FAR 47.304-2—Shipments within CONUS.
Plain-English Summary
FAR 47.304-2 addresses how solicitations for shipments within the continental United States (CONUS) must be structured and evaluated when transportation terms are part of the competition. It covers two core topics: allowing offers on either or both f.o.b. origin and f.o.b. destination terms, and evaluating those offers on the basis of the lowest overall cost to the Government. It also addresses the exception to that policy: if the contracting activity has sufficient reasons not to follow it, the contract file must document those reasons. In practice, this section is meant to ensure that transportation pricing is competed and compared in a way that reflects total Government cost, not just the base price of the goods or services. It promotes fair competition, consistent evaluation, and better buying decisions when shipments occur within CONUS. For contracting officers, it creates a documentation requirement whenever the standard evaluation approach is not used; for offerors, it signals that both shipping terms may be in play and that pricing strategy should account for transportation responsibility and cost.
Key Rules
Allow both FOB terms
Solicitations must permit offers on either or both f.o.b. origin and f.o.b. destination bases. This gives offerors flexibility to propose the shipping arrangement that best fits their pricing and logistics approach.
Evaluate lowest overall cost
Offers must be evaluated using the lowest overall cost to the Government. The evaluation must consider the full cost impact of the shipping terms, not just the quoted item price.
Document any exception
If there are sufficient reasons not to follow the standard policy, the contract file must explain those reasons. The file documentation is required to support the deviation and show the basis for the alternative approach.
Responsibilities
Contracting Officer
Include solicitation language allowing offers on either or both f.o.b. origin and f.o.b. destination terms, evaluate offers on the basis of lowest overall cost to the Government, and document the contract file whenever the standard policy is not followed.
Agency/Contracting Activity
Ensure procurement procedures and review processes support proper transportation-term evaluation and that any departure from the policy is justified and retained in the official file.
Offeror/Contractor
Submit pricing using the permitted f.o.b. terms and understand that the Government will compare offers based on total cost, including the transportation implications of the proposed delivery term.
Practical Implications
This section matters because shipping terms can change the real cost of an offer even when the base price looks lower. A destination-price offer may be more expensive overall than an origin-price offer once freight is considered, or vice versa.
A common pitfall is evaluating only the product price and ignoring transportation costs, which can lead to an improper award decision and a weak source selection record.
Another frequent issue is failing to document why the standard policy was not used. If the file does not clearly explain the reason for the exception, the procurement record may be vulnerable to protest or audit findings.
Contractors should pay close attention to whether the solicitation allows one or both f.o.b. bases and should price accordingly, including any freight responsibilities they assume under the proposed term.
Contracting officers should make sure the evaluation method is clear in the solicitation so offerors understand how their shipping terms will be compared and so the Government can defend the award decision.
Official Regulatory Text
(a) Solicitations shall provide that offers may be submitted on the basis of either or both f.o.b origin and f.o.b. destination and that they will be evaluated on the basis of the lowest overall cost to the Government. (b) When sufficient reasons exist not to follow this policy, the contract file shall be documented to include the reasons.