52.247-59 F.o.b. Origin-Carload and Truckload Shipments
Source: FAR 52.247-59 on acquisition.gov
Contractors must ship in carload or truckload lots when possible and use the lowest applicable freight rates, or risk being liable for increased government costs.
Overview
FAR 52.247-59 establishes requirements for contractors making f.o.b. (free on board) origin shipments in carload or truckload quantities. The clause ensures that shipments are made in the most economical lot sizes, facilitating accurate freight cost evaluation and minimizing transportation costs for the government. It specifies how shipment quantities, weights, and freight rates are to be determined for both evaluation and actual delivery, and holds contractors liable for any increased costs resulting from non-compliance.
Key Rules
- Shipment in Carload/Truckload Lots
- Contractors must ship in carload or truckload lots when the delivery quantity to a destination meets the minimum required for such shipments, unless otherwise directed in writing by the Contracting Officer.
- Freight Rate Evaluation
- For bid evaluation, the agreed weight is the highest minimum weight that yields the lowest freight rate or per car charge, based on tariffs or tenders in effect at bid opening.
- Freight Rate for Actual Delivery
- For actual shipments, the agreed weight is determined by the lowest possible freight rate or per car charge as of the shipment date.
- Single Shipment for Less-than-Minimum Quantities
- If the scheduled quantity is less than the minimum used for evaluation, it must be shipped in one lot.
- Contractor Liability
- Contractors are responsible for any increased government costs due to failure to comply with these requirements.
Responsibilities
- Contracting Officers: Specify when the clause applies, provide written exceptions or directions, and monitor compliance.
- Contractors: Ship in required lot sizes, use correct freight rates for evaluation and delivery, and ensure compliance to avoid liability.
- Agencies: Oversee contract administration and enforce cost recovery for non-compliance.
Practical Implications
This clause ensures cost-effective shipping practices, accurate bid evaluations, and clear contractor accountability. Contractors must understand freight tariffs and shipment sizing to avoid increased costs and potential penalties. Common pitfalls include miscalculating lot sizes or failing to use the correct freight rates for evaluation and delivery.
As prescribed in 47.305-16(a), insert the following clause in solicitations and contracts when it is contemplated that they may result in f.o.b. origin contracts with shipments in carloads or truckloads. This will facilitate realistic freight cost evaluations of offers and ensure that contractors produce economical shipments of agreed size.
F.o.b. Origin-Carload and Truckload Shipments (Apr 1984)
(a) The Contractor agrees that shipment shall be made in carload or truckload lots when the quantity to be delivered to any one destination in any delivery period pursuant to the contract schedule of deliveries is sufficient to constitute a carload or truckload shipment, except as may otherwise be permitted or directed, in writing, by the Contracting Officer.
(b) For evaluation purposes, the agreed weight of a carload or truckload shall be the highest applicable minimum weight that will result in the lowest freight rate (or per car charge) on file or published in common carrier tariffs or tenders as of the date of bid opening (or the closing date specified for receipt of proposals).
(c) For purposes of actual delivery, the agreed weight of a carload or truckload will be the highest applicable minimum weight that will result in the lowest possible freight rate (or per car charge) on file or published as of date of shipment.
(d) If the total weight of any scheduled quantity to a destination is less than the highest carload/truckload minimum weight used for evaluation of offers, the Contractor agrees to ship such scheduled quantity in one shipment.
(e) The Contractor shall be liable to the Government for any increased costs to the Government resulting from failure to comply with the above requirements.
(End of clause)