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    Would this be considered FOB Origin or FOB Destination when the vendor quoted that inspection and acceptance is destination?


    Answer

    The following response is based solely on the question posed. No additional
    information has been obtained or solicited in formulating the response set
    forth below.  The answer is for educational purposes only. It is not to be
    construed as legally binding or specific direction.
     
    The question relates to the issue of where inspection and acceptance occurs
    when the contract stipulates f.o.b. origin or f.o.b. destination. 
     
    As mentioned in the question above, the general rule is promulgated by FAR
    47.302(c) which sets forth that the delivery terms shall not be dictated by
    the place that the quality assurance occurs or by the place of acceptance.
    However, there is the exception. The provision stipulates that "if
    acceptance is at destination, transportation shall be f.o.b. destination".
    This point is reiterated again at FAR 47.304-1(f) which states "When
    acceptance must be at destination, solicitation shall be on an f.o.b.
    destination only basis".  Given the both provision use and the mandatory
    verbiage of "shall", it should be interpreted as clear direction.
     
    This approach makes sense when dealing with the acquisition of commercial
    items; such as the item identified in the question.  In various sections of
    Part 12 of the FAR, Acquisition of Commercial Items, it sets forth the
    principle that the Government will rely upon the quality assurance of the
    contractor. Thus, inspection of non-complex commercial items can easily be
    done at destination.  And since the inspection will be done at destination,
    FAR mandates that the transportation term be f.o.b. destination.
     
    As to the interpretation of the instructions set forth in NAVSUPINST
    4200.85D, it does not stipulate shipping terms to be utilized.  Instead,
    based on the portion of the manual that was provided, the instructions are
    focused upon the discrete segregation of costs between the material (end
    product) and the transportation costs. In other words, when structuring the
    solicitation wherein the term of shipping is f.o.b. destination, the
    solicitation should instruct potential offerors that they should clearly
    identify the shipping costs apart from the material costs.  This falls in
    line with the definition  of  f.o.b. destination that is set forth at FAR
    47.303-6, and reads in part that " [t]he Government shall not be liable for
    any delivery, storage, demurrage, accessorial, or other charges involved
    before the actual delivery".
     

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