47.304-3 Shipments from CONUS for overseas delivery
Source: FAR 47.304-3 on acquisition.gov
Always use f.o.b. origin for overseas shipments from CONUS unless a well-documented exception is justified, ensuring the lowest total shipping cost for the government.
Overview
FAR 47.304-3 addresses the requirements and best practices for government acquisitions involving shipments from the Continental United States (CONUS) to overseas destinations. The regulation emphasizes the use of f.o.b. (free on board) origin terms to leverage lower domestic freight rates and provide flexibility in selecting export ports and ocean carriers, ultimately reducing overall shipping costs for the government. It also outlines the need for proper justification and documentation if other delivery terms are used, and highlights the importance of evaluating total landed costs and utilizing agency export licensing privileges. Contracting officers are required to consult with transportation officers to ensure compliance and cost-effectiveness.
Key Rules
- Preference for f.o.b. Origin
- Supplies shipped from CONUS to overseas destinations should be acquired on an f.o.b. origin basis unless valid reasons exist to do otherwise.
- Documentation of Exceptions
- Any deviation from f.o.b. origin must be justified and documented in the contract file.
- Cost Evaluation
- Contracting officers must evaluate total landed costs, including inland, terminal, and ocean shipping costs, to determine the lowest overall cost.
- Consultation with Transportation Officer
- Contracting officers must seek advice from transportation officers, especially regarding export licensing privileges.
Responsibilities
- Contracting Officers: Ensure f.o.b. origin is used for overseas shipments from CONUS, document exceptions, evaluate total costs, and consult transportation officers.
- Contractors: Comply with specified delivery terms and provide necessary shipping information.
- Agencies: Oversee compliance, maintain documentation, and utilize export licensing privileges where applicable.
Practical Implications
- This section ensures cost-effective and flexible shipping for overseas government acquisitions.
- It impacts daily contracting by requiring careful selection of shipping terms and thorough cost analysis.
- Common pitfalls include failing to document exceptions or neglecting to consult transportation officers, which can lead to compliance issues or higher costs.
(a) When Government acquisitions involve shipments from CONUS to overseas destinations, delivery f.o.b. origin may afford not only the economies of lower freight rates available to the Government within CONUS, but also flexibility for selection of-
(1) The port of export; and
(2) The ocean transportation providing the lowest overall cost to the Government.
(b)
(1) Unless there are valid reasons to the contrary (see 47.304-5), acquisition of supplies originating within CONUS for ultimate delivery to destinations outside CONUS shall be made on the basis of f.o.b. origin. This policy applies to supplies and equipment to be shipped either directly to a port area for export or to a storage or holding area for subsequent forwarding to a port area for export.
(2) Justification for the solicitation of offers on other than an f.o.b. origin basis shall be recorded and the contract file documented accordingly.
(c) Export cargo involves considerations of operational and cost factors from the point of origin within CONUS to the overseas port destination. The lowest cost of shipping can be determined only by evaluating and comparing the various prospective landed costs (including inland, terminal, and ocean costs). Also, agencies may have export licensing privileges for shipments to foreign destinations. The contracting officer shall obtain advice from the transportation officer to ensure full use of these privileges.