F.o.b. Destination-Evidence of Shipment
Contractors must ship goods before invoicing and retain shipment evidence for three years, but do not need to submit this documentation with invoices unless requested.
Overview
This clause, FAR 52.247-48, applies to contracts awarded on a free on board (f.o.b.) destination basis. It establishes requirements for contractors regarding invoicing and the retention of shipment evidence. Contractors must not invoice for payment until supplies have been shipped to the specified destination. They are required to retain specific documentation as evidence of shipment for three years after final payment, but are not required to submit this documentation with their invoice unless requested by the Government. The type of documentation required depends on the method of transportation used (common carrier, parcel post, or other means). This clause ensures accountability and traceability in the delivery of goods under government contracts.
Key Rules
- Invoicing Restriction
- Contractors cannot invoice until supplies have been shipped to the destination.
- Retention of Shipment Evidence
- Contractors must retain shipment documentation for three years after final payment.
- Types of Acceptable Documentation
- Commercial bill of lading (common carrier), certificate of mailing (parcel post), or delivery document (other means).
- No Submission Requirement with Invoice
- Contractors do not need to submit shipment evidence with their invoice unless requested.
Responsibilities
- Contracting Officers: Ensure inclusion of this clause in applicable contracts and verify compliance during audits or reviews.
- Contractors: Ship supplies before invoicing, retain required shipment evidence, and make it available for government review upon request.
- Agencies: May review shipment documentation as needed for verification or audit purposes.
Practical Implications
- This clause exists to prevent premature invoicing and to provide a clear audit trail for shipped goods.
- Contractors must have robust record-keeping systems to retain and retrieve shipment evidence.
- Common pitfalls include invoicing before shipment or failing to retain required documentation for the full retention period.