FAR 52.247-31—F.o.b. Origin, Freight Allowed.
Plain-English Summary
FAR 52.247-31, F.o.b. Origin, Freight Allowed, sets the shipping terms for contracts where title and delivery obligations begin at the contractor’s shipping point, but the Government receives a freight allowance that is deducted from the contract price. This clause explains what “f.o.b. origin, freight allowed” means, including delivery to the carrier, delivery to a postal facility, or delivery to a Government-designated point in the same city or commercial zone when the solicitation so states. It also covers how the contractor must pack, mark, order carrier equipment, load and secure shipments, complete bills of lading, and distribute transportation documents. The clause allocates risk of loss and damage before carrier delivery and for improper packing or loading to the contractor, while also tying the freight allowance to published tariff rates or Government rate tenders. It further addresses where these responsibilities are performed, including special rules when the shipping plant is in Alaska or Hawaii and when Hawaii shipments move by container service. In practice, this clause matters because it determines who pays transportation costs, who bears shipping risk, what shipping paperwork must say, and where the contractor’s performance obligations end.
Key Rules
FOB origin delivery point
The contractor must deliver the supplies free of expense to the Government at the designated origin point, carrier wharf or freight station, U.S. Postal Service facility, or another Government-designated point if the solicitation allows it. The clause distinguishes line-haul transportation from local terminal services and ties the delivery point to the contract’s stated origin location.
Freight allowance deducted
The contract price is reduced by an allowance for freight based on applicable published tariff rates or Government rate tenders between the contract-specified points. This means the Government effectively reimburses transportation through a price deduction mechanism rather than by paying freight separately in the ordinary course.
Proper packing and marking required
The contractor must pack and mark shipments to meet contract specifications, or if none exist, to meet carrier requirements and protect the goods while securing the lowest applicable transportation charge. Poor packing or marking can create contractor liability for damage and may also increase freight costs.
Carrier equipment and loading duties
When requested by the Government, the contractor must order the specified carrier equipment; otherwise, it must order suitable equipment with enough capacity for the shipment. The contractor must also deliver the shipment in good order and condition and, when it loads the shipment, must load, stow, trim, block, and brace it according to carrier rules.
Contractor bears certain losses
The contractor is responsible for loss or damage occurring before delivery to the carrier, damage caused by improper packing or marking, and damage caused by improper loading, stowing, trimming, blocking, or bracing when the contractor performs that loading. The risk allocation turns on whether the goods were properly prepared and handed over to the carrier.
Bill of lading requirements
The contractor must complete the Government bill of lading if one is provided, or otherwise prepare a commercial bill of lading or other transportation receipt. The document must include the freight classification or tariff description, seal numbers, car or truck lengths and capacities, consignee information, routing, special instructions, and the carrier agent’s signature and receipt date.
Distribution of shipping documents
The contractor must distribute copies of the bill of lading or other transportation receipts as directed by the ordering agency. This ensures the Government can track shipment, verify freight charges, and support payment or reimbursement actions.
Where duties are performed
These responsibilities are normally performed at the plant where final inspection and acceptance occur. If carrier equipment is not available at the plant, the contractor performs them at the nearest suitable point in the same or nearest city where carrier facilities are available.
Alaska and Hawaii exceptions
If the shipping plant is in Alaska or Hawaii and the supplies are shipping outside those states, the contractor must deliver them at its expense to the specified port of loading, making that portion of the arrangement effectively f.o.b. destination. For Hawaii shipments requiring container service, the contractor must deliver at its expense to the container yard in the same or nearest city where seavan container service is available.
Responsibilities
Contracting Officer / Ordering Agency
Insert the clause when prescribed, identify the origin point and any Government-designated delivery point, specify whether carrier equipment is to be ordered, provide or direct use of the Government bill of lading when applicable, and give instructions for distribution of transportation documents and special annotations.
Contractor
Pack, mark, and prepare the shipment; order the required carrier equipment; deliver the shipment to the carrier in good order; load and secure the shipment when responsible for loading; complete or prepare the bill of lading; and follow agency instructions for document distribution. The contractor must also bear specified losses and damages and comply with Alaska, Hawaii, and container-service exceptions when applicable.
Carrier
Receive the shipment at the designated point, acknowledge receipt on the bill of lading, and provide transportation service under the applicable tariff or Government rate tender. The carrier’s facilities and rules help define how the contractor must prepare and load the shipment.
