Delivery instructions for supplies must specify a f.o.b. point, which is determined on the basis of overall costs, including rates, delivery terms, redirection in transit costs, and other factors. Generally, f.o.b. origin will produce lower costs for large-scale and consolidated purchases or when the Postal Service may benefit from determining and managing the transportation provider. The solicitation may require the supplier’s proposal to include both f.o.b. origin and destination prices for transportation analysis. A transportation analysis is available from field material management specialists or nonmail freight transportation at Headquarters.
F.o.b. origin means that the Postal Service makes the arrangements for the pickup, transportation, and delivery to the required destination. Title passes to the Postal Service when delivery is made to the carrier. The supplier’s risk is limited to loss or damage prior to delivery to the carrier or caused by improper marking or packing of the goods, while the transportation carrier is accountable to the Postal Service for loss or damage to the shipment. This payment for transportation services is separate from the price of the purchased supplies.
F.o.b. destination means delivery, free of expense to the Postal Service, to a destination or shipment base points specified in the contract. Title to the supplies passes to the Postal Service when they arrive at the stated destination. The supplier pays the carrier and assumes the risk for loss or damage until delivery to the specified destination. Under this arrangement, freight costs are likely to be much higher because suppliers add on a markup and the cost of freight is hidden in the purchase price of the product. However, some suppliers have sufficient volume to get excellent discounts or, more frequently, there are program-related activities such as installation where the program-risk of transportation problems or early property transfer are unacceptable. The item manager is responsible for analyzing transportation requirements and determining the best value solution. Decisions will be documented in the contract files.
Paragraph t of Clause 4-1: General Terms and Conditions or when included by the purchase⁄SCM team, Clause 2-9: Definition of Delivery Terms and Supplier’s Responsibilities addresses delivery terms.
