47.502 Policy
Source: FAR 47.502 on acquisition.gov
Government contracts requiring ocean transportation must prioritize U.S.-flag vessels, ensuring at least 50% of cargo is shipped on them unless a valid waiver is obtained.
Overview
FAR 47.502 establishes the U.S. Government's policy on the use of U.S.-flag vessels for ocean transportation of government supplies and personnel. It mandates preference for U.S.-flag commercial vessels under several statutes, including the Cargo Preference Acts of 1904 and 1954 and the Merchant Marine Act of 1936. The regulation requires that at least 50% of the gross tonnage of government-acquired supplies transported by sea must be shipped on U.S.-flag vessels, provided such vessels are available at fair and reasonable rates. This policy applies to supplies acquired for the U.S. government, furnished to foreign nations, or acquired with U.S. funds or guarantees. Additional preferences apply to official travel and transportation of personal effects and government-owned vehicles. Temporary waivers are allowed in emergencies declared by Congress, the President, or the Secretary of Defense.
Key Rules
- Mandatory Use of U.S.-Flag Vessels (Cargo Preference Act of 1904 & 1954)
- DOD must use U.S.-flag vessels for transporting military supplies unless unavailable at fair and reasonable rates; at least 50% of government cargo must be shipped on U.S.-flag vessels under specified conditions.
- Merchant Marine Act Policy
- U.S. policy encourages the development and maintenance of a strong merchant marine fleet.
- Additional Preferences
- U.S.-flag vessels must be used for official travel, personal effects, and government-owned vehicle transport when at government expense.
- Emergency Waivers
- Cargo Preference Act requirements may be temporarily waived in declared emergencies.
Responsibilities
- Contracting Officers: Ensure compliance with cargo preference laws and document vessel selection; seek waivers if necessary.
- Contractors: Arrange for U.S.-flag vessel use as required; provide documentation of compliance.
- Agencies: Monitor compliance and process waiver requests during emergencies.
Practical Implications
- Ensures support for the U.S. maritime industry and national security.
- Impacts shipping arrangements, costs, and timelines for government contracts involving ocean transport.
- Noncompliance can result in contract disputes, penalties, or loss of eligibility for future contracts.
(a) The policy of the United States regarding the use of U.S.-flag vessels is stated in the following acts:
(1) The Cargo Preference Act of 1904 (http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section2631&num=0&edition=prelim" target="_blank">10 U.S.C. 2631), which requires the Department of Defense to use only U.S.-flag vessels for ocean transportation of supplies for the Army, Navy, Air Force, or Marine Corps unless those vessels are not available at fair and reasonable rates.
(2) The Merchant Marine Act of 1936 (http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title46-section1101&num=0&edition=prelim" target="_blank">46 U.S.C. 1101), which declares it is the policy of the United States to foster the development and encourage the maintenance of its merchant marine.
(3) The Cargo Preference Act of 1954 (http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title46-section1241(b)&num=0&edition=prelim" target="_blank">46 U.S.C. 1241(b), which is Section 901(b) of the Merchant Marine Act). Under this Act, Government agencies acquiring, either within or outside the United States, supplies that may require ocean transportation shall ensure that at least 50 percent of the gross tonnage of these supplies (computed separately for dry bulk carriers, dry cargo liners, and tankers) is transported on privately owned U.S.-flag commercial vessels to the extent that such vessels are available at rates that are fair and reasonable for U.S.-flag commercial vessels. This applies when the supplies are-
(i) Acquired for the account of the United States;
(ii) Furnished to, or for the account of, a foreign nation without provision for reimbursement;
(iii) Furnished for the account of a foreign nation in connection with which the United States advances funds or credits, or guarantees the convertibility of foreign currencies; or
(iv) Acquired with advance of funds, loans, or guaranties made by or on behalf of the United States.
(b) Additional policies providing preference for the use of U.S.-flag vessels are contained in-
(1) http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title46-section1241(a)&num=0&edition=prelim" target="_blank">46 U.S.C. 1241(a) for official business travel by officers and employees of the United States and for the transportation of their personal effects; and
(2) http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title46-section1241(e)&num=0&edition=prelim" target="_blank">46 U.S.C. 1241(e) for the transportation of motor vehicles owned by Government personnel when transportation is at Government expense or otherwise authorized by law.
(c) The provisions of the Cargo Preference Act of 1954 may be temporarily waived when the Congress, the President, or the Secretary of Defense declares that an emergency justifying a temporary waiver exists and so notifies the appropriate agency or agencies.