FAR 47.303-4—F.o.b. origin, freight prepaid.
Plain-English Summary
FAR 47.303-4 explains the delivery term "f.o.b. origin, freight prepaid" and how it works in federal contracting. It covers where delivery is considered complete, what transportation point the contractor must use, how the Government’s transportation cost is handled, and the contractor’s paperwork duties for shipping. The section distinguishes this term from other origin-based delivery terms by making clear that the contractor prepays freight charges even though the transportation cost is ultimately the Government’s obligation. It also identifies the specific places delivery may occur: the carrier’s conveyance, the carrier’s wharf or freight station, a U.S. Postal Service facility, or a Government-designated point in the same city or commercial zone if the solicitation says so. Finally, it tells contracting officers to include the prescribed clause at FAR 52.247-32 when this delivery term is used, which makes the shipping obligations enforceable in the contract.
Key Rules
Delivery at origin point
Under this term, the contractor delivers free of expense to the Government at the origin point named in the contract. Delivery may be to the carrier’s conveyance, the carrier’s wharf or freight station, a U.S. Postal Service facility, or a Government-designated point if the solicitation allows it.
Line-haul begins at origin
The designated origin point must be in the city, county, and State from which shipment will begin and where line-haul transportation starts. This excludes switching, local drayage, and other terminal services from the line-haul point.
Government bears transportation cost
Although the contractor prepays the freight charges, the transportation cost is ultimately the Government’s obligation. The contractor advances the charges and then ships under the contract terms that allocate the cost to the Government.
Commercial zone delivery option
If the solicitation states it, delivery may be made to a Government-designated point within the same city or commercial zone as the f.o.b. origin point. The commercial zone concept follows the Federal Motor Carrier Safety Administration rules in 49 CFR part 372, subpart B.
Shipping documents required
The contractor must prepare commercial bills of lading or other transportation receipts and prepay all freight charges to the extent required by the contract. This documentation supports shipment, payment, and any later freight reconciliation.
Mandatory clause use
When the contract uses f.o.b. origin, freight prepaid, the contracting officer must insert FAR 52.247-32, F.o.b. Origin, Freight Prepaid, in both solicitations and contracts.
Responsibilities
Contracting Officer
Use the correct delivery term in the solicitation and contract, and insert clause 52.247-32 whenever the contract is f.o.b. origin, freight prepaid. The contracting officer should also ensure the origin point and any Government-designated delivery point are clearly stated.
Contractor
Deliver the goods at the specified origin point or other authorized location, prepare commercial bills of lading or equivalent transportation receipts, and prepay freight charges as required by the contract. The contractor must follow the contract’s shipping instructions and document the shipment properly.
Government
Accept delivery at the designated origin point and bear the transportation cost as allocated by the contract. If a Government-designated point within the same city or commercial zone is authorized, the Government must ensure that point is properly identified in the solicitation or contract.
Carrier
Receive the shipment at the carrier’s conveyance, wharf, freight station, or other authorized point and issue the appropriate transportation receipt or bill of lading documentation as applicable.
Practical Implications
This term shifts the shipping paperwork and upfront freight payment burden to the contractor, even though the Government ultimately pays the transportation cost. Contractors need to plan cash flow and freight administration accordingly.
The exact origin point matters. If the contract does not clearly identify the city, county, State, and delivery location, disputes can arise over whether delivery was properly completed.
A common pitfall is confusing freight prepaid with freight collect. Under this clause, the contractor prepays the freight; it is not enough to simply hand the shipment to the carrier.
If the solicitation authorizes delivery to a Government-designated point in the same city or commercial zone, the parties should verify that the point is within the permitted zone under the applicable transportation rules.
Contracting officers should not omit the required clause, because the clause is what ties the delivery term to the contractor’s shipping and prepayment obligations and helps avoid later payment or responsibility disputes.
Official Regulatory Text
(a) Explanation of delivery term. "F.o.b. origin, freight prepaid" means- (1) Free of expense to the Government delivered- (i) On board the indicated type of conveyance of the carrier (or of the Government, if specified) at a designated point in the city, county, and State from which the shipments will be made and from which line-haul transportation service (as distinguished from switching, local drayage, or other terminal service) will begin; (ii) To, and placed on, the carrier’s wharf (at shipside, within reach of the ship’s loading tackle, when the shipping point is within a port area having water transportation service) or the carrier’s freight station; (iii) To a U.S. Postal Service facility; or (iv) If stated in the solicitation, to any Government-designated point located within the same city or commercial zone as the f.o.b. origin point specified in the contract (the Federal Motor Carrier Safety Administration prescribes commercial zones at Subpart B of 49 CFR part 372 ); and (2) The cost of transportation, ultimately the Government’s obligation, is prepaid by the contractor to the point specified in the contract. (b) Contractor responsibilities. The contractor’s responsibilities are the same as those listed in 47.303-1 (b), except that the contractor shall prepare commercial bills of lading or other transportation receipts and shall prepay all freight charges to the extent specified in the contract. (c) Contract clause. The contracting officer shall insert in solicitations and contracts the clause at 52.247-32 , F.o.b. Origin, Freight Prepaid, when the delivery term is f.o.b. origin, freight prepaid.