Overview
FAR Subpart 47.3 establishes policies and procedures for integrating transportation and traffic management into the acquisition of supplies, primarily for fixed-price contracts. It ensures that the government acquires goods using delivery terms that are most advantageous in terms of cost, speed, and safety while clearly defining when the risk of loss transfers from the contractor to the government.
Key Rules
- F.O.B. Origin vs. Destination: The subpart defines two primary delivery modes: "F.o.b. Origin" (government takes delivery at the contractor's facility and pays for/arranges transportation) and "F.o.b. Destination" (contractor pays for and manages delivery to a specific government site).
- Risk of Loss: Under F.o.b. Origin, the government generally bears the risk of loss once the carrier accepts the goods. Under F.o.b. Destination, the contractor remains liable for loss or damage until the supplies reach the specified delivery point.
- Defense Transportation System (DTS): For DoD-related shipments, contractors must follow DoD 4500.9-R (Defense Transportation Regulation) and cannot ship directly to military air or water terminals without specific authorization.
- Justification for Deviations: Contracting officers must document and justify any solicitation that does not follow the standard delivery basis prescribed in the FAR (e.g., using F.o.b. Origin when Destination is the standard).
- Quality Assurance vs. Delivery: The place of inspection or acceptance does not dictate the F.o.b. point. For example, the government can inspect goods at the contractor’s plant (origin) even if the delivery term is F.o.b. Destination.
Responsibilities
- Requiring Activity: Responsible for considering all transportation factors (present and future) and providing the contracting office with specific instructions and requirements for the acquisition.
- Contracting Officers (COs):
- Must obtain transportation factors from traffic management offices for solicitations and awards.
- Must request participation from transportation offices for "unusual" shipments (oversized, heavy, sensitive, or dangerous goods).
- Enforce compliance with DTS regulations and ensure the contract designates a contact point for movement control.
- Transportation Officers: Participate in the solicitation and evaluation process to ensure transit arrangements, costs, and port capabilities are factored into the contract award.
- Contractors:
- Responsible for packing and marking shipments to meet contract specifications or carrier requirements.
- Must order appropriate carrier equipment and (for F.o.b. Origin) prepare the necessary bills of lading.
- Bear liability for damages resulting from improper packing or loading.
Practical Implications
- Pricing Strategy: Offerors must carefully calculate their bids based on the F.o.b. point; F.o.b. Destination requires the contractor to bake the "landed cost" (shipping + insurance + handling) into their unit price, whereas F.o.b. Origin allows the government to leverage its own freight rates.
- Logistical Expertise: For complex international shipments (C.I.F. or F.a.s. Vessel), contractors must have a deep understanding of export/import documentation, customs duties, and maritime insurance, as these responsibilities are explicitly assigned in the 47.303 series.
- Coordination is Mandatory: Contracting officers cannot operate in a vacuum regarding logistics. They must collaborate with traffic management early in the process—especially for "heavy lift" or hazardous items—to avoid massive cost overruns or delivery delays caused by specialized equipment needs or circuitous routing.
- Payment Documentation: For F.o.b. Destination contracts where inspection happens at the origin, contractors must ensure their invoices are supported by signed commercial bills of lading to prove the shipment is en route before receiving payment.