility services provided by another Federal agency, services obtained by Federal power or water marketing agencies as part of their programs, CATV and telecommunications services, natural or manufactured gas bought as a commodity, utility services acquired in foreign countries, certain real property and utility-facility acquisitions, and third-party financed shared-savings projects under 42 U.S.C. 8287. The section further clarifies that agencies may still use Part 41 for energy savings or purchased utility services directly resulting from a qualifying shared-savings project, but only for up to 25 years. Practically, this section is a threshold rule: before choosing acquisition strategy, the agency must determine whether the requirement is a Part 41 utility service action or falls under another acquisition framework.
Key Rules
Part 41 generally applies
FAR Part 41 governs acquisitions of utility services for the Government. This includes not only the utility service itself, but also connection charges and termination liabilities associated with obtaining that service.
Interagency utility services excluded
If the utility service is produced, distributed, or sold by another Federal agency, Part 41 does not apply. In those cases, agencies must use interagency agreements under FAR 41.206.
Certain agency programs excluded
Utility services obtained by a Federal power or water marketing agency as part of its marketing or distribution program are outside Part 41. These transactions are handled under the authority and structure of that agency’s program, not as standard Part 41 utility procurements.
CATV and telecom excluded
Cable television and telecommunications services are not covered by this part. They must be acquired under the rules that apply to those services, rather than the utility-service rules in Part 41.
Gas commodity purchases excluded
The acquisition of natural or manufactured gas when purchased as a commodity is excluded from Part 41. The key distinction is whether the Government is buying gas as a commodity rather than acquiring utility service under the part.
Foreign-country utility acquisitions excluded
Utility services acquired in foreign countries are not subject to Part 41. Agencies must use the acquisition approach applicable to overseas requirements and local conditions.
Real property and facility rights excluded
Part 41 does not apply to acquiring rights in real property, public utility facilities, on-site equipment needed for a facility’s own distribution system, or construction and maintenance of Government-owned equipment and real property. These are treated as property or construction-related actions, not utility-service acquisitions.
Shared-savings projects limited exception
Third-party financed shared-savings projects authorized by 42 U.S.C. 8287 are excluded from Part 41, but agencies may use Part 41 for energy savings or purchased utility services directly resulting from such a project. That use is limited to periods not exceeding 25 years.
Responsibilities
Contracting Officer
Determine whether the requirement is a utility service acquisition covered by FAR Part 41 or falls within one of the listed exclusions. If the service is provided by another Federal agency, ensure the agency uses an interagency agreement under FAR 41.206, and if a shared-savings project is involved, confirm any Part 41 use stays within the 25-year limit.
Agency Program/Requirements Office
Identify the nature of the requirement early—utility service, commodity purchase, telecom, foreign acquisition, property/facility acquisition, or shared-savings project—so the correct acquisition vehicle and regulatory framework are used from the start.
Federal Power or Water Marketing Agency
When acquiring utility services incident to its marketing or distribution program, follow the special program authority rather than Part 41 utility-service procedures.
Other Federal Agency Providing Utility Services
When producing, distributing, or selling utility services to another agency, support the transaction through an interagency agreement rather than a Part 41 procurement.
Contractor/Utility Provider
Understand whether the Government’s requirement is being acquired under Part 41 or under an excluded framework, because the applicable terms, pricing structure, and contract vehicle may differ significantly.
Practical Implications
The first practical step is classification: many disputes and procurement errors come from mislabeling a requirement as a utility service when it is actually telecom, a commodity gas purchase, a property right, or a construction-related acquisition.
If another Federal agency is the provider, the buyer should not run a normal utility procurement; it should use an interagency agreement, which changes documentation, approvals, and often pricing treatment.
Shared-savings and energy-savings projects need special attention because Part 41 is generally excluded, but a limited Part 41 path exists for resulting utility services or energy savings for up to 25 years.
Connection charges and termination liabilities are part of the Part 41 universe, so contracting officers should account for them early when estimating total cost and negotiating terms.
A common pitfall is assuming all utility-related purchases are covered by the same rules; the exclusions in this section are broad and can shift the acquisition into a completely different FAR part or statutory regime.
Official Regulatory Text
(a) Except as provided in paragraph (b) of this section, this part applies to the acquisition of utility services for the Government, including connection charges and termination liabilities. (b) This part does not apply to- (1) Utility services produced, distributed, or sold by another Federal agency. In those cases, agencies shall use interagency agreements (see 41.206 ); (2) Utility services obtained by purchase, exchange, or otherwise by a Federal power or water marketing agency incident to that agency’s marketing or distribution program; (3) Cable television (CATV) and telecommunications services; (4) Acquisition of natural or manufactured gas when purchased as a commodity; (5) Acquisition of utilities services in foreign countries; (6) Acquisition of rights in real property, acquisition of public utility facilities, and on-site equipment needed for the facility’s own distribution system, or construction/maintenance of Government-owned equipment and real property; or (7) Third party financed shared-savings projects authorized by 42 U.S.C. 8287 . However, agencies may utilize part 41 for any energy savings or purchased utility service directly resulting from implementation of a third party financed shared-savings project under 42 U.S.C.8287 for periods not to exceed 25 years.