FAR 52.247-59—F.o.b. Origin-Carload and Truckload Shipments.
Plain-English Summary
FAR 52.247-59 addresses how f.o.b. origin contracts must handle shipments that are large enough to move as carloads or truckloads. It is used when the Government expects offers to include freight costs and wants those costs evaluated realistically, while also encouraging contractors to ship in economical lot sizes. The clause covers when it applies, the contractor’s duty to ship in carload or truckload lots when the scheduled quantity is sufficient, how the agreed shipment weight is determined for evaluation purposes, how that weight is determined for actual shipment, what happens when the scheduled quantity is smaller than the applicable minimum weight, and the contractor’s liability for increased Government costs if the clause is not followed. In practice, the clause helps the Government compare offers on a fair freight-cost basis and prevents avoidable transportation charges caused by inefficient shipment planning. It also gives the Contracting Officer limited discretion to authorize or direct different shipment arrangements in writing when needed. For contractors, the clause creates a pricing and performance obligation tied directly to carrier tariff or tender rules and to the shipment quantities in the delivery schedule.
Key Rules
Applies to FOB origin freight
This clause is used in solicitations and contracts that may result in f.o.b. origin shipments by carload or truckload. Its purpose is to make freight-cost evaluation realistic and to promote economical shipment sizes.
Ship in economical lots
When the quantity due to one destination in a delivery period is enough to make a carload or truckload, the contractor must ship in that lot size. The Contracting Officer may allow or direct a different arrangement, but only in writing.
Evaluation weight uses lowest rate
For bid or proposal evaluation, the agreed shipment weight is the highest applicable minimum weight that produces the lowest freight rate or per-car charge under published or filed tariffs or tenders in effect on the bid opening or proposal closing date.
Shipment weight uses shipment-date rates
For actual delivery, the agreed weight is determined the same way, but using the tariffs or tenders in effect on the date of shipment. This means the shipment must be planned against the current carrier pricing available when the goods move.
Single shipment for smaller quantities
If the total scheduled quantity to a destination is less than the highest carload or truckload minimum weight used for evaluation, the contractor still agrees to ship that quantity in one shipment. The clause is aimed at avoiding unnecessary split shipments.
Contractor pays increased costs
If the contractor fails to comply with the shipment requirements, the contractor is liable to the Government for any increased costs caused by that failure. This creates a direct financial consequence for inefficient or noncompliant shipping.
Responsibilities
Contracting Officer
Include the clause when FOB origin contracts may involve carload or truckload shipments. Approve or direct any exception to the required shipment method in writing, and assess whether contractor noncompliance caused increased Government transportation costs.
Contractor
Ship in carload or truckload lots when the scheduled quantity to a destination is sufficient, unless the Contracting Officer authorizes otherwise in writing. Use the correct tariff or tender minimum weight for evaluation and shipment, consolidate smaller scheduled quantities into one shipment when required, and reimburse the Government for increased costs caused by noncompliance.
Government/Agency
Evaluate offers using the clause’s freight-rate methodology so transportation costs are compared consistently. Track shipment performance and document any added costs attributable to a contractor’s failure to follow the required shipment practices.
Practical Implications
This clause can materially affect evaluated price because freight charges are calculated using tariff minimum weights, not just the actual shipment weight. Offerors need to understand carrier pricing rules before bidding.
Contractors should plan production and shipping schedules so deliveries to each destination are consolidated into the required lot size whenever possible. Splitting shipments unnecessarily can trigger higher freight charges and liability.
The key date matters: evaluation uses rates in effect at bid opening or proposal closing, while actual shipment uses rates in effect on the shipment date. Changes in tariffs or tenders can change the economics of delivery.
A written exception from the Contracting Officer is important. Verbal approvals or informal shipping instructions are not enough to protect the contractor if shipment practices later become an issue.
Common pitfalls include using the wrong minimum weight, failing to account for destination-specific delivery quantities, and not documenting why a shipment could not be made as a carload or truckload. These mistakes can lead to cost disallowance or reimbursement claims.
Official Regulatory Text
As prescribed in 47.305-16 (a) , insert the following clause in solicitations and contracts when it is contemplated that they may result in f.o.b. origin contracts with shipments in carloads or truckloads. This will facilitate realistic freight cost evaluations of offers and ensure that contractors produce economical shipments of agreed size. F.o.b. Origin-Carload and Truckload Shipments (Apr 1984) (a) The Contractor agrees that shipment shall be made in carload or truckload lots when the quantity to be delivered to any one destination in any delivery period pursuant to the contract schedule of deliveries is sufficient to constitute a carload or truckload shipment, except as may otherwise be permitted or directed, in writing, by the Contracting Officer. (b) For evaluation purposes, the agreed weight of a carload or truckload shall be the highest applicable minimum weight that will result in the lowest freight rate (or per car charge) on file or published in common carrier tariffs or tenders as of the date of bid opening (or the closing date specified for receipt of proposals). (c) For purposes of actual delivery, the agreed weight of a carload or truckload will be the highest applicable minimum weight that will result in the lowest possible freight rate (or per car charge) on file or published as of date of shipment. (d) If the total weight of any scheduled quantity to a destination is less than the highest carload/truckload minimum weight used for evaluation of offers, the Contractor agrees to ship such scheduled quantity in one shipment. (e) The Contractor shall be liable to the Government for any increased costs to the Government resulting from failure to comply with the above requirements. (End of clause)