FOB Destination
A shipping term where the seller retains risk of loss until goods arrive at the buyer's location, common in government supply contracts.
Overview
FOB Destination (Free on Board Destination) is a shipping and delivery term specifying that the seller retains title and risk of loss for goods until they are delivered to the buyer's designated location. In government contracting, FOB Destination is the default delivery term under FAR Part 47, meaning the contractor is responsible for shipping costs, insurance, and any loss or damage during transit.
Why It Matters in GovCon
The FOB term directly affects contract pricing, risk allocation, and inspection rights. Under FOB Destination, contractors must factor shipping, handling, and insurance costs into their pricing. Understanding this term is essential for accurate cost proposals on supply contracts.
Key Details
- FAR 52.247-34: The standard clause establishing FOB Destination terms in federal contracts.
- Risk Transfer: Title and risk pass to the government only upon delivery and acceptance at the destination.
- Inspection: Under FOB Destination, the government inspects and accepts goods at the delivery point.
- Shipping Costs: The contractor bears all transportation costs to the destination.
- FOB Origin Alternative: Under FOB Origin, the government assumes risk when goods are loaded onto the carrier at the shipping point.
Related Terms
- FAR Part 47 (Transportation)
- Delivery Order
- Inspection and Acceptance
- Contract Line Item Number (CLIN)
More Acquisition Terms
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Written narrative responses that describe a candidate or contractor capability in specific areas, historically used in federal hiring and some proposal evaluations.
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