Overview
FAR 47.506 establishes the administrative steps and coordination requirements that contracting officers must follow to comply with the Cargo Preference Act of 1954. It emphasizes mandatory consultation with transportation activities and the Maritime Administration (MARAD) to ensure U.S.-flag vessels are utilized at fair and reasonable rates.
Key Rules
- Mandatory Coordination: Contracting officers must obtain assistance from their agency’s transportation activity to develop shipping instructions and delivery terms for any contract involving ocean transportation.
- Non-Availability Protocol: If a contractor identifies that a U.S.-flag commercial vessel is unavailable, the contracting officer must seek assistance from the transportation activity rather than making a unilateral determination.
- Rate Reasonableness: Rates published with the Federal Maritime Commission (FMC) are deemed fair and reasonable; however, for charter cargoes not in published tariffs, a determination must be requested from MARAD.
- Regulatory Reporting: Contracting officers are required to support agency reporting requirements mandated by MARAD regulations (46 CFR 381) concerning ocean shipments.
Practical Implications
- Early Integration: Contracting officers must involve technical transportation experts during the solicitation phase to ensure shipping terms are legally compliant, preventing costly delays or contract disputes later.
- Verification Burden: If a U.S.-flag vessel is unavailable or appears overpriced, the government must follow a formal verification process involving MARAD, limiting the contracting officer's independent discretion in choosing foreign-flag carriers.