Our station's finance Office is billing contractors for the utilities they use, specifically billing a construction contractor for utilities used at their administrative trailers kept at the job site. Authority of the DoD to bill private parties for utility fees ahead of their actual use is in DoD FMR Vol 11A, para. 040201. However, I told the Comptroller that our contract grants free use of utilities to the contractor per the FAR clause we included, 52.236-14. i told our Finance Ddepartment to stop billing contractors for advance utility payments when the contract states those Ktors get free utilities. Why is this a big deal? Because the Ktor ends up paying advance utilities to one base department (Comptroller), then ends up submitting a monthly invoice to another base department (Construction Office) to get reimbursed for costs they are suposed to get free under the contract - and of course there is a fee tacked on top for processing this. So if the Ktor is billed for $100 in utilities, they submit an invoice for $115 to be repaid those utility costs and the fee for proessing it. Arghhh.

Our finance office doesn't believe me that the utility costs associated with the trailers are still utility fees "arising under the contract" per the FAR clause above; their next argument is that free utility costs are not "reasonable" as defined in the FAR clause. Of couse I said "Show me", but they are stuck in "this is the way we always do it"; so I am looking for more specific ammo. Anyone seen recent caselaw of GAO or COFC where Ktors successfully proved associated utility fees for a trailer are still arising under the contract - that is probably too specific, but there is probably some caselaw about associated costs that are covered under a more general contract clause?

Our station's finance Office is billing contractors for the utilities they use, specifically billing a construction contractor for utilities used at their administrative trailers kept at the job site. Authority of the DoD to bill private parties for utility fees ahead of their actual use is in DoD FMR Vol 11A, para. 040201. However, I told the Comptroller that our contract grants free use of utilities to the contractor per the FAR clause we included, 52.236-14. i told our Finance Ddepartment to stop billing contractors for advance utility payments when the contract states those Ktors get free utilities. Why is this a big deal? Because the Ktor ends up paying advance utilities to one base department (Comptroller), then ends up submitting a monthly invoice to another base department (Construction Office) to get reimbursed for costs they are suposed to get free under the contract - and of course there is a fee tacked on top for processing this. So if the Ktor is billed for $100 in utilities, they submit an invoice for $115 to be repaid those utility costs and the fee for proessing it. Arghhh.

Our finance office doesn't believe me that the utility costs associated with the trailers are still utility fees "arising under the contract" per the FAR clause above; their next argument is that free utility costs are not "reasonable" as defined in the FAR clause. Of couse I said "Show me", but they are stuck in "this is the way we always do it"; so I am looking for more specific ammo. Anyone seen recent caselaw of GAO or COFC where Ktors successfully proved associated utility fees for a trailer are still arising under the contract - that is probably too specific, but there is probably some caselaw about associated costs that are covered under a more general contract clause?

Am at volleyball match now, but is this for MILCON or O&M projects?

Interesting. Why are you telling us?

Am at volleyball match now, but is this for MILCON or O&M projects?

Am unable to do the research this evening but I believe that the Army and perhaps the Air Force have been charging construction contractors on MILCON projects for utilities used during construction for several years. The installation pays for the utilities with O? funds. Complicating this, the utilities at many installations are privatized. There is an effort underway not to subsidize or augment the cost to construct MILCON funded projects with O&M funding. I think it is discussed in AR420-1 for Army projects but am not certain.

And yes, the contractor will certainly try to put in enough in the contract price to cover itself.

It would be cheaper just to charge the utility cost within the government accounts but that requires management effort and additional procedures by government employees, who generally feel that it easier to let a contractor manage it.

Sir, it is MILCON

Sir, it is MILCON

Well, I'm still out of office today without access to computer. I think you can see why the Installation doesn't want to pay for utilities on a MILCON funded project with their O&M dollars. If this is Army, you could research AR 420-1 for the policy to charge MCA projects for utilities used. I think it is in there someplace.

I had to research this issue back in 2006 or so for a Model RFP we developed for Army design-build projects.

Sir, it is MILCON

I forgot to mention that you either have to modify your clause to charge the contractor or there may be a DFARS clause - again, I'm at a disadvantage here today (driving the bus to a volleyball tournament this weekend). The clause may well be editable. I just don't remember off the top of my head. You cited the authority to charge utilities. You just need to make sure that the contract reads consistent with the installation's requirements. Then you won't have to process a change each month. It will be included in the contract price. The other alternative is to have your project manager process a direct reimbursement to the installation from the project MCP appropriation. He/she won't like that extra budgeting and work plus it will not encourage contractors to conserve utilities.

Thank you for the input. This has me tracking some research paths I had not considered, so this should be a producive day.

Thank you for the input. This has me tracking some research paths I had not considered, so this should be a producive day.

Here is the FAR Clause verbatim:

"52.236-14 -- Availability and Use of Utility Services (Apr 1984)

(a) The Government shall make all reasonably required amounts of utilities available to the Contractor from existing outlets and supplies, as specified in the contract. Unless otherwise provided in the contract, the amount of each utility service consumed shall be charged to or paid for by the Contractor at prevailing rates charged to the Government or, where the utility is produced by the Government, at reasonable rates determined by the Contracting Officer. The Contractor shall carefully conserve any utilities furnished without charge.

( The Contractor, at its expense and in a workmanlike manner satisfactory to the Contracting Officer, shall install and maintain all necessary temporary connections and distribution lines, and all meters required to measure the amount of each utility used for the purpose of determining charges. Before final acceptance of the work by the Government, the Contractor shall remove all the temporary connections, distribution lines, meters, and associated paraphernalia.

(End of Clause)"

Thus, the clause, as written, states that the Contractor must pay for all utilities used. If this is the clause in your contract, you should not be reimbursing the Contractor for any utilities that the Installation has billed it for, provided that the rates are the same as those paid by the Government.

I took a quick look at AR 420-1:

"2?11. Government furnished, contractor occupied facilities

A contractor host is required to coordinate with its servicing public works activity manager and to obtain approval from

the garrison commander before facilities on a garrison are made available for contractor use. Before approval and

contract award, square footage, type of space provided, and reimbursement for utilities will be defined in the contract."

2-17 Project Costs

"...c. Appropriations that finance a project will be used to reimburse other appropriations for all funded costs initially

financed by such other appropriations. Funded costs include?

(1) Government-owned real property, materials, supplies, services, rental trailers and buildings, utilities, or items

applicable to the project..."