FAR 52.247-32—F.o.b. Origin, Freight Prepaid.
Plain-English Summary
FAR 52.247-32, F.o.b. Origin, Freight Prepaid, sets the shipping terms for contracts where title and risk transfer at the origin point, but the contractor prepays freight charges and is later reimbursed or otherwise handled under the contract. This clause explains what "f.o.b. origin, freight prepaid" means, including delivery to the carrier’s conveyance, wharf, freight station, Postal Service facility, or a Government-designated point in the same city or commercial zone when the solicitation says so. It also allocates the contractor’s duties for packing, marking, ordering carrier equipment, loading and securing shipments, preparing bills of lading and transportation receipts, distributing shipping documents, and prepaying freight charges. The clause further assigns responsibility for loss or damage before carrier delivery or caused by improper packing, marking, or loading. Finally, it addresses where these duties are performed, including special rules when the plant lacks carrier facilities and special Alaska and Hawaii exceptions, including a Hawaii container-yard requirement for container service. In practice, this clause matters because it determines who controls shipping, who bears certain transportation-related risks and costs, and what documentation is needed to support prompt delivery and proper freight payment.
Key Rules
Origin delivery standard
Under this clause, delivery is complete when the contractor places the shipment on the carrier’s conveyance, wharf, freight station, Postal Service facility, or a Government-designated point in the same city or commercial zone if the solicitation allows it. The Government does not take delivery at the contractor’s plant unless the contract says otherwise.
Freight prepaid by contractor
The contractor must prepay transportation charges to the point specified in the contract, even though the transportation cost is ultimately the Government’s obligation. This means the contractor fronts the freight charges and must handle them as required by the contract.
Packing and marking duties
The contractor must pack and mark shipments to meet contract specifications, or if none exist, to meet carrier requirements and protect the goods while supporting the lowest applicable transportation charge. Poor packing or marking can shift loss or damage responsibility to the contractor.
Carrier equipment and loading obligations
If the Government requests specific carrier equipment, the contractor must order it; otherwise, the contractor must order suitable equipment not exceeding the shipment’s capacity needs. The contractor must also deliver the shipment in good order and, when it loads the shipment, must load, stow, trim, block, and brace it according to carrier rules.
Loss and damage allocation
The contractor is responsible for loss or damage occurring before delivery to the carrier, or caused by improper packing, marking, loading, stowing, trimming, blocking, or bracing when the contractor performs those tasks. This clause therefore places significant pre-carrier risk on the contractor.
Bill of lading requirements
The contractor must prepare the bill of lading or other transportation receipt and include required shipment details such as freight classification or tariff basis, seal numbers, car or truck lengths and capacities, consignee information, routing, special instructions, and the carrier agent’s signature and date. Accurate documentation is essential for prompt delivery and freight reimbursement.
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 the shipment, verify charges, and support receiving and payment actions.
Where duties are performed
These responsibilities are normally performed at the plant where final inspection and acceptance occur. If carrier equipment cannot be loaded at the plant, the contractor performs them at the nearest available carrier facility in the same or nearest city.
Alaska and Hawaii exceptions
If the shipping plant is in Alaska or Hawaii and the shipment is going outside the state, the contractor must deliver it at its expense to the specified port of loading, making that portion effectively f.o.b. destination. In Hawaii, if the contract requires 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
Contractor
Pack and mark shipments properly; order carrier equipment when requested or appropriate equipment when not specified; deliver goods in good order to the carrier; load, stow, trim, block, and brace shipments when the contractor loads them; bear responsibility for pre-delivery loss or damage and for damage caused by improper packing or loading; prepare the bill of lading or transportation receipt with all required information; distribute shipping documents as directed; and prepay freight charges to the extent required by the contract.
Contracting Officer / Ordering Agency
Specify any Government-designated delivery point within the same city or commercial zone when desired; request specific carrier equipment if needed; direct how bill of lading copies or transportation receipts are to be distributed; and ensure the contract clearly states routing, delivery, and special shipping instructions needed for performance and freight administration.
Carrier
Receive the shipment and provide the carrier’s agent signature and date on the bill of lading or receipt; furnish the ordered equipment when available; and transport the shipment after the contractor has delivered it to the carrier under the contract terms.
Government
Accept the freight-prepaid origin arrangement as the contract shipping term; reimburse or otherwise bear the transportation cost as provided in the contract; and use the shipping documentation to track, receive, and process the shipment and freight charges.
Practical Implications
This clause shifts a lot of shipping execution to the contractor, so contractors need strong shipping procedures for packing, labeling, loading, and paperwork.
The biggest risk area is pre-carrier loss or damage: if the shipment is damaged before the carrier takes custody, or if the contractor packed or loaded it badly, the contractor may be on the hook.
Bill of lading errors can cause delayed delivery, billing disputes, or inability to prove freight charges, so shipment data must be accurate and complete.
Contractors shipping from Alaska or Hawaii need to watch the special port-of-loading and container-yard rules, because those exceptions can change the normal origin-delivery point and cost responsibility.
Contracting officers should make sure the solicitation and contract clearly identify the origin point, any Government-designated delivery point, routing instructions, and any special equipment or documentation requirements to avoid disputes.
Official Regulatory Text
As prescribed in 47.303-4 (c) , insert the following clause: F.o.b. Origin, Freight Prepaid (Feb 2006) (a) The term "f.o.b. origin, freight prepaid," 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) The cost of transportation, ultimately the Government’s obligation, is prepaid by the contractor to the point specified in the contract. (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 or 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) Prepare a 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 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; (6) Distribute the copies of the bill of lading, or other transportation receipts, as directed by the ordering agency; and (7) Prepay all freight charges to the extent specified in the contract. (c) These Contractor responsibilities are specified for performance at the plant or plants at which these 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)