Overview
This section outlines the cargo preference requirements for overseas construction projects, mandating the use of U.S.-flag vessels while providing specific exemptions for projects heavily funded by recipient nations.
Key Rules
- General Compliance: Construction contractors, subcontractors, and suppliers performing overseas work are required to follow U.S.-flag vessel shipping policies.
- Foreign Aid Exception: Requirements are waived for military assistance or foreign aid projects if the recipient nation provides or pays for at least 50% of the transportation.
- Tonnage Limitation: Under the co-funded exception, foreign-flag vessels may be used, but their use is capped at 50% of the project's total gross tonnage.
Practical Implications
- Contractors must verify the funding structure of international aid projects to determine if they can leverage lower-cost foreign shipping for up to half of their cargo.
- Subcontractors and suppliers must be flow-down compliant with these shipping regulations unless the specific project funding exemption is formally triggered.