FAR 52.247-33—F.o.b. Origin, with Differentials.
Plain-English Summary
FAR 52.247-33, F.o.b. Origin, with Differentials, sets the pricing, delivery, packing, loading, documentation, risk, and reimbursement rules for contracts where the Government buys supplies on an f.o.b. origin basis but may also pay added transportation-related differentials. It defines what “f.o.b. origin, with differentials” means, including delivery to the carrier at the shipping point, to a carrier’s wharf or freight station, to a U.S. Postal Service facility, or, if the solicitation says so, to a Government-designated point in the same city or commercial zone. The clause also allows the contractor to quote optional differentials for mode of transportation, type of vehicle, or place of delivery, and explains how those differentials are evaluated and when they may be reimbursed. It assigns the contractor responsibility for packing, marking, ordering equipment, loading, securing, and preparing bills of lading, and it allocates loss or damage risk before carrier delivery or caused by improper packing or loading. It further gives the Government the option to arrange transportation itself, in which case no quoted differential is reimbursed. In practice, this clause matters because it affects bid evaluation, invoice preparation, shipping instructions, freight cost allocation, and who bears transportation-related risk and administrative burden.
Key Rules
F.O.B. origin definition
The contractor delivers the supplies free of expense to the Government at the designated shipping point, carrier facility, postal facility, or, if the solicitation allows, a Government-designated point in the same city or commercial zone. The clause ties the delivery point to the start of line-haul transportation, not local drayage or terminal services.
Differentials may be quoted
Offerors may propose added rates for transportation mode, vehicle type, or delivery point options the Government may later select. These differentials must be stated as cents per 100 pounds and are part of the pricing structure for the contract.
Differentials affect evaluation
The Government considers quoted differentials when evaluating offers to determine the lowest overall cost. This means the apparent low base price may not be the evaluated low price if differentials change the total cost to the Government.
Contractor packing and marking duties
The contractor must pack and mark shipments to meet contract specifications, or if none exist, to meet carrier requirements and minimize transportation charges. Proper preparation is required to protect the goods and secure the lowest applicable freight rate.
Loading and equipment responsibilities
The contractor must order specified carrier equipment when requested, or otherwise order suitable equipment that is not larger than needed. If the contractor loads the shipment, it must load, stow, trim, block, and brace the cargo according to carrier rules.
Risk of loss before carrier delivery
The contractor is responsible for loss or damage occurring before delivery to the carrier, and for damage caused by improper packing, marking, loading, stowing, trimming, blocking, or bracing when the contractor performs those tasks.
Bill of lading requirements
The contractor must complete the Government bill of lading if provided, or prepare a commercial bill of lading or other transportation receipt if not. The document must include classification or tariff information, seal numbers, vehicle lengths and capacities, consignee details, routing, special instructions, and the carrier agent’s signature and receipt date.
Government transportation option
The Government may choose to perform or arrange transportation from the contractor’s shipping point to the carrier’s facility at its own expense. If it does so, the Government does not reimburse any quoted differential for that movement.
Invoice treatment of selected differentials
If the Government selects a transportation option for which the contractor quoted a differential, the contractor must show the differential as a separate reimbursable item on the invoice, calculated by multiplying the applicable rate by the actual weight.
Responsibilities
Contracting Officer / Ordering Agency
State in the solicitation whether delivery may be made to a Government-designated point within the same city or commercial zone. Evaluate offers using quoted differentials, provide shipping instructions, supply or direct completion of the Government bill of lading when applicable, and decide whether the Government will arrange transportation at its own expense.
Contractor
Quote any optional differentials in cents per 100 pounds, pack and mark shipments properly, order appropriate carrier equipment, deliver goods in good order to the carrier, load and secure shipments when responsible for loading, complete or prepare transportation documents, distribute bill of lading copies as directed, and invoice selected differentials separately when applicable.
Carrier
Accept the shipment at the point of delivery, sign and date the bill of lading or receipt, and transport the goods under the applicable freight classification, tariff, or Government rate tender.
Government
When it elects to exercise its transportation option, arrange or perform transportation from the contractor’s shipping point to the carrier’s facility at its own expense and forego reimbursement of any quoted differential for that movement.
Practical Implications
Offerors should price the base f.o.b. origin amount and the optional differentials carefully, because the Government may evaluate total cost rather than just the base price.
Contractors need to know exactly which shipping point, mode, and vehicle assumptions are being used; quoting the wrong differential can make the offer noncompetitive or create invoice disputes later.
Poor packing, marking, or loading can shift loss and damage liability to the contractor even after the shipment leaves the plant, so shipping procedures matter as much as pricing.
Bill of lading errors are a common problem: missing tariff/classification data, routing, seal numbers, consignee details, or carrier signatures can delay delivery and payment.
If the Government arranges transportation itself, the contractor should not expect reimbursement for the quoted differential on that movement, so invoice preparation must match the Government’s actual shipping decision.
Official Regulatory Text
As prescribed in 47.303-5 (c) , insert the following clause: F.o.b. Origin, with Differentials (Feb 2006) (a) The term "f.o.b. origin, with differentials," 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) Differentials for mode of transportation, type of vehicle, or place of delivery as indicated in Contractor’s offer may be added to the contract price. (b) The Contractor shall- (1) (i) Pack and mark the shipment to comply with contract specification; 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 bills of lading; e.g., "This shipment is the property of, and the freight charges paid to the carrier 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) (1) It may be advantageous to the offeror to submit f.o.b. origin prices that include only the lowest cost to the Contractor for loading of shipment at the Contractor’s plant or most favorable shipping point. The cost beyond that plant or point of bringing the supplies to the place of delivery and the cost of loading, blocking, and bracing on the type vehicle specified by the Government at the time of shipment may exceed the offeror’s lowest cost when the offeror ships for the offeror’s account. Accordingly, the offeror may indicate differentials that may be added to the offered price. These differentials shall be expressed as a rate in cents for each 100 pounds (CWT) of the supplies for one or more of the options under this clause that the Government may specify at the time of shipment. (2) These differential(s) will be considered in the evaluation of offers to determine the lowest overall cost to the Government. If, at the time of shipment, the Government specifies a mode of transportation, type of vehicle, or place of delivery for which the offeror has set forth a differential, the Contractor shall include the total of such differential costs (the applicable differential multiplied by the actual weight) as a separate reimbursable item on the Contractor’s invoice for the supplies. (3) The Government shall have the option of performing or arranging at its own expense any transportation from Contractor’s shipping plant or point to carrier’s facility at the time of shipment and, whenever this option is exercised, the Government shall make no reimbursement based on a quoted differential. (4) Offeror’s differentials in cents for each 100 pounds for optional mode of transportation, types of vehicle, transportation within a mode, or place of delivery, specified by the Government at the time of shipment and not included in the f.o.b. origin price indicated in the Schedule by the offeror, are as follows: _______ (carload, truckload, less-load, _______ wharf, flatcar, driveaway, etc.) (End of clause)