DFARS Part 247 - Transportation - DFARS

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THE DFARS – PART 247

DFARS PART 247
Transportation
SPEAKER: Zachary Jacobson
FIRM: Seyfarth Shaw
EMAIL: zjacobson@seyfarth.com
TODAYS SPEAKER + TOPIC

AGENDA
Today’s Topics
1 – Overview and Applicability of DFARS Part 247
2 – Transportation Services (Subpart 247.2)
3 – Transportation in Supply Contracts (Subpart 247.3)
4 – Use of U.S.-Flag Vessels (Subpart 247.5)
5 – Required Clauses and Compliance Obligations
6 – Defense Transportation System (DTS) and Documentation
7 – Best Practices and Common Pitfalls

DFARS Part 247
Overview
DFARS Part 247 supplements FAR Part 47 and provides DoD-specific rules for
acquiring transportation and transportation-related services.
It prescribes:
• Policies for freight, drayage, and household goods movement
• Use of U.S.-flag carriers under statutory mandates
• Implementation of the Defense Transportation Regulation (DoD 4500.9-R)
• Contractual responsibilities for clearance, documentation, and audit
This Part applies when transportation is the purpose of the contract (e.g., freight
services) or a contract cost component (e.g., supply shipments).

Applicability and DoD Transportation Policies
DFARS Part 247 applies to:
• Direct transportation service contracts (freight, household goods)
• Supply contracts requiring DoD transportation support
• Contracts using GSA or DoD tender agreements
General policy (DFARS 247.101):
• The Defense Transportation System (DTS) is the preferred method for DoD
shipments
• When DTS is unavailable or unsuitable, commercial transportation may be used
• Transportation methods must ensure efficiency, economy, and compliance
with statutory mandates

Defense Transportation System (DTS)
DTS = network of DoD-controlled and commercial transport assets
Includes:
• USTRANSCOM (United States Transportation Command)
• Surface Deployment and Distribution Command (SDDC)
• Air Mobility Command (AMC)
DoD 4500.9-R, Defense Transportation Regulation (DTR), Part II governs use of
DTS.
Contracting officers must:
• Require DTS use where appropriate
• Coordinate with DoD transportation offices
• Enforce pre-approval for shipments to or from military terminals

Transportation Services – DFARS Subpart 247.2
Covers contracts where transportation is the primary purpose
Applies to:
• Freight transportation
• Local drayage
• Related services (e.g., packing, crating, storage)
Key points:
• DFARS incorporates FAR Subpart 47.2 but adds military-specific procedures
• Subpart does not apply to household goods (see 247.271)
• Contracting officers must ensure that contractors hold the required operating
authorities and comply with carrier regulations

Key Clauses for Transportation Services
Common DFARS clauses used:
• 252.247-7003: Pass-through of motor carrier fuel surcharges
• 252.247-7007: Liability and insurance
• 252.247-7008: Evaluation of bids
• 252.247-7009: Award
• 252.247-7014: Demurrage
• 252.247-7016: Contractor liability for loss or damage
These clauses impose contract-specific responsibilities and integrate with DoD
transportation oversight practices.

Transportation in Supply Contracts – DFARS Subpart 247.3
Subpart 247.3 aligns with FAR 47.3 and adds DoD-specific rules:
• Mandatory use of DTS and DTR procedures
• Required use of REPSHIP messages and transportation control numbers
(TCNs)
• Enhanced scrutiny of routing, documentation, and shipment traceability
The contract must specify:
• Who is responsible for arranging transportation
• Whether shipment is FOB origin or FOB destination
• The contractor’s responsibility for marking, packing, and submitting
shipping documents

Use of U.S.-Flag Vessels – DFARS Subpart 247.5
Implements:
• Cargo Preference Act of 1904 (10 U.S.C. § 2631)
• Cargo Preference Act of 1954 (46 U.S.C. § 55305)
DFARS requires contractors to use U.S.-flag commercial vessels to transport
supplies:
• Owned by DoD or contractors for DoD use
• Purchased with U.S. public funds
• In foreign assistance or military operations
Applies even when contractor arranges transport.
Waivers must follow DFARS 247.573 and be properly justified.

