FAR Part 47

Things You Need to Know About Transportation

Vocabulary

• Bill of Lading (BOL) – a form type contract used to transport goods– Provides evidence of title permitting cargo to clear

customs– Commercial BOL is a simple contract saying “I will

transport these goods from x to y for a fee and if they are damaged I will pay a set value (usually per pound) in compensation”

– Government BOL provides the above and is a negotiable instrument (can be presented for payment)

Vocabulary

• Carrier – the transportation firm responsible for moving the goods– Common Carrier – available to anyone willing to

contract their services– Contract Carrier – Available to a source under a

continuing agreement – Private Carrier – Usually owned by the

manufacturer and is not for hire

Vocabulary

• Shipper – Person, agency, or firm initiating the shipment of goods

• Consignee – Person agency or firm to which the goods are delivered.

• Overpack – A carton or crate which contains individually packaged items.

Vocabulary

• Goods & Cargo– Household Goods – Personal property and effects– Bulk Goods/Cargo – Unpackaged material (oil,

coal, grain, etc.)– Break Bulk Cargo – General items of cargo that

have to be loaded individually and may be packaged or crated.

Vocabulary

• Accessorial Services – Special services authorized and paid for as they occur such as special packing etc.

• Demurrage – A cost levied by the carrier against the shipper for delays in loading or unloading (e.g., excessive laytime) or for failure to return shipping containers in a timely manner.

Vocabulary

• (Transportation) Tariff – A rate schedule applying to the transportation of goods– Intrastate tariff. A rate applied to goods shipped

between two points both of which lie within the same state. Rates are approved by the state.

– Interstate tariff – A rate applied to shipments that cross state lines.

– Tariffs are typically based on class of goods, weight and distance for less than truckload (LTL) or on truckload rates which set a max weight and then are quoted by distance.

Vocabulary

• Freight Consolidator (or Aggregator) – a firm that combines less than truckload (LTL) shipments into a complete load– Using LTL rates is less expensive than truckload

rates but runs a greater risk of loss or damage– Truckload rates are often paid for sensitive

material or delicate cargo to provide traceability and minimize handling of cargo.

Government Transportation

• The Government solicits rate quotes for intrastate, interstate and international transportation of goods under FAR 47– The resulting contract(s) establish government – unique rates that

are often significantly below “man-on-the street” rates.– The contract may be either

• A single purpose contract to provide specific transportation services on a one-time basis

• A Basic Ordering Agreement with delivery (of services) being directed via a GBL or a specially annotated CBL.

– Contracts are typically solicited as Fixed Price contracts using sealed bids but may also be negotiated.

– Rates may not exceed those available to the general public or otherwise available to the federal government.

Contractor Transportation

• Transportation of Goods is an allowable contract expense.– On FFP contracts transportation cost are included as a

part of the contract price if delivery is “f.o.b. Destination”– On FFP contracts transportation charges for goods that

are f.o.b. Origin and later shipped at government direction are recoverable.

– On Cost Reimbursement contracts the contractor shall take advantage of government shipping rates by annotating their CBL per 52.247-1 Commercial Bill of Laden Notations if the clause is in their contract.

Liability and Insurance

• Carrier must be responsible for and insured against loss or damage of goods and injury to personnel

• If contract does not specify liability, the Interstate Commerce Commission rules apply

• The government ‘self-insures’ for damages that exceed the coverage provided by the carrier.

Delivery Terms & Conditions

• F.o.b. Origin – Free of expense to the Government on board the designated conveyance at the designated point of origin which can be:– The contractor’s facility (F.o.b. Origin, Contractor’s

Facility)– A point designated by the contract for pick-up

within a commercial zone; at a wharf or dock; or a U.S. Postal facility. (F.o.b. Origin, Freight Allowed or Freight Prepaid)

Delivery Terms & Conditions

• F.o.b. Destination. Free of expense to the Government delivered to a specified destination– Contractor responsible for loading, unloading,

storage prior to delivery, demurrage.– May include ‘constructive placement’– Unusually heavy or bulky items to be unloaded by

consignee.

Other Delivery Terms & Conditions

• F.a.s Vessel, Port of Shipment• F.o.b. Vessel, Port of Shipment• Ex dock, pier, or warehouse, Port of

importation• C&F (Cost and Freight) Destination• C.I.F. (Cost, Insurance and Freight) Destination

Mode of Transportation

• Generally, solicitations shall not specify a particular mode of transportation or a particular carrier.

• If the use of particular types of carriers is necessary to meet program requirements, the solicitation shall provide that only offers involving the specified types of carriers will be considered.

Preferred Carriers

• Preference for U.S. Flagged Vessels – Registered and operated under the laws of the United States,– Used in commercial trade of the United States,– Owned and operated by U.S. citizens, including a vessel

under voyage or time charter to the Government, and– A Government-owned vessel under bareboat charter to, and

operated by, U.S. citizens.• Required by:

– The Cargo Preference Act of 1904 (10 U.S.C. 2631)– The Merchant Marine Act of 1936 (46 U.S.C. 1101)– The Cargo Preference Act of 1954 (46 U.S.C. 1241(b