FAR 41.501—Solicitation provision and contract clauses.
Plain-English Summary
FAR 41.501 tells contracting officers which utility-specific solicitation provisions and contract clauses must be included when buying utility services, and when those clauses apply. It addresses the special reality that utility terms and conditions vary by locality, by regulatory status, and by the type of utility arrangement, so the FAR allows prescribed clauses to be used on a “substantially the same as” basis with agency-approved variations. The section covers the Electric Service Territory Compliance Representation for solicitations seeking proposals from alternative electric suppliers, the core utility clauses that belong in most utility solicitations and contracts, and a set of conditional clauses that apply only when certain facts exist—such as regulated versus unregulated service, refundable or nonrefundable connection charges, termination liability, multiple service locations, capital credits, and other nonrecurring charges. It also reminds contracting officers to include other FAR provisions and clauses that are required elsewhere, depending on the acquisition. In practice, this section is the roadmap for building a compliant utility solicitation and contract package that matches the service environment and protects the Government’s pricing, service, and termination interests.
Key Rules
Use utility-specific clauses
The contracting officer must include the prescribed utility clauses in solicitations and contracts for utility services. These clauses address ordering priority, contract scope and duration, service changes, contractor facilities, and service provisions.
Alternative electric suppliers
When proposals from alternative electric suppliers are sought, the solicitation must include a representation substantially the same as the Electric Service Territory Compliance Representation. This helps ensure the supplier is authorized or otherwise compliant for the service territory involved.
Regulated service clause
If the utility service is subject to a regulatory body, the contracting officer must include the clause on changes in rates or terms and conditions for regulated services. For most agencies, the clause must identify the contracting officer in the blank; GSA areawide contracts use the specified GSA/customer wording.
Unregulated service clause
If the utility service is not subject to a regulatory body, the contracting officer must include the clause on changes in rates or terms and conditions for unregulated services. This clause fills the gap where regulatory oversight does not control pricing or service changes.
Connection and termination charges
When the Government must pay a refundable connection charge, the connection charge clause applies; if the charge is nonrefundable, Alternate I is used. If payment is to be made upon termination of service in lieu of or together with a connection charge, the termination liability clause must be included.
Multiple locations and service charges
If alternative service locations may be needed, the multiple service locations clause applies, except under areawide contracts. If the Government must pay a nonrefundable, nonrecurring service charge, membership fee, initiation fee, or construction contribution, the nonrefundable, nonrecurring service charge clause must be included.
Capital credits for cooperatives
When the Federal Government is a member of a cooperative and is entitled to capital credits under the cooperative’s bylaws and governing documents, the capital credits clause must be included.
Include other required FAR clauses
The contracting officer must also add any other FAR provisions and clauses required elsewhere in the FAR, based on the specific acquisition conditions. This section does not replace other mandatory clause prescriptions.
Agency-approved variations allowed
Because utility terms vary by area, the prescribed provisions and clauses may be varied on a substantially the same as basis in accordance with agency procedures. The core substance must remain, but wording can be adapted to fit the utility situation.
Responsibilities
Contracting Officer
Determine which utility clauses and provisions apply based on the service type, regulatory status, location, charges, and contract structure; insert the required clauses and any other applicable FAR clauses; use agency-approved substantially-the-same-as variations when appropriate; and complete required clause blanks, such as the contracting officer identification or GSA-specific wording where required.
Agency
Establish procedures for preparing and using substantially-the-same-as variations of the prescribed utility provisions and clauses; ensure contracting officers know when special utility clauses apply; and support consistent clause selection across utility acquisitions.
Utility Supplier / Contractor
Comply with the solicitation representations and contract clauses that govern service territory compliance, rates, service changes, facilities, charges, termination liability, and other utility-specific terms; and provide service under the contract terms as modified by the applicable utility clauses.
Federal Government / Customer Activity
Identify operational needs that affect utility contracting, such as alternative service locations, expected service changes, or the need for special facilities or nonrecurring charges; and provide the information needed for the contracting officer to select the correct clauses.
Practical Implications
Clause selection is fact-specific: the wrong utility clause can leave the Government exposed to rate changes, termination costs, or disputes over service obligations.
Contracting officers must distinguish carefully between regulated and unregulated utility service, because the applicable change-in-rates clause depends on that status.
Connection charges, termination liability, and nonrefundable service charges are related but not interchangeable; the contract must match the actual payment structure.
Areawide utility contracts and GSA areawide contracts have special treatment, so standard clause language and blanks may need tailored completion.
This section does not stand alone—officers must still check the rest of the FAR for other mandatory provisions and clauses that apply to the acquisition.
Official Regulatory Text
(a) Because the terms and conditions under which utility suppliers furnish service may vary from area to area, the differences may influence the terms and conditions appropriate to a particular utility’s contracting situation. To accommodate requirements that are peculiar to the contracting situation, this section prescribes provisions and clauses on a "substantially the same as" basis (see 52.101 ) which permits the contracting officer to prepare and utilize variations of the prescribed provision and clauses in accordance with agency procedures. (b) The contracting officer shall insert in solicitations for utility services a provision substantially the same as the provision at 52.241-1 , Electric Service Territory Compliance Representation, when proposals from alternative electric suppliers are sought. (c) The contracting officer shall insert in solicitations and contracts for utility services clauses substantially the same as the clauses at- (1) 52.241-2 , Order of Precedence-Utilities; (2) 52.241-3 , Scope and Duration of Contract; (3) 52.241-4 , Change in Class of Service; (4) 52.241-5 , Contractor’s Facilities; and (5) 52.241-6 , Service Provisions. (d) The contracting officer shall insert clauses substantially the same as the clauses listed below in solicitations and contracts under the prescribed conditions- (1) 52.241-7 , Change in Rates or Terms and Conditions of Service for Regulated Services, when the utility services are subject to a regulatory body. (Except for GSA areawide contracts, the contracting officer shall insert in the blank space provided in the clause the name of the contracting officer. For GSA areawide contracts, the contracting officer shall insert the following: "GSA and each areawide customer with annual billings that exceed $250,000"). (2) 52.241-8 , Change in Rates or Terms and Conditions of Service for Unregulated Services, when the utility services are not subject to a regulatory body. (3) 52.241-9 , Connection Charge, when a refundable connection charge is required to be paid by the Government to compensate the contractor for furnishing additional facilities necessary to supply service. (Use AlternateI to the clause if a nonrefundable charge is to be paid. When conditions require the incorporation of a nonrecurring, nonrefundable service charge or a termination liability, see paragraphs (d)(6) and (d)(4) of this section). (4) 52.241-10 , Termination Liability, when payment is to be made to the contractor upon termination of service in conjunction with or in lieu of a connection charge upon completion of the facilities. (5) 52.241-11 , Multiple Service Locations (as defined in 41.101 ), when providing for possible alternative service locations, except under areawide contracts, is required. (6) 52.241-12 , Nonrefundable, Nonrecurring Service Charge, when the Government is required to pay a nonrefundable, nonrecurring membership fee, a charge for initiation of service, or a contribution for the cost of facilities construction. The Government may provide for inclusion of such agreed amount or fee as a part of the connection charge, a part of the initial payment for services, or as periodic payments to fulfill the Government’s obligation. (7) 52.241-13 , Capital Credits, when the Federal Government is a member of a cooperative and is entitled to capital credits, consistent with the bylaws and governing documents of the cooperative. (e) Depending on the conditions that are appropriate for each acquisition, the contracting officer shall also insert in solicitations and contracts for utility services the provisions and clauses prescribed elsewhere in the FAR.