47.305-13 Transit arrangements
Source: FAR 47.305-13 on acquisition.gov
FAR 47.305-13 ensures the Government maximizes transportation cost savings by leveraging transit arrangements and credits, requiring specific contract clauses and careful management of shipping and invoicing procedures.
Overview
FAR 47.305-13 addresses the use of transit arrangements and transit credits in government transportation contracts. Transit arrangements allow shipments to stop at intermediate points for storage or processing, often resulting in cost savings through single through rates rather than multiple charges. The regulation outlines when and how contracting officers should consider and incorporate these arrangements and credits into solicitations and contracts, particularly for large shipments where such benefits are likely. It also specifies the use of certain FAR clauses and the responsibilities of both contracting officers and contractors regarding documentation and invoicing.
Key Rules
- Transit Arrangements
- Allow for intermediate stops in shipments, with cost savings via through rates and additional transit charges instead of separate rates.
- Solicitation Restrictions
- Solicitations using transit arrangements must be limited to f.o.b. origin offers, as f.o.b. destination offers cannot accommodate variable transit pricing.
- Traffic Management Analysis
- Traffic management personnel must analyze and advise on the benefits of transit arrangements, ensuring sufficient shipment quantities for carload/truckload movements.
- Required Clauses
- FAR 52.247-56 must be included in solicitations when transit arrangements may benefit the Government.
- Transit Credits
- Contracting officers must use contractors’ earned transit credits in evaluations, and contracts must specify prepaid commercial bills of lading and reimbursement procedures.
- Invoicing Requirements
- Contractors must itemize transportation and transit charges on invoices, with reimbursement capped at the quoted offer amount.
- Additional Clauses for Transit Credits
- FAR 52.247-57 must be included when transit credits are likely to reduce costs.
Responsibilities
- Contracting Officers: Evaluate and incorporate transit arrangements/credits, include required clauses, ensure proper contract terms, and verify invoicing compliance.
- Contractors: Ship on prepaid commercial bills of lading, itemize charges on invoices, and comply with contract terms regarding transit arrangements and credits.
- Agencies: Provide traffic management analysis and oversight to ensure cost-effective transportation solutions.
Practical Implications
- This section exists to help the Government leverage commercial transportation practices for cost savings and efficiency.
- It impacts daily contracting by requiring careful analysis of shipping methods, contract clauses, and invoicing.
- Common pitfalls include failing to include required clauses, improper invoicing, or not fully utilizing available transit credits.
(a) Transit privileges.
(1) Transit arrangements permit the stopping of a carload or truckload shipment at a specific intermediate point en route to the final destination for storage, processing, or other purposes, as specified in carrier tariffs or rate tenders. A single through rate is charged from origin to final destination plus a transit or other related charge, rather than a more expensive combination of rates to and from the transit point.
(2) The contracting officer shall consider possible benefits available to the Government through the use of existing transit arrangements or through efforts to obtain additional transit privileges from the carriers. Solicitations incorporating transit arrangements shall be restricted to f.o.b. origin offers, as f.o.b. destination offers can only quote fixed overall delivered prices at first destination.
(3)
(i) Traffic management personnel shall furnish information and analyses of situations in which transit arrangements may be beneficial. The quantity to be awarded must be of sufficient tonnage to ensure that carload/truckload shipments can be made by the contractor, and there should be reasonable certainty that shipments out of the transit point will be requested in carload/truckload quantities.
(ii) The contracting officer shall insert in solicitations the provision at 52.247-56, Transit Arrangements, when benefits may accrue to the Government because transit arrangements may apply.
(b) Transit credits.
(1) In evaluations of f.o.b. origin offers for large quantities of supplies that contractors normally have in process or storage at intermediate points, contracting officers shall make use of contractors’ earned commercial transit credits, which are recorded with the carriers. A transit credit represents the transportation costs for a recorded tonnage from the initial point to an intermediate point. The remaining transportation charges from the intermediate point to the Government destination, because they are based on through rates, are frequently lower than the transportation charges that would apply for the same tonnage if the intermediate point were the initial origin point.
(2) If transit credits apply, the contract shall state that the contractor shall ship the goods on prepaid commercial bills of lading, subject to reimbursement by the Government. The contracting officer shall ensure that this does not preclude a proper change in delivery terms under the Changes clause. The shipments move for the account and at the risk of the Government, as they become Government property at origin.
(3) The contractor shall show the transportation and transit charges as separate amounts on the invoice for each individual shipment. The amount to be reimbursed by the Government shall not exceed the amount quoted in the offer.
(4) The contracting officer shall insert in solicitations and contracts the clause at 52.247-57, Transportation Transit Privilege Credits, when supplies are of such a nature, or when it is the custom of the trade, that offerors may have potential transit credits available and the Government may reduce transportation costs through the use of transit credits.