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    I am preparing a solicitation for Electric Utility Services for IHS, and there's only one company in the market, I will utilize FAR 13 and FAR 41. Assistance with clarification if I will use Clause 52.213-4 Terms and Conditions – Simplified Acquisitions (Other Than Commercial Products and Commercial Services). (JAN 2022) or the commercial terms and condition clause ? Thank you.


    Answer

    Commercial services are defined in FAR 2.101 as "services of a type offered and sold competitively in substantial quantities in the commercial marketplace based on established catalog or market prices for specific tasks performed or specific outcomes to be achieved and under standard commercial terms and conditions."  A utility service is defined in FAR 41.101 as "a service such as furnishing electricity, natural or manufactured gas, water, sewerage, thermal energy, chilled water, steam, hot water, or high temperature hot water. The application of part  41 to other services (e.g., rubbish removal, snow removal) may be appropriate when the acquisition is not subject to the 41 U.S.C. chapter 67, Service Contract Labor Standards (see 37.107)."

    DFARS 241.201 lays out DoD’s policy for the acquisition of utility services as follows:

    (1) DoD, as a matter of comity, generally complies with the current regulations, practices, and decisions of independent regulatory bodies. This policy does not extend to nonindependent regulatory bodies.

    (2) Purchases of utility services outside the United States may use—

    (i) Formats and technical provisions consistent with local practice; and

    (ii) Dual language forms and contracts.

    (3) Rates established by an independent regulatory body—

    (i) Are considered “prices set by law or regulation”;

    (ii) Are sufficient to set prices without obtaining certified cost or pricing data (see FAR subpart 15.4); and

    (iii) Are a valid basis on which prices can be determined fair and reasonable.

    (4) Compliance with the regulations, practices, and decisions of independent regulatory bodies as a matter of comity is not a substitute for the procedures at FAR 41.202(a).

    Bottom line: Because utility rates are established by a regulatory body and are therefore considered “prices set by law or regulation”, a utility service does not meet the definition of a commercial service as defined by FAR 2.101.  According to FAR 12.301(b), FAR provision 52.212-4 is used for the acquisition of commercial products or commercial services.  Since utility services do not meet the FAR definition of a commercial service, none of the commercial provisions and clauses should be used for your acquisition if you follow what FAR 12.301(b) says.  As far as the use of FAR 53.213-4 is concerned, FAR 13.302-5(d)(1) states that FAR 52.213-4 may be used in simplified acquisitions exceeding the micro-purchase threshold that are for other than commercial products or commercial services (see 12.301).”  Therefore, it looks like you can use this provision as long as the aggregate dollar amount of the utilities being acquired do not exceed the simplified acquisition threshold (SAT).  However, be aware that if there is a recurring need for the utilities, the aggregate amount is calculated for the entire period of time that you anticipate the services will be needed to ensure you stay within the SAT.  And as you already pointed out, you need to comply with FAR Part 41 as well as DFARS Part 241 and your agency regulations.

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