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  • Question

    Are utilities (water, electric, gas etc) considered a Commercial Item?


    Answer

    We need to look at the definition of "commercial item" at FAR 2.101. While many services can be classified as "commercial," the utilities at issue here do not meet the criteria specified in paragraphs (5) and (6) of the commercial item definition. Of particular relevance is that most utility rates are set by a regulatory body and not subject to true market-based pricing...which is necessary for a service to be considered "commercial." Furthermore, FAR Subpart 41.6 prescribes the use of forms (e.g., SF 26 and 33) for utilities contracts that are not used for commercial items. Ultimately the commercial item determination is a contracting officer decision, but for a more authoritative response I recommend you contact DCMA's Commercial Item Group (CIG). You will find contact info on the CIG site.

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