DATE: October 24, 2022

SUBJECT: Importance of Ensuring Compliance with Federal Cargo Preference Statutes and Regulations

TO: HCAs/Procurement Directors/Contracting Officers
FROM: Director, Contract and Financial Assistance Policy Division, Office of Policy, Office of Acquisition Management

SUMMARY: This Policy Flash provides a reminder for Contracting Officers to follow policies and procedures in accordance with FAR Part 47 – Transportation, which includes direction for the use of appropriate clauses in FAR Part 52. Contracting Officers are reminded of the importance of ensuring compliance with federal cargo preference statutes and regulations that require agencies, contractors, and grantees to use U.S. merchant
vessels to meet their ocean transportation needs. Congress has directed the Maritime Administration (MARAD) by statute to oversee compliance with cargo preference requirements by agencies whose expenditures of funds directly or indirectly result in the transportation of cargo by water.
The Cargo Preference Act of 1954 (“the Act”) requires federal agencies to ship at least 50 percent of the gross tonnage of the equipment, materials, or commodities that are transported by sea on privately owned U.S. commercial vessels to the extent that those vessels are available at fair and reasonable rates for such vessels. Executive Order 14005 – Ensuring the Future is Made in All of America By All of America’s Workers, bolsters the importance of the Act by rearticulating the Administration’s policy that the “United States Government should…maximize the use of goods, products, and materials, produced in, and services offered in, the United States.” Effective compliance with cargo preference requirements increases the use of U.S. flag vessels to ship U.S. cargo, which directly supports the economic growth, safety, and security of our Nation.

Pursuant to regulations promulgated under the Act, 46 CFR 381.3(a) and (b), federal agencies are required to provide bills of lading for all cargoes they ship, whether the cargo is moved on a U.S. vessel or a foreign vessel, to MAARAD within 20 or 30 working days of an ocean shipment, depending on the nature of the shipment, so that MARAD can monitor and ensure compliance with cargo preference requirements.
Other than the statutory, regulatory, and executive requirements under financial assistance, National Policy Requirements are included by reference in all financial assistance awards, which includes Use of U.S. Flag Vessels and U.S. Flag Air Carriers.

For DOE questions concerning this policy flash, please email: DOE_oapmpolicy@hq.doe.gov

For NNSA questions concerning this policy flash, please contact NNSA at (505) 845-4337.