Government / Ordering Agency
Specify shipment instructions, furnish a Government bill of lading when used, identify routing or special annotations, and apply the freight allowance through the contract pricing mechanism. The agency also determines any Government-designated delivery point within the same city or commercial zone when authorized.
Practical Implications
This clause shifts a lot of shipping administration to the contractor, so contractors need strong warehouse, logistics, and documentation controls to avoid charge disputes and damage claims.
The biggest pitfalls are improper packing, incorrect freight classification on the bill of lading, missing seal numbers or routing data, and failure to follow agency-specific shipping instructions.
Because the freight allowance is tied to published tariffs or Government rate tenders, parties should verify the applicable rate basis before shipment to avoid pricing errors.
Contractors shipping from Alaska or Hawaii need to watch the special port-of-loading and container-yard rules, which can change cost responsibility and delivery planning.
For contracting officers, the key is to state shipping points and instructions clearly in the solicitation and order, because ambiguity can create disputes over where delivery occurs and who pays for terminal or line-haul services.
Official Regulatory Text
As prescribed in 47.303-3 (c) , insert the following clause: F.o.b. Origin, Freight Allowed (Feb 2006) (a) The term "f.o.b. origin, freight allowed," as used in this clause, 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) An allowance for freight, based on applicable published tariff rates (or Government rate tenders) between the points specified in the contract, is deducted from the contract price. (b) The Contractor shall- (1) (i) Pack and mark the shipment to comply with contract specifications; or (ii) In the absence of specifications, prepare the shipment in conformance with carrier requirements to protect the goods and to ensure assessment of the lowest applicable transportation charge; (2) (i) Order specified carrier equipment when requested by the Government; or (ii) If not specified, order appropriate carrier equipment not in excess of capacity to accommodate shipment; (3) Deliver the shipment in good order and condition to the carrier, and load, stow, trim, block, and/or brace carload or truckload shipment (when loaded by the Contractor) on or in the carrier’s conveyance as required by carrier rules and regulations; (4) Be responsible for any loss of and/or damage to the goods- (i) Occurring before delivery to the carrier; (ii) Resulting from improper packing and marking; or (iii) Resulting from improper loading, stowing, trimming, blocking, and/or bracing of the shipment, if loaded by the Contractor on or in the carrier’s conveyance; (5) Complete the Government bill of lading supplied by the ordering agency, or when a Government bill of lading is not supplied, prepare a commercial bill of lading or other transportation receipt. The bill of lading shall show- (i) A description of the shipment in terms of the governing freight classification or tariff (or Government rate tender) under which lowest freight rates are applicable; (ii) The seals affixed to the conveyance with their serial numbers or other identification; (iii) Lengths and capacities of cars or trucks ordered and furnished; (iv) Other pertinent information required to effect prompt delivery to the consignee, including name, delivery address, postal address and ZIP code of consignee, routing, etc.; (v) Special instructions or annotations requested by the ordering agency for commercial bills of lading; e.g., "This shipment is the property of, and the freight charges paid to the carrier(s) will be reimbursed by, the Government" ; and (vi) The signature of the carrier’s agent and the date the shipment is received by the carrier; and (6) Distribute the copies of the bill of lading, or other transportation receipts, as directed by the ordering agency. (c) These Contractor responsibilities are specified for performance at the plant or plants at which the supplies are to be finally inspected and accepted, unless the facilities for shipment by carrier’s equipment are not available at the Contractor’s plant, in which case the responsibilities shall be performed f.o.b. the point or points in the same or nearest city where the specified carrier’s facilities are available; subject, however, to the following qualifications: (1) If the Contractor’s shipping plant is located in the State of Alaska or Hawaii, the Contractor shall deliver the supplies listed for shipment outside Alaska or Hawaii to the port of loading in Alaska or Hawaii, respectively, as specified in the contract, at Contractor’s expense, and to that extent the contract shall be "f.o.b. destination." (2) Notwithstanding paragraph (c)(1) of this clause, if the Contractor’s shipping plant is located in the State of Hawaii, and the contract requires delivery to be made by container service, the Contractor shall deliver the supplies, at the Contractor’s expense, to the container yard in the same or nearest city where seavan container service is available. (End of clause)