Overview
FAR 47.503 defines the scope of the Cargo Preference Acts of 1904 and 1954, specifying which types of government-related supplies must be transported via U.S.-flag vessels. It establishes that these requirements apply to government-owned goods, supplies intended for future government ownership, and certain foreign assistance cargo.
Key Rules
- Broad Ownership Scope: Preference requirements apply to supplies owned by the government, whether they are currently in the possession of the government, a prime contractor, or a subcontractor at any tier.
- Supplies for Government Use: The rules apply to supplies contracted for government use that require delivery to a government activity, even if the government does not yet own the supplies at the time of shipment.
- Foreign Assistance: Cargo for distribution to foreign assistance programs is covered unless the supplies are acquired or contracted for using local currency funds.
- Military Department Priority: Supplies for military departments must be transported 100% ("exclusively") on privately owned U.S.-flag commercial vessels, provided they are available at fair and reasonable rates.
- Threshold Flexibility: While the Cargo Preference Act of 1954 establishes a 50-percent minimum, this section clarifies that agencies may use U.S.-flag vessels for up to 100 percent of the cargo.
Practical Implications
- Flow-down Requirements: Prime contractors must ensure that subcontractors at all tiers are aware of cargo preference requirements, as the rules apply regardless of who physically possesses the government-owned supplies.
- Military vs. Civilian Logistics: Logistics planners must distinguish between military and civilian cargo; military contracts generally face a much stricter 100% U.S.-flag requirement compared to the standard 50% threshold often applied to civilian agency cargo.