FAR 47.304—Determination of delivery terms.

General.

FAR 47.304-1 explains how contracting officers should choose and state freight-on-board (f.o.b.) delivery terms in solicitations and contracts. It covers the general cost-based decision standard, how solicitations must be structured (f.o.b. origin, f.o.b. destination, or both), and the specific factors that make one delivery point more advantageous than another. The section also identifies when f.o.b. origin is generally preferred, including when lower freight rates, transit privileges, diversion rights, special routings, premium transportation control, freight-rate negotiations, or shipment consolidation are important. It further requires f.o.b. origin only when destinations are tentative or unknown, and generally favors f.o.b. origin for certain classified or sensitive shipments that must move through commercial transportation. Conversely, it requires f.o.b. destination only when acceptance must occur at destination and lists common situations where destination terms are normally best for the Government, such as bulk commodities, forest products, perishables, medical supplies, and cases where evaluating origin offers would add too much time or cost. In practice, this section is about matching the delivery term to the Government’s logistics, risk, and administrative needs so the solicitation reflects the most advantageous transportation arrangement.

Shipments within CONUS.

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.

Shipments from CONUS for overseas delivery.

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.

Shipments originating outside CONUS.

FAR 47.304-4 addresses how the Government should structure acquisitions of supplies that originate outside the continental United States (CONUS) when those supplies will ultimately be delivered to a destination within CONUS or elsewhere. It covers the required use of either f.o.b. origin or f.o.b. destination terms, the rule that the choice must be the one most advantageous to the Government, and the limited exception for valid reasons to do otherwise by reference to FAR 47.304-5. It also directs the contracting officer to consult the transportation officer when deciding the delivery point to be stated in the acquisition documents. In doing so, the section requires consideration of Government transportation facilities, reduced transportation rates, special licensing or customs requirements, and the availability of U.S.-flag shipping services under subpart 47.5. In practice, this section is about making sure overseas-origin shipments are planned with transportation, customs, and shipping constraints in mind so the Government selects the delivery term and delivery point that minimize cost, avoid compliance problems, and support efficient movement of goods.

Exceptions.

FAR 47.304-5 explains when the Government may need to use shipping terms other than the standard f.o.b. origin or f.o.b. destination clauses. It identifies the kinds of unusual conditions or circumstances that can justify a different delivery term, including transportation disabilities at the origin or destination, the required mode of transportation, the availability of Government or commercial loading, unloading, or transshipment facilities, the characteristics of the supplies, trade customs for certain supplies, origins or destinations in Alaska and Hawaii, and program requirements. The section exists to make sure delivery terms match real-world transportation conditions and mission needs rather than forcing a standard term that could create cost, risk, or performance problems. In practice, this means contracting officers must think beyond the default f.o.b. choices whenever logistics are atypical and must coordinate with transportation specialists before issuing the solicitation. The rule helps prevent disputes over shipping responsibility, improper pricing assumptions, and avoidable delivery failures caused by using the wrong delivery term.