Short answer: Who pays shipping on a DLA order depends on the FOB term. FOB destination means you pay to get the parts to the government's receiving dock and you carry the risk until they arrive. FOB origin means you pack, mark and hand the shipment to a carrier the government arranges, and the government pays line-haul freight. The RFQ states which term applies, and it changes your price.
Where the FOB term shows up on a DLA RFQ
Look in two places. The cover page of a DLA request for quotation has a delivery block that shows FOB origin or FOB destination, and each line item in Section B repeats it (for example, a line that reads "DELIVER FOB: ORIGIN"). Read the line-item value. If the two ever disagree, ask the buyer before you quote. Don't guess.
The FOB term is one of the things you can't change on an automated DLA quote. DLA's master solicitation for automated buys lists exceptions to FOB terms among the things that make a quote ineligible for automated award. Quote the term the RFQ asks for. The current master solicitation is linked from .
What FOB destination means
The FAR defines FOB destination as delivery free of expense to the government, on board the carrier's conveyance, at the consignee's facility. The contractor pays delivery to the warehouse unloading platform or receiving dock (). The matching contract clause is .
In plain terms:
- You pay the freight. Build it into your unit price. There is no separate freight line to bill later.
- You choose and book the carrier. That could be a parcel service or a less-than-truckload carrier, whatever gets the order there by the delivery date.
- The risk stays with you in transit. If the box is lost or damaged before it reaches the consignee, that's your problem to fix.
On DLA orders, you still use DLA's Vendor Shipment Module (VSM) for FOB destination shipments. DLA says vendors print the military shipping label from VSM so the ship-to address is current (; ). Don't copy an address from an old order. Depot addresses change.
What FOB origin means
The FAR defines FOB origin as delivery free of expense to the government on board the carrier's conveyance at the shipping point, or at the carrier's freight station or a U.S. Postal Service facility (). The clause is .
FOB origin doesn't mean "no work for you." Under 52.247-29(b), the contractor still has to:
- pack and mark the shipment to the contract specifications;
- order the carrier equipment the government asks for;
- deliver the shipment in good condition to the carrier, and load and brace it if you load it;
- answer for loss or damage before the carrier takes it, or caused by bad packing, marking or loading; and
- complete the bill of lading.
For DLA buys, VSM is how this happens. DLA's vendor packaging guidance says that on FOB origin orders the government arranges transportation and VSM prints the labels and transportation documents, including a small-parcel tracking label or a bill of lading for freight (). Freight shipments take about 4 business days to tender to a carrier, per DLA, so enter the shipment in VSM early enough to make your delivery date.
Some DLA RFQs say they're issued under DLA's First Destination Transportation program and ask you to quote FOB origin so the government can use its own freight contracts. When you see that language, price FOB origin even if you'd rather ship it yourself.
FOB origin vs FOB destination at a glance
| FOB origin | FOB destination | |
|---|---|---|
| Who pays line-haul freight | Government | You |
| Who arranges the carrier on DLA orders | Government, through VSM | You |
| Risk of loss in transit | Passes when the carrier takes it, unless caused by your packing or loading | Stays with you until delivery |
| Labels on DLA orders | Printed from VSM | Military shipping label printed from VSM |
| What to add to your price | Packing, marking, loading | Packing, marking, plus freight to the consignee |
How FOB changes your quote
FOB destination: get a real freight estimate before you price. Use the weight and size after packaging, not the bare part, and the actual consignee on the RFQ. A small, light part going by parcel may add little. A long, heavy or crated item going by truck can cost more than your margin. If the RFQ lists more than one destination, price the worst case or ask the buyer.
FOB origin: you skip line-haul freight, but you still pay for packaging, marking and the time to get the shipment ready when the carrier arrives. DLAD procurement note C20 tells contractors to keep their VSM profile current, including business hours and holidays, and warns that the government may ask for reimbursement if a carrier is sent and the shipment isn't ready.
Either way: FOB is not the same thing as inspection and acceptance. A DLA RFQ lists an inspection point and an acceptance point on their own lines, and they don't always match the FOB term. Read all three before you price.
Common mistakes
- Pricing from the part's weight and forgetting the packaging adds size and weight.
- Treating FOB origin as "the government handles everything" and missing the packing, marking and loading duties in 52.247-29.
- Shipping FOB destination to an address from a previous order instead of printing a fresh VSM label.
- Typing a different FOB term on the quote. On an automated buy, that makes the quote ineligible.
Where FedOpp fits
FedOpp checks delivery days and the last award price on each DIBBS row, and its Bid Sheet builds freight under the FOB terms into your unit price, so you can see whether freight will eat the margin before you quote. You still quote on DIBBS yourself. FedOpp is $199 a month after a 7-day free trial.
For the rest of the RFQ, see How to Bid on DIBBS and the DIBBS bid checklist. For packaging costs, decode the PKGING DATA line with the MIL-STD-2073 packaging code decoder.
Also see How to Read a DIBBS RFQ.
Also see How to Price DLA Bids Using Procurement History.
Frequently asked questions
Who pays shipping on an FOB destination government contract?
The contractor. Under FAR 52.247-34, you deliver free of expense to the government at the consignee's facility, so freight belongs in your unit price.
Who pays shipping on FOB origin?
The government pays line-haul freight. You still pack, mark, hand the shipment to the carrier and complete the bill of lading under FAR 52.247-29.
Can I change the FOB term when I quote on DIBBS?
On automated DLA buys, an exception to the FOB terms makes the quote ineligible for automated award. Quote the term the RFQ states.
Do I use VSM on FOB destination orders?
Yes, on DLA-administered orders. DLAD procurement note C20 has vendors print labels from VSM for FOB destination, and print labels and arrange shipping through VSM for FOB origin.
Is FOB the same as the inspection point?
No. A DLA RFQ lists the FOB term, the inspection point and the acceptance point separately. Each can be origin or destination.
Last verified 2026-10-08 · Author FedOpp
Sources
Practical notes, not legal advice. The solicitation controls.