47.504 Exceptions
Source: FAR 47.504 on acquisition.gov
FAR 47.504 provides clear exceptions to U.S.-flag vessel requirements, but contractors must carefully verify that their shipments or subcontracts meet the specific criteria to qualify.
Overview
FAR 47.504 outlines specific exceptions to the policy and procedures governing ocean transportation by U.S.-flag vessels. This section clarifies when the requirements of Subpart 47.5 do not apply, helping contracting professionals determine if their shipments or contracts are exempt from these rules. The exceptions include shipments required by law or treaty to use certain vessels, ocean transportation between foreign countries funded under the Foreign Assistance Act, classified shipments that cannot use non-Government vessels, and certain subcontracts for commercial products or services. However, there are notable exclusions to these exceptions, particularly for grants-in-aid, Export-Import Bank-related shipments, subcontracts under ocean transportation or construction contracts, and shipments of commercial products that are simply resold or shipped in direct support of military or humanitarian operations.
Key Rules
- Legal or Treaty-Required Shipments
- Shipments aboard vessels as mandated or authorized by law or treaty are exempt from Subpart 47.5.
- Foreign Assistance Act Shipments
- Ocean transportation between foreign countries using funds from the Foreign Assistance Act is exempt.
- Classified Shipments
- Shipments of classified supplies that cannot use non-Government vessels are exempt.
- Commercial Subcontracts
- Subcontracts for commercial products or services are generally exempt, with specific exceptions for certain types of shipments and contracts.
Responsibilities
- Contracting Officers: Must determine if a shipment or subcontract falls under these exceptions before applying Subpart 47.5 requirements.
- Contractors: Should identify and document when their shipments or subcontracts qualify for an exception and ensure compliance with any applicable exclusions.
- Agencies: Oversee and verify that exceptions are properly applied and documented.
Practical Implications
- This section helps avoid unnecessary compliance with U.S.-flag vessel requirements when exceptions apply, streamlining contracting and shipping processes.
- Misapplying exceptions can lead to noncompliance or missed opportunities for regulatory relief.
- Contractors should carefully review the detailed exclusions to ensure their shipments truly qualify for an exception.
The policy and procedures in this subpart do not apply to the following:
(a) Shipments aboard vessels as required or authorized by law or treaty.
(b) Ocean transportation between foreign countries of supplies purchased with foreign currencies made available, or derived from funds that are made available, under the Foreign Assistance Act of1961 (http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title22-section2353&num=0&edition=prelim" target="_blank">22 U.S.C. 2353).
(c) Shipments of classified supplies when the classification prohibits the use of non-Government vessels.
(d) Subcontracts for the acquisition of commercial products, including commercial components, or commercial services (see 12.504(a)(1) and (a)(11)). This exception does not apply to-
(1) Grants-in-aid shipments, such as agricultural and food-aid shipments;
(2) Shipments covered under 46 U.S.C. App.1241-1, such as those generated by Export-Import Bank loans or guarantees;
(3) Subcontracts under-
(i) Government contracts or agreements for ocean transportation services; or
(ii) Construction contracts; or
(4) Shipments of commercial products that are-
(i) Items the contractor is reselling or distributing to the Government without adding value (see FAR 12.501(b)). Generally, the contractor does not add value to the items when it subcontracts items for f.o.b. destination shipment; or
(ii) Shipped in direct support of U.S. military-
(A) Contingency operations;
(B) Exercises; or
(C) Forces deployed in connection with United Nations or North Atlantic Treaty Organization humanitarian or peacekeeping operations.