52.247-64 Preference for Privately Owned U.S.-Flag Commercial Vessels
Source: FAR 52.247-64 on acquisition.gov
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.
As prescribed in 47.507(a), insert the following clause:
Preference for Privately Owned U.S.-Flag Commercial Vessels (Nov 2021)
(a) Except as provided in paragraph (e) of this clause, the Cargo Preference Act of1954 (46 U.S.C.App.1241(b)) requires that Federal departments and agencies shall transport in privately owned U.S.-flag commercial vessels at least 50 percent of the gross tonnage of equipment, materials, or commodities that may be transported in ocean vessels (computed separately for dry bulk carriers, dry cargo liners, and tankers). Such transportation shall be accomplished when any equipment, materials, or commodities, located within or outside the United States, that may be transported by ocean vessel are-
(1) Acquired for a U.S. Government agency account;
(2) Furnished to, or for the account of, any foreign nation without provision for reimbursement;
(3) 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
(4) Acquired with advance of funds, loans, or guaranties made by or on behalf of the United States.
(b) The Contractor shall use privately owned U.S.-flag commercial vessels to ship at least 50 percent of the gross tonnage involved under this contract (computed separately for dry bulk carriers, dry cargo liners, and tankers) whenever shipping any equipment, materials, or commodities under the conditions set forth in paragraph (a) of this clause, to the extent that such vessels are available at rates that are fair and reasonable for privately owned U.S.-flag commercial vessels.
(c)
(1) The Contractor shall submit one legible copy of a rated on-board ocean bill of lading for each shipment to both-
(i) The Contracting Officer, and
(ii) The:
Office of Cargo Preference Maritime Administration (MAR-590) 400 Seventh Street, SW Washington DC 20590.
Subcontractor bills of lading shall be submitted through the Prime Contractor.
(2) The Contractor shall furnish these bill of lading copies (i) within 20 working days of the date of loading for shipments originating in the United States, or (ii) within 30 working days for shipments originating outside the United States. Each bill of lading copy shall contain the following information:
(A) Sponsoring U.S. Government agency.
(B) Name of vessel.
(C) Vessel flag of registry.
(D) Date of loading.
(E) Port of loading.
(F) Port of final discharge.
(G) Description of commodity.
(H) Gross weight in pounds and cubic feet if available.
(I) Total ocean freight revenue in U.S. dollars.
(d) The Contractor shall insert the substance of this clause, including this paragraph (d), in all subcontracts or purchase orders under this contract, except those described in paragraph (e)(4).
(e) The requirement in paragraph (a) does not apply to-
(1) Cargoes carried in vessels as required or authorized by law or treaty;
(2) 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);
(3) Shipments of classified supplies when the classification prohibits the use of non-Government vessels; and
(4) Subcontracts or purchase orders for the acquisition of commercial products or commercial services unless-
(i) This contract is-
(A) A contract or agreement for ocean transportation services; or
(B) A construction contract; or
(ii) The supplies being transported are-
(A) Items the Contractor is reselling or distributing to the Government without adding value. (Generally, the Contractor does not add value to the items when it subcontracts items for f.o.b. destination shipment); or
(B) Shipped in direct support of U.S. military-
(1) Contingency operations;
(2) Exercises; or
(3) Forces deployed in connection with United Nations or North Atlantic Treaty Organization humanitarian or peacekeeping operations.
(f) Guidance regarding fair and reasonable rates for privately owned U.S.-flag commercial vessels may be obtained from the:
Office of Costs and Rates Maritime Administration 400 Seventh Street, SW Washington DC 20590 Phone: (202) 366-4610.
(End of clause)
Alternate I (Apr 2003). As prescribed in 47.507 (a)(2), substitute the following paragraphs (a) and (b) for paragraphs (a) and (b) of the basic clause:
(a) Except as provided in paragraphs (b) and (e) of this clause, the Contractor shall use privately owned U.S.-flag commercial vessels, and no others, in the ocean transportation of any supplies to be furnished under this contract.
(b) If such vessels are not available for timely shipment at rates that are fair and reasonable for privately owned U.S.-flag commercial vessels, the Contractor shall notify the Contracting Officer and request (1) authorization to ship in foreign-flag vessels or (2) designation of available U.S.-flag vessels. If the Contractor is authorized in writing by the Contracting Officer to ship the supplies in foreign-flag vessels, the contract price shall be equitably adjusted to reflect the difference in costs of shipping the supplies in privately owned U.S.-flag commercial vessels and in foreign-flag vessels.
Alternate II (Nov 2021) . As prescribed in 47.507 (a)(3), substitute the following paragraph (e) for paragraph (e) of the basic clause:
(e) The requirement in paragraph (a) does not apply to-
(1) Cargoes carried in vessels as required or authorized by law or treaty;
(2) 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); and
(3) Shipments of classified supplies when the classification prohibits the use of non-Government vessels.
(4) Subcontracts or purchase orders under this contract for the acquisition of commercial products or commercial services unless the supplies being transported are-
(i) Items the Contractor is reselling or distributing to the Government without adding value. (Generally, the Contractor does not add value to the items when it subcontracts items for f.o.b. destination shipment); or
(ii) Shipments 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. (Note: This contract requires shipment of commercial products in direct support of U.S. military contingency operations, exercises, or forces deployed in connection with United Nations or North Atlantic Treaty Organization humanitarian or peacekeeping operations.)