FAR 47.304-3—Shipments from CONUS for overseas delivery.
Plain-English Summary
FAR 47.304-3 explains how the Government should handle shipments that start in the continental United States (CONUS) and are ultimately delivered overseas. The section focuses on when to use f.o.b. origin pricing, why that approach is usually preferred for export shipments, and how it can reduce total transportation cost by preserving the Government’s flexibility to choose the port of export and the most economical ocean carrier. It also covers shipments that go directly to a port area or first move to a storage or holding area before export, and it requires the contracting officer to document any decision to use a basis other than f.o.b. origin. Finally, it emphasizes that export cargo decisions must consider the full landed cost picture— inland, terminal, and ocean transportation—and that agencies may have export licensing privileges that should be fully used with advice from the transportation officer. In practice, this section is about making sure the acquisition strategy and solicitation terms support the lowest overall transportation cost and the best use of Government shipping and export authorities.
Key Rules
Prefer f.o.b. origin
For supplies originating in CONUS and destined for overseas delivery, the default rule is to acquire them on an f.o.b. origin basis unless there is a valid reason to do otherwise. This policy is intended to preserve Government control over transportation choices and reduce total shipping cost.
Applies to export-bound shipments
The rule covers items shipped directly to a port area for export as well as items sent first to a storage or holding area and then forwarded to a port area. The key factor is that the supplies originate in CONUS and are ultimately destined outside CONUS.
Document any exception
If the contracting officer solicits offers on a basis other than f.o.b. origin, the justification must be recorded and the contract file must be documented. This creates an audit trail showing why the normal policy was not used.
Evaluate total landed cost
Export cargo decisions should be based on the lowest overall cost, not just the inland freight rate. The contracting officer must consider inland, terminal, and ocean transportation costs together when comparing alternatives.
Use transportation expertise
The contracting officer must obtain advice from the transportation officer to ensure the Government fully uses any export licensing privileges available for shipments to foreign destinations. This helps avoid missing cost-saving or compliance opportunities.
Select port and ocean carrier flexibly
Using f.o.b. origin can give the Government flexibility to choose the port of export and the ocean transportation that provides the lowest total cost. That flexibility is a central reason the policy favors f.o.b. origin for overseas shipments.
Responsibilities
Contracting Officer
Use f.o.b. origin as the default basis for CONUS-origin supplies going overseas, unless a valid reason supports another approach. Obtain advice from the transportation officer, compare total landed costs, and document any decision to solicit on a basis other than f.o.b. origin in the contract file.
Transportation Officer
Advise the contracting officer on transportation factors affecting export shipments, including inland, terminal, and ocean transportation considerations. Help ensure the agency fully uses any export licensing privileges available for the shipment.
Agency
Support acquisition and transportation planning for export cargo so that shipments are structured to achieve the lowest overall cost and comply with export-related requirements. Ensure internal processes allow proper documentation when exceptions to the default policy are used.
Contractor/Offeror
Prepare offers consistent with the solicitation’s shipping basis and understand that CONUS-origin items for overseas delivery will ordinarily be evaluated or acquired on an f.o.b. origin basis. Provide pricing and logistics information needed for the Government to assess transportation-related cost impacts when requested.
Practical Implications
This section pushes contracting officers to think beyond the product price and compare the full cost of getting the item overseas, including inland movement, port handling, and ocean freight.
A common mistake is treating export shipments like ordinary domestic deliveries and failing to preserve Government flexibility over the port of export and ocean carrier selection.
If the solicitation uses a basis other than f.o.b. origin, the file must clearly explain why; missing or weak documentation can create audit and protest risk.
Coordination with the transportation officer is not optional in practice if export licensing privileges or transportation efficiencies may affect the acquisition.
For contractors, the key takeaway is that shipping terms and delivery assumptions can materially affect pricing, logistics responsibility, and evaluation outcomes for overseas-bound CONUS shipments.
Official Regulatory Text
(a) When Government acquisitions involve shipments from CONUS to overseas destinations, delivery f.o.b. origin may afford not only the economies of lower freight rates available to the Government within CONUS, but also flexibility for selection of- (1) The port of export; and (2) The ocean transportation providing the lowest overall cost to the Government. (b) (1) Unless there are valid reasons to the contrary (see 47.304-5 ), acquisition of supplies originating within CONUS for ultimate delivery to destinations outside CONUS shall be made on the basis of f.o.b. origin. This policy applies to supplies and equipment to be shipped either directly to a port area for export or to a storage or holding area for subsequent forwarding to a port area for export. (2) Justification for the solicitation of offers on other than an f.o.b. origin basis shall be recorded and the contract file documented accordingly. (c) Export cargo involves considerations of operational and cost factors from the point of origin within CONUS to the overseas port destination. The lowest cost of shipping can be determined only by evaluating and comparing the various prospective landed costs (including inland, terminal, and ocean costs). Also, agencies may have export licensing privileges for shipments to foreign destinations. The contracting officer shall obtain advice from the transportation officer to ensure full use of these privileges.