FAR 52.247-57—Transportation Transit Privilege Credits.
Plain-English Summary
FAR 52.247-57, Transportation Transit Privilege Credits, is a pricing and shipment clause used when supplies may qualify for transit credits under regulated common carrier arrangements and the Government may lower transportation costs by using those credits. It tells offerors how to propose use of transit privileges, how shipping will be handled under commercial bills of lading, how reimbursement works for remaining transportation charges, and how risk of loss shifts after carrier acceptance. The clause also explains how the quoted transportation rate is calculated, including the carrier’s transit privilege charge and the transit credit, and how the Government uses that rate to evaluate the offered f.o.b. origin price. In practice, this clause matters because it can materially affect evaluated price, reimbursement amounts, and who bears transportation risk during shipment. It is intended to capture transportation savings that would otherwise be lost and to ensure the Government can compare offers on a consistent basis when transit credits are available.
Key Rules
Clause applies only when credits may exist
The clause is prescribed only when the supplies are of a type, or trade practice is such, that offerors may have transit credits available and the Government may reduce transportation costs by using them. It is not a universal shipping clause; it is used when transit-privilege pricing is realistically available.
Offeror may propose use of credits
If the offeror has established transit privileges with regulated common carriers that can be applied from the original source, the offeror is invited to propose using those credits for shipment to Government destinations. The clause is permissive for the offeror, but once proposed, the quoted transportation terms become part of the evaluation and contract terms.
Commercial bills of lading are required
The offeror ships under commercial bills of lading and pays the remaining transportation charges connected with the shipment, subject to Government reimbursement. This means the shipment is not initially moved on a Government bill of lading unless the contracting office later directs otherwise under the Changes clause.
Government reimburses only up to quoted amount
The Government reimburses the remaining transportation charges, including transit charges, but only up to the amount quoted by the offeror. If actual remaining charges exceed the quoted amount, the contractor bears the excess; if they are lower, reimbursement is limited by the contract terms and applicable transportation rules.
Risk shifts after carrier acceptance
Once the shipment is loaded on the carrier’s equipment and accepted by the carrier, the shipment moves for the account of and at the risk of the Government, unless the administering office directs use of Government bills of lading under the Changes clause. This allocation of risk is a key practical effect of the clause.
Quoted rate must reflect transit math
The quoted transportation amount is stated in cents per 100 pounds for full carload or truckload shipments from the original source, via the transit plant or point, to the Government destination, including the carrier’s transit privilege charge less the applicable transit credit. The clause defines the rate basis so the Government can compare offers consistently.
Evaluated price uses quoted freight rate
The rate per CWT quoted is used to evaluate the offered f.o.b. origin price unless a lower rate applies on the bid opening or closing date. To get evaluated on this basis, the offeror must insert the remaining transportation charges it agrees to pay, including transit charges, and identify the destination(s) in the schedule.
Responsibilities
Contracting Officer
Include the clause only when transit credits may be available and the Government can benefit from them. Use the quoted transportation rate to evaluate f.o.b. origin offers, and if necessary direct use of Government bills of lading under the Changes clause.
Offeror/Contractor
Determine whether transit privileges exist and decide whether to propose using them. If proposing use, quote the remaining transportation charges accurately, include transit charges, identify destinations, ship under commercial bills of lading, and pay the charges subject to reimbursement limits.
Government
Reimburse the contractor for remaining transportation charges up to the quoted amount and accept the risk allocation that applies after carrier acceptance, unless shipment method is changed by the administering office.
Carrier
Accept the shipment and, once accepted, move it under the applicable commercial transportation arrangement. The carrier’s acceptance is the point at which the risk allocation described in the clause takes effect.
Practical Implications
This clause can change the evaluated price even when the base supply price is unchanged, so offerors must understand how freight and transit credits affect competition.
A common pitfall is miscalculating the quoted rate by omitting transit charges, failing to subtract the correct transit credit, or using the wrong shipment basis (for example, not using the original source to destination route).
Contractors should verify that their transit privileges are actually established and applicable to the shipment; unsupported claims can lead to pricing errors or reimbursement disputes.
Because the Government reimburses only up to the quoted amount, contractors bear the risk of underquoting transportation costs.
The risk-of-loss provision is important operationally: once the carrier accepts the load, the shipment is generally at Government risk, so parties should document carrier acceptance and shipment details carefully.
Official Regulatory Text
As prescribed in 47.305-13 (b)(4) , insert the following clause in solicitations and contracts when supplies are of such a nature, or when it is the custom of the trade, that offerors may have potential transit credits available and the Government may reduce transportation costs through the use of transit credits: Transportation Transit Privilege Credits (Apr 1984) (a) If the offeror has established with regulated common carriers transit privileges that can be applied to the supplies when shipped from the original source, the offeror is invited to propose to use these credits for shipping the supplies to the designated Government destinations. The offeror will ship these supplies under commercial bills of lading, paying all remaining transportation charges connected with the shipment, subject to reimbursement by the Government in an amount equal to the remaining charges but not exceeding the amount quoted by the offeror. (b) After loading on the carrier’s equipment and acceptance by the carrier, these shipments under paid commercial bills of lading will move for the account of and at the risk of the Government (unless, pursuant to the Changes clause, the office administering the contract directs use of Government bills of lading). (c) The amount quoted below by the offeror represents the transportation costs in cents per 100 pounds (freight rate) for full carload/truckload shipments of the supplies from offeror’s original source, via offeror’s transit plant or point, to the Government destination(s) including the carrier’s transit privilege charge, less the applicable transit credit ( i.e., the amount (rate) initially paid to the carrier for shipment from original source to offeror’s transit plant or point). (d) The rate per CWT quoted will be used by the Government to evaluate the offered f.o.b. origin price unless a lower rate is applicable on the date of bid opening (or closing date specified for receipt of offers). To have the offer evaluated on this basis, the offeror must insert below the remaining transportation charges that the offeror agrees to pay, including any transit charges, subject to reimbursement by the Government, as explained in this clause, to destinations listed in the Schedule as follows: Rate Per CWT in Cents: ________________ To Destination: _______________________ (End of clause)