Transportation

Overview

FAR Part 47 prescribes policies and procedures for applying transportation and traffic management considerations to the acquisition of supplies and the procurement of transportation-related services. It aims to ensure that the government moves goods and personnel in the most economical, efficient, and regulatory-compliant manner possible, utilizing both commercial carriers and government resources when necessary.

Key Rules

• Carrier Preference: The government’s preferred method for transporting supplies is through commercial carriers. Government-owned or leased vehicles may only be used if they are available, result in substantial economies, and comply with specific agency policies.
• Government Rate Tenders: Under 49 U.S.C. 10721 and 13712, common carriers may offer the government rates that are lower than those offered to the general public. These reduced rates apply to both Government Bills of Lading (GBL) and Commercial Bills of Lading (CBL) if properly endorsed.
• Transportation Insurance: The government generally self-insures and does not purchase commercial insurance for its property while in the possession of carriers. It retains the risk of loss unless special circumstances require the carrier to assume full responsibility.
• Fly America Act (Subpart 47.4): Government-financed air transportation must use U.S.-flag air carriers unless specific exceptions apply (e.g., unavailability or bilateral transport agreements).
• Cargo Preference Act (Subpart 47.5): Requires that a specific percentage of government-financed ocean cargo be transported on U.S.-flag vessels.
• Delivery Terms (F.o.b. Points): Contracts must specify delivery terms, typically F.o.b. Origin (government takes title at the contractor’s facility) or F.o.b. Destination (contractor retains title and risk until delivery).
• Prepayment Audits: Agencies are required to establish prepayment audit programs for transportation services to ensure billing accuracy before payment.

Responsibilities

• Contracting Officers (CO):
  • Select the appropriate F.o.b. point and delivery terms.
  • Insert required transportation clauses (e.g., 52.247-1 for CBL notations).
  • Obtain traffic management advice for solicitations, awards, and modifications.
  • Ensure contractors use carriers offering acceptable service at reduced rates when available.
• Contract Administration Office (CAO):
  • Ensure instructions to contractors result in the most economical use of transportation services.
  • Provide transportation management expertise and assist in coordinating shipments.
• Transportation Officers/Specialists:
  • Assist COs without transportation backgrounds in evaluating shipping factors.
  • Negotiate additional or revised rate tenders for volume movements.
  • Provide contractors with the names of carriers offering reduced government rates.
• Contractors:
  • Follow specific packing, marking, and consignment instructions.
  • Prepare necessary shipping documents (CBL/GBL) as directed.
  • Report shipments (REPSHIP) to provide advance notice of delivery to consignees.
• General Services Administration (GSA):
  • Conducts post-payment audits of transportation documents and invoices.

Practical Implications

• Total Cost Evaluation: In competitive solicitations, the government evaluates offers based on the "lowest overall cost," which includes the bid price plus the government's estimated transportation costs. A lower bid price from a distant contractor may lose to a higher bid price from a local contractor if shipping costs bridge the gap.
• Compliance Penalties: Failure to adhere to the Fly America Act or Cargo Preference Act can lead to the disallowance of expenditures. If a contractor uses a foreign-flag carrier without authorization, the government may refuse to reimburse those transportation costs.
• Risk Management: Because the government generally self-insures, COs must carefully evaluate whether a shipment's value or sensitivity justifies the "special circumstances" required to mandate contractor-provided insurance, which would increase the contract price.
• Administrative Burden: For cost-reimbursement contracts, contractors must be diligent in their documentation. All original paid freight bills and supporting documents must be submitted for GSA audit, and failure to provide proper "Commercial Bill of Lading Notations" can prevent the government from realizing statutory rate savings.