DFARS 252.247-7023 – Transportation by Sea
Required in all DoD solicitations/contracts when goods may be transported by sea.
• Applies to prime and subcontracts, including for commercial products
• Requires contractors to provide advance notice of any foreign-flag use
• Must use U.S.-flag unless waived by the contracting officer
• Failure to comply may result in payment withholding or termination

Case Example – DFARS 247 Violation
Improper Use of Foreign-Flag Vessel Without Waiver
A defense contractor awarded a contract for shipping sensitive communications
equipment to a NATO partner arranged transport through a foreign-flag carrier
without obtaining the required waiver under DFARS 252.247-7023.
The contracting officer discovered the violation during invoice review. The
contractor failed to notify the CO under DFARS 252.247-7024.
Outcome:
• Partial withhold of payment for transportation cost and formal cure notice
issued
• Contractor required to submit a new compliance plan
• Internal audit flagged lack of subcontractor compliance training
Lesson: Always vet subcontracted carriers, submit required notifications early,
and secure written approval when U.S.-flag shipping is unavailable.

DFARS 252.247-7024 – Notification of Transportation by Sea
Use this clause in all solicitations and contracts where sea transport is possible.
Contractor must:
• Notify the CO in writing if any supplies will be shipped by sea
• Provide details of vessel, port, estimated departure, and arrival
• Comply even if transportation is subcontracted
This ensures Government visibility into logistics and helps maintain cargo
preference compliance.

DFARS 252.247-7028 – Application for Bill of Lading
Required in DoD contracts involving Government-arranged shipping
Contractor must:
• Apply to the transportation office for a Government Bill of Lading (GBL)
• Must submit all required documentation for GBL issuance
GBLs allow use of DoD-negotiated rates and tracking through DTS
Clause ensures visibility and audit control for freight cost reimbursement

Documentation & Terminal Clearance
Contracting officers must include terms ensuring:
• Proper REPSHIP (Report of Shipment) messages sent
• Contractors obtain clearance authority before shipping to/from military
terminals
• Use of Transportation Control Numbers (TCNs) for each shipment
• Adherence to DTR procedures for packaging, labeling, and notification
Failure to comply may delay delivery and result in costs or penalties.

DTS Routing & REPSHIP Checklist
Defense Transportation System (DTS) Routing & REPSHIP Compliance
✅Coordinate with the responsible transportation office before shipment
✅ Use REPSHIP message format to notify DoD consignee (DTR Part II, Ch. 203)
✅ Assign and transmit Transportation Control Number (TCN) for each shipment
✅ Ensure transportation clearance for shipments to military ports or
transshipment facilities
✅ Provide accurate packing, marking, and labeling in accordance with MIL-STD-
129 or agency-specific standards
✅ Confirm bill of lading (CBL or GBL) is properly prepared and distributed
✅ Retain records for DoD audit (e.g., DFARS 252.247-7028)
Tip: Missing REPSHIP or using incorrect routing can delay delivery and result in
chargebacks or performance deductions.

Exceptions & Waivers
DoD can approve exceptions for use of foreign carriers only when:
• U.S.-flag vessels are unavailable or rates are not fair/reasonable
• Shipment is classified, urgent, or part of a multinational mission
• Cargo is purchased with foreign funds (under limited programs)
Waivers must be justified in writing, retained in the contract file, and submitted
through proper DoD channels (e.g., MARAD or USTRANSCOM coordination).

Contractor Use of DTS – Responsibilities
Contractors must:
• Use DTS when required or authorized
• Provide shipment data to the designated transportation office
• Coordinate for GFM (Government Furnished Movement)
• Prepare and transmit all shipping documentation
DTS compliance ensures that the Government benefits from volume discounts,
tracking, and central logistics support.

Common Pitfalls and Best Practices
🔻 Pitfalls:
• Failing to notify of sea shipment (7024 clause)
• Using foreign-flag vessels without waiver
• Improper documentation delaying delivery
• Missing TCNs or failing to REPSHIP
✅ Best Practices:
• Engage with transportation officer early
• Confirm packaging and marking compliance
• Track U.S.-flag vessel availability
• Ensure subcontractors understand DFARS flowdowns

Conclusion – Key Takeaways
• DFARS 247 supplements FAR 47 with DoD-specific mandates
• Use of U.S.-flag carriers and DTS is not optional without a waiver
• Contracts must incorporate DFARS clauses and documentation requirements
• Contractors must engage early with transportation and logistics teams to
avoid noncompliance

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QUESTIONS?
Please Contact Our Speaker:
SPEAKER: Zachary Jacobson
FIRM: Seyfarth Shaw
EMAIL: zjacobson@seyfarth.com

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The DFARS – 2025
The Defense Federal Acquisition Regulation
Supplement
A Complimentary Webinar Series

DFARS Part 247 - Transportation - DFARS

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