47.303-17 Contractor-prepaid commercial bills of lading, small package shipments
Source: FAR 47.303-17 on acquisition.gov
Contractors may use prepaid commercial bills of lading for small package shipments if authorized, but must follow strict documentation, invoicing, and consolidation rules to ensure cost savings and compliance.
Overview
FAR 47.303-17 outlines the procedures and requirements for contractor-prepaid commercial bills of lading for small package shipments when supplies are acquired f.o.b. origin. It allows contracting officers to authorize contractors to ship supplies to domestic destinations using commercial carriers, provided certain weight and security restrictions are met. The regulation also covers consolidation of shipments, reimbursement procedures, documentation requirements, and the use of specific contract clauses.
Key Rules
- Authorization for Prepaid Shipments
- Contracting officers may authorize contractors to use commercial bills of lading for shipments not exceeding 150 pounds by air or 1,000 pounds by other carriers, with no security classification.
- Consolidation of Shipments
- Contractors may consolidate Government shipments with their own to achieve cost savings, with the Government paying its pro rata share. Agency transportation personnel must ensure overall savings before authorizing consolidation.
- Ownership and Risk
- Supplies become Government property and risk transfers when loaded on the carrier’s equipment and the carrier’s receipt is obtained. The contractor pays for transportation and is reimbursed by the Government.
- Reimbursement and Documentation
- Contractors must itemize prepaid transportation charges on invoices and support them with receipted freight bills, except for certain low-value shipments where alternative documentation or waivers may apply.
- Prohibition on Splitting Shipments
- Shipments and invoices cannot be split to avoid documentation requirements for charges of $100 or less.
- Required Clause
- The clause at 52.247-65 must be included in applicable solicitations and contracts.
Responsibilities
- Contracting Officers: Authorize shipments, ensure cost savings, insert required clauses, and oversee compliance.
- Contractors: Consolidate shipments appropriately, pay and invoice for transportation, provide required documentation, and retain records as specified.
- Agencies: Evaluate transportation costs, determine documentation waivers, and process loss or damage claims per agency regulations.
Practical Implications
- This section ensures efficient, cost-effective small package shipping while protecting the Government’s interests. Contractors must follow strict documentation and invoicing rules, and agencies must verify cost savings and compliance. Common pitfalls include improper documentation, unauthorized shipment splitting, and failure to include required contract clauses.
(a) If it is advantageous to the Government, the contracting officer may authorize the contractor to ship supplies, which have been acquired f.o.b. origin, to domestic destinations, including DoD air and water terminals by common carriers on commercial bills of lading. Such shipments shall not exceed 150 pounds by commercial air or 1,000 pounds by other commercial carriers and shall not have a security classification.
(b) The contracting officer may authorize the shipments under paragraph (a) of this subsection to be consolidated with the contractor’s own prepaid shipments for delivery to one or more destinations, if all appropriate f.o.b. origin shipments under one or more Government contracts have been consolidated initially. The contractor may be authorized to consolidate less-than-carload or less-than-truckload Government shipments with its own shipments so that the Government can take advantage of lower carload or truckload freight costs. The Government shall assume its pro rata share of the combined shipment cost. Agency transportation personnel shall evaluate overall transportation costs before authorizing any movement to ensure savings to the Government consistent with other contract and traffic management considerations. When consolidation is authorized, a copy of the commercial bill of lading shall be mailed promptly to each consignee.
(c) Shipments under prepaid commercial bills of lading, as authorized in paragraph (a) of this subsection, do not require a contract modification. Unless otherwise provided in the contract, the supplies move for the account of, and at the risk of, the Government. The supplies become Government property when loaded on the carrier’s equipment and the contractor has obtained the carrier’s receipt. The contractor pays the transportation charges and is reimbursed by the Government. Loss or damage claims shall be processed in accordance with agency regulations.
(d) The contractor’s invoice for reimbursement by the Government shall show the prepaid transportation charges as agreed (see paragraph (b) of this subsection), as a separate item for each individual shipment. The contractor shall support the transportation charges with a copy of the carrier’s receipted freight bill or other evidence of receipt, except as follows:
(1) A Government agency may determine that receipted freight bills or other evidence of receipt are not required for transportation charges of $100 or less.
(2) A Government agency may pay an invoiced but unsupported transportation charge of $250 or less per transaction (i.e., purchase, invoice, or aggregate billing or payment for multiple purchases), if-
(i) The contractor cannot reasonably provide a receipted freight bill; and
(ii) The agency has determined that the charges are reasonable. Determination of reasonableness may be based on-
(A) Past experience (authenticated transportation charges for similar shipments);
(B) Rate checks;
(C) Copies of previous freight bills submitted by the contractor; or
(D) Other information submitted by the contractor to substantiate the amount claimed.
(3) Receipted freight bills in support of invoiced transportation charges of $100 or less are not required for reimbursement by the Government, if-
(i) The underlying contract specifies retention by the contractor of all records for at least 3 years after final payment under the contract; and
(ii) The contractor agrees to furnish evidence of payment when requested by the Government.
(e) Shipments and invoices shall not be split to reduce transportation charges to $100 or less per transaction as a means of avoiding the required documented support for the charges. See paragraph (d)(2) of this subsection for unsupported transportation charges of $250 or less.
(f) The contracting officer shall insert the clause at 52.247-65, F.o.b. Origin, Prepaid Freight-Small Package Shipments, in solicitations and contracts when f.o.b. origin shipments are to be made.