The Maritime Administration initiates and recommends regulations and procedures for the Department of Defense (DOD) to follow in administering cargo preference. Program efforts concentrate on meetings and discussions with DOD component commands, contractors, suppliers, freight forwarders, and shipping companies to focus attention on meeting the needs of all constituents within the context of U.S.-flag carriage requirements.
Cargo shipping for DOD is subject to the Military Cargo Preference Act of 1904 which requires that items procured for, intended for use by, or owned by military departments or defense agencies, must be carried exclusively (100 percent) on U.S.-flag vessels, if available at reasonable rates. Most DOD containerized cargo is booked on U.S.-flag vessels by the Military Surface Deployment and Distribution Command (SDDC) for the various DOD shipper services as part of the Defense Transportation System (DTS). Shipping via DTS allows DOD shippers access to pre-negotiated ocean shipping contracts providing cost and convenience benefits.
MARAD’s functions with regard to the Military Cargo Preference Act of 1904:
To determine the availability of U.S.-flag service when that availability is questioned by another agency, contractor, or program participant.
To provide guidance concerning the reasonableness of ocean freight rates to Federal agencies and participants in programs sponsored by those agencies.
To monitor the compliance of Government agencies and commercial shippers subject to the preference statutes.
To report to Congress on compliance with the cargo preference laws by Federal agencies.
- Defense Federal Acquisition Regulations Supplement (DFARS):
- DFARS Table of Contents
- Transportation of Supplies at Sea, Clause 252.247-7023
- Notification of Transportation of Supplies by Sea, Clause 252.247-7024
- Ocean Transportation By U.S.-Flag Vessels, Subpart 247.5
The prime contractor is responsible for ensuring compliance with cargo preference regulations, not only by the prime but by all subcontractors, regardless of the tier. The prime contractor is responsible for ensuring that subcontractors are in compliance with the cargo preference statutes. Any penalties for violation of the cargo preference regulations at any level would be imposed on the prime contractor. The prime contractor is also responsible for providing the Government Contracting Officer and MARAD with a copy of the ocean carrier, freight rated, onboard ocean bill of lading for each shipments.
Bills of lading for MARAD should be directed to:
Maritime Administration Office of Cargo and Commercial Sealift
MAR-640/Mail Stop 2 1200 New Jersey Avenue, SE
Washington, DC 20590