FAR 52.241-12—Nonrefundable, Nonrecurring Service Charge.
Plain-English Summary
FAR 52.241-12, Nonrefundable, Nonrecurring Service Charge, addresses when the Government may agree to pay a utility or other service contractor a one-time charge that is not refundable and is not tied to recurring service use. The clause covers three specific kinds of charges: an initiation-of-service charge, a contribution in aid of construction, and a nonrefundable membership fee. It also recognizes that the charge may be imposed either in addition to, or instead of, a connection charge, and it requires the contract schedule to state the specific service, the dollar amount, and when the charge is payable. In practice, this clause is used to document and authorize a one-time upfront payment that the contractor’s published rules require before service can begin or infrastructure can be extended. Its purpose is to make the charge explicit in the contract, avoid later disputes over whether the Government must pay it, and ensure the payment terms are clear and enforceable. For contracting officers and contractors, the key significance is that the charge must be tied to the contractor’s rules and inserted into the schedule with enough specificity to show exactly what is being paid and under what timing conditions.
Key Rules
Only specified charges qualify
The clause applies only to a nonrefundable charge for initiation of service, a contribution in aid of construction, or a nonrefundable membership fee. Charges outside those categories are not covered by this clause and should not be treated as automatically payable under it.
Charge must be required by contractor rules
The Government pays the charge only when the contractor’s rules and regulations require the customer to pay it. The clause does not create a new entitlement by itself; it incorporates an existing contractor-imposed requirement into the contract.
May supplement or replace connection charge
The nonrefundable, nonrecurring service charge may be in addition to a connection charge or may be charged in lieu of one. The contract should make clear whether both charges apply or whether this charge substitutes for another connection-related fee.
Schedule entry is required
The clause directs that the contractor’s schedule be amended to identify the nonrefundable, nonrecurring charge. The schedule must specify the service or purpose, the exact dollar amount, and the payment timing or schedule.
Payment terms must be explicit
The clause requires the contract to state when the charge is payable, using specified dates or schedules. This prevents ambiguity about whether payment is due at award, before service initiation, upon connection, or on another defined date.
Nonrefundable means no return of payment
Because the charge is nonrefundable, the Government should expect that the amount will not be returned once paid, even if service is later discontinued or the circumstances change, unless another contract term or law provides otherwise.
Responsibilities
Contracting Officer
Determine whether the contractor’s rules require a qualifying nonrefundable, nonrecurring charge and, if so, insert the clause and complete the schedule entry with the correct service description, amount, and payment timing. The contracting officer must ensure the contract clearly states whether the charge is in addition to or in lieu of a connection charge.
Contractor
Apply its published rules and regulations consistently, identify the qualifying charge, and provide the information needed for the contract schedule. The contractor must charge only the amount and for the purpose authorized by the contract and its governing rules.
Government Customer/Activity
Review the proposed charge for business need and budget impact, and ensure the service requirement justifies the one-time payment. The customer should confirm that the charge is understood as nonrefundable and that the timing of payment aligns with operational needs.
Agency/Legal or Pricing Support
Support the contracting officer in evaluating whether the charge is allowable under the contract structure and whether the schedule language is sufficiently precise. They may also help confirm that the charge is properly characterized and documented.
Practical Implications
This clause matters most when the Government is obtaining utility or similar service where the provider requires an upfront, one-time fee before service can begin or infrastructure can be extended.
A common pitfall is failing to state the exact amount and payment timing in the schedule, which can lead to disputes over when the Government must pay and whether the charge is enforceable.
Another risk is confusing this charge with a recurring service rate or a standard connection fee; the clause is meant for a specific nonrefundable, nonrecurring payment, not ongoing usage charges.
Contracting officers should verify that the contractor’s rules actually require the fee and that the contract language matches those rules, because the clause does not independently authorize arbitrary charges.
Because the charge is nonrefundable, agencies should confirm the operational need before agreeing to it, since recovery may not be available if service is delayed, reduced, or later terminated.
Official Regulatory Text
As prescribed in 41.501 (d)(6) , insert a clause substantially the same as the following: Nonrefundable, Nonrecurring Service Charge (Feb 1995) As provided herein, the Government will pay a nonrefundable, nonrecurring charge when the rules and regulations of a Contractor require that a customer pay (1)a charge for the initiation of service, (2)a contribution in aid of construction, or (3)a nonrefundable membership fee. This charge may be in addition to or in lieu of a connection charge. Therefore, there is hereby added to the Contractor’s schedule a nonrefundable, nonrecurring charge for ___________ in the amount of $ ________ dollars payable .[ specify dates or schedules ] (End of clause)