Preference for Privately Owned U.S.-Flag Commercial Vessels
Contractors must prioritize U.S.-flag commercial vessels for at least 50% of ocean shipments under federal contracts and provide timely shipping documentation, unless a specific exception applies.
Overview
FAR 52.247-64 implements the Cargo Preference Act of 1954, requiring contractors to use privately owned U.S.-flag commercial vessels for at least 50% of the gross tonnage of ocean shipments related to federal contracts, when such vessels are available at fair and reasonable rates. This clause applies to shipments acquired for, or financed by, the U.S. Government, including those furnished to foreign nations under certain conditions. Contractors must submit detailed shipping documentation and flow down the clause to most subcontracts. There are specific exceptions, including certain commercial items, classified shipments, and shipments under specific international operations. Alternate versions of the clause may impose stricter requirements or modify exceptions, depending on contract type and agency needs.
Key Rules
- U.S.-Flag Vessel Requirement
- At least 50% of the gross tonnage of ocean shipments must be transported on privately owned U.S.-flag commercial vessels, when available at fair and reasonable rates.
- Documentation and Reporting
- Contractors must submit rated on-board ocean bills of lading with detailed shipment information to both the Contracting Officer and the Maritime Administration within specified timeframes.
- Subcontract Flowdown
- The substance of this clause must be included in all applicable subcontracts and purchase orders, with some exceptions.
- Exceptions
- Certain shipments (e.g., classified, specific commercial items, or those under international operations) are exempt from the requirement.
- Alternate Clauses
- Alternate I may require exclusive use of U.S.-flag vessels unless authorized otherwise; Alternate II modifies the list of exceptions.
Responsibilities
- Contracting Officers: Ensure inclusion of the clause, review compliance, and authorize exceptions as needed.
- Contractors: Use U.S.-flag vessels as required, submit documentation, and flow down requirements to subcontractors.
- Agencies: Oversee compliance and provide guidance on fair and reasonable rates.
Practical Implications
- Ensures support for the U.S. maritime industry and compliance with federal law.
- Impacts logistics planning, subcontracting, and documentation processes for contractors.
- Non-compliance can result in contractual remedies or penalties; common pitfalls include missing documentation or improper subcontract flowdown.