Major revision to regulation outlining acquisition, sales of utilities published

Published March 24, 2015

The long-awaited revision to Army Regulation 420-41, Acquisition and Sale of Utilities Services, is now available. The Army Publishing Directorate formally released the updated regulation March 3. The extensive revision and update comes as significant changes in energy policy and technology have evolved over the past 20 years since the regulation was last revised in 1990. The revised regulation goes into effect April 3.

photo illustration of AR 420-41 cover

AR 420-41 establishes Department of the Army policies, responsibilities and mandatory procedures for the acquisition and sale of utilities and related services for continental United States military Army facilities. Its intent is the acquisition of life cycle cost-effective utility services commensurate with facility requirements and the sale of utilities and related services to garrison reimbursable customers.

The proponent of the regulation is the Chief of Engineers. Updating the AR-420-41 was a U.S. Army Corps of Engineers effort shared between Headquarters (Rafael Zayas, retired) and the Engineering and Support Center, Huntsville (Bernard Givan and Bob Hennessee). The revision implements electricity procurement requirements of the Energy Policy Act of 2005, Executive Order 13423, Executive Order 13514, Department of Defense Instruction 4170.11, and the DOD 4140.25–M chapters pertaining to the competitive acquisition of electricity and natural gas.

Utility acquisition and sales responsibilities are explained from the Assistant Secretaries of the Army down to the installation utility sales officers.

Chapter 3 provides guidance on the acquisition of utilities (electricity, natural or manufactured gas, water, sewage, thermal energy, chilled water, steam, hot water or high temperature hot water) services. Renewal energy, onsite generation, demand response and energy financial incentives are included with regard to the most recent Army policy.

The cost recovery of utility sales to Army facility customers is extremely important for an Army facility as well as the Army. Chapter 4 is dedicated to providing detailed policy and guidance to the recovery of government costs for utility services delivered. Figure 4-1 covers all possible reimbursable Army facility utility resources.

In 1992 the TN420-41, Guidance for Calculation of Rates for the Sale of Utilities Services, was published to provide technical guidance with the development of reimbursable rates for the sale of utilities services by Army installations. The Interim Guidance, Calculation of Rates for the Sale of Utilities Services and Utilities Contracts Invoicing and Billing Services, was released in 2012 to supersede the TN420-41. The Huntsville Center’s Commercial Utilities Program is further developing an enterprise application that will take utility provider bills and produce invoices for facility customers based on AR 420-41 guidance and data from the meter data management system.

Changes in the new AR 420-41 include the following:

  • Updates responsibilities for the acquisition of utilities services and the sale of utilities and related services to conform to Army Installation Management Transformation
  • Updates general Army policies for acquiring and selling utilities and services
  • Incorporates energy related statutes and executive order requirements related to the purchase of utility services from renewable energy, demand response pricing and environmental concerns
  • Identifies considerations for acquiring utilities services from renewable resource projects through energy power purchase agreements
  • Updates approval threshold levels for acquisition contracts and adds guidance on waivers or deviations from service related regulations and guidance
  • Provides guidance on the sale of electricity from alternate energy and cogeneration production facilities
  • Provides guidance on preparing, executing and administering solicitations and contracts for acquiring utility services
  • Provides guidance on acquisition utility contract rate changes
  • Establishes the Army Utilities Services Acquisition and Sale Specialist Training and Certification Program
  • Removes the reproducible utilities-sale-instrument formats from the regulation and prescribes additional special provision forms for hot water service, fuel oil service, compressed air service, ice service, chilled water service and liquefied propane gas service
  • Changes the terms “purchaser(s)” and “tenant(s)” to “customer(s)” and expands the customer classes on the sales of utilities and related services
  • Updates and expands the unit cost rates for the sale of utilities and related services for each customer class
  • Provides guidance on recovering incremental costs associated with privatizing an Army utility system and recovering energy savings performance contracting costs, or utility energy services contracting costs, directly related to a government-owned utility generation and/or utility external infrastructure
  • Provides guidance on using utility sale meters.

Bernard Givan is the program manager for Huntsville Center's Commercial Utilities Program

Bernard Givan

Release no. 15-034