FAR 47.303-5—F.o.b. origin, with differentials.
Plain-English Summary
FAR 47.303-5 explains the delivery term "f.o.b. origin, with differentials" and how it differs from a standard f.o.b. origin arrangement. It covers the point at which the Government is considered to receive delivery, the acceptable delivery locations (carrier conveyance, carrier wharf or freight station, U.S. Postal Service facility, or a Government-designated point within the same city or commercial zone when stated in the solicitation), and the ability of contractors to add price differentials for mode of transportation, type of vehicle, or place of delivery. The section also ties contractor responsibilities back to FAR 47.303-1(b), meaning the contractor still bears the same obligations associated with f.o.b. origin delivery until proper tender to the carrier or other specified point. Finally, it tells contracting officers when to include the clause at 52.247-33, which is important when offerors may build in a contingency to cover unfavorable routing conditions chosen by the Government at shipment time. In practice, this section matters because it affects pricing, shipping risk, delivery performance, and how transportation-related contingencies are handled in the contract.
Key Rules
F.O.B. origin delivery point
Under this term, delivery is free of expense to the Government when the contractor places the shipment on the indicated conveyance or at the specified origin point. The key concept is that delivery occurs at the shipping point, not at the destination, subject to the exact location described in the contract.
Allowed delivery locations
The shipment may be delivered to the carrier’s wharf, freight station, a U.S. Postal Service facility, or, if the solicitation says so, a Government-designated point in the same city or commercial zone as the origin point. The commercial zone concept is tied to the FMCSA rules in 49 CFR part 372.
Differentials may be added
Contractors may include and the contract may reflect differentials for transportation mode, vehicle type, or place of delivery as stated in the offer. These differentials are part of the contract price and are intended to account for routing or delivery conditions that affect cost.
Contractor duties remain unchanged
The contractor’s responsibilities are the same as under FAR 47.303-1(b). In practical terms, the contractor must still perform the origin-side delivery obligations correctly and in accordance with the contract’s transportation terms.
Use the clause when contingencies are likely
The contracting officer must insert the clause at 52.247-33 when offerors are likely to include a contingency in their f.o.b. origin pricing to offset unfavorable routing conditions selected by the Government at shipment time. This clause helps address pricing and routing uncertainty up front.
Responsibilities
Contracting Officer
Determine whether offerors are likely to price in contingencies for unfavorable Government-selected routing conditions and, if so, include the clause at 52.247-33 in the solicitation and contract. The contracting officer must also ensure the delivery term and any authorized differentials are clearly stated so offers can be evaluated consistently.
Contractor
Deliver the goods free of expense to the Government at the specified origin point or other authorized delivery location, and comply with the same responsibilities applicable to f.o.b. origin under FAR 47.303-1(b). The contractor may include permitted differentials in its offer when supported by the solicitation and contract terms.
Government/Agency
Specify the delivery point, any Government-designated point within the same city or commercial zone if applicable, and any transportation-related conditions that may affect routing. The agency must also understand that its routing choices at shipment time can affect pricing when contingencies are contemplated.
Practical Implications
This clause affects price formation: contractors may build in extra cost for transportation uncertainty, so contracting officers should watch for pricing that reflects routing risk rather than just base freight cost.
The exact delivery point matters. If the solicitation is vague about the origin point, carrier facility, or Government-designated location, disputes can arise over whether delivery was properly tendered.
Commercial zone language is not informal shorthand; it ties to FMCSA commercial zone definitions, so users should verify the geographic scope rather than assume a local area definition.
Because contractor responsibilities mirror FAR 47.303-1(b), parties should not treat "with differentials" as relaxing the contractor’s delivery obligations; it only addresses pricing adjustments, not performance standards.
The 52.247-33 clause is important when Government routing decisions could create cost swings. Omitting it when contingencies are likely can lead to pricing misunderstandings or post-award disputes about who bears the extra transportation cost.
Official Regulatory Text
(a) Explanation of delivery term. "F.o.b. origin, with differentials" 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) Differentials for mode of transportation, type of vehicle, or place of delivery as indicated in contractor’s offer may be added to the contract price. (b) Contractor responsibilities. The contractor’s responsibilities are the same as those listed in 47.303-1 (b). (c) Contract clause . Insert in solicitations and contracts the clause at 52.247-33 , F.o.b. Origin, with Differentials, when it is likely that offerors may include in f.o.b. origin offers a contingency to compensate for unfavorable routing conditions by the Government at the time of shipment.