FAR 47.306-2—Lowest overall transportation costs.
Plain-English Summary
FAR 47.306-2 tells contracting personnel how to evaluate transportation costs when freight is part of the price comparison. It requires use of the lowest available freight rates and related accessorial and incidental charges, but only if those charges are in effect by the expected initial shipment date and were on file or published by the bid opening date or due date for offers. The section also addresses what happens when new rates appear after bid opening or offer due date: they generally cannot be used in evaluation, except when they are the first applicable rates for transportation that had no existing rate or related charge at the relevant time. In practice, this rule is meant to keep evaluations fair, based on information available when offers are due, and to prevent post-opening rate changes from distorting competition. It is especially important in procurements where destination, shipping mode, or accessorial services can materially affect the evaluated cost of an offer.
Key Rules
Use lowest available rates
The transportation officer must provide, and the contracting officer must use, the lowest available freight rates and related accessorial and incidental charges for evaluation. The goal is to compare offers using the least costly applicable transportation charges, not a higher or optional rate.
Rates must be timely effective
Only rates and charges that are in effect on, or become effective before, the expected date of the initial shipment may be used. If a rate will not be effective until after the first shipment is expected, it cannot be used in the evaluation.
Rates must exist by bid opening
The rates or charges must be on file or published on the date of bid opening. For negotiated procurements, the same timing concept applies to the due date for offers. This prevents evaluators from relying on information that was not available to all offerors at the relevant time.
Later rates usually excluded
Rates or related charges that become available after bid opening or the offer due date generally may not be used in evaluation. Post-opening changes cannot be used to improve or worsen an offer’s evaluated transportation cost after competition has closed.
Exception for no prior rate
A later rate may be used only when it covers transportation for which no applicable rate or accessorial/incidental cost existed at bid opening or offer due date. In other words, if there was no usable rate at the relevant time, the later rate can fill that gap.
Responsibilities
Transportation Officer
Identify the lowest applicable freight rates and related accessorial and incidental charges that meet the timing requirements, and provide them to the contracting officer for use in evaluation.
Contracting Officer
Use the transportation officer’s information in evaluating offers and ensure only qualifying rates and charges are included in the price comparison.
Agency/Procurement Team
Maintain accurate, current rate information and coordinate early enough to determine which transportation charges are valid as of bid opening or offer due date.
Offerors/Contractors
Understand that evaluated transportation costs will be based on rates available by the relevant cutoff date, and structure pricing and shipping assumptions accordingly.
Practical Implications
Evaluations must be based on the transportation market as it existed at bid opening or offer due date, not on later rate changes.
A common mistake is using a newly published rate simply because it is lower; unless it was available by the required date or fills a gap where no rate existed, it should not be used.
Accessorial and incidental charges matter just as much as base freight rates, so evaluators need to check detention, delivery, handling, and similar charges.
This rule can materially affect best-value or low-price determinations when shipping costs are a significant part of total evaluated cost.
Contracting officers should coordinate early with transportation specialists to avoid evaluation errors and protests based on improper freight-cost assumptions.
Official Regulatory Text
(a) For the evaluation of offers, the transportation officer shall give to the contracting officer, and the contracting officer shall use, the lowest available freight rates and related accessorial and incidental charges that- (1) Are in effect on, or become effective before, the expected date of the initial shipment; and (2) Are on file or published on the date of the bid opening. (b) If rates or related charges become available after the bid opening or the due date of offers, they shall not be used in the evaluation unless they cover transportation for which no applicable rates or accessorial or incidental costs were in existence at the time of bid opening or due date of the offers.