Scopelitis Archives

Pursuant to legislation adopted in 2008, the Defense Department in late July published an immediately effective interim amendment to the Defense Federal Acquisition Regulation, mandating a fuel surcharge pass-through clause in Defense Department transportation contracts and solicitations. Under the interim rule, this clause is to be inserted in “solicitations and contracts for carriage in which a motor carrier, broker, or freight forwarder will provide or arrange truck transportation services that provide for a fuel-related adjustment.” The rule includes a “flow-down” requirement, thus applying to carriers serving Defense Department contractors and subcontractors–including brokers and forwarders, who are required to pass fuel surcharges on to the motor carrier.

The Surface Deployment and Distribution Command has already included the pass-through requirement in its international and domestic household goods moving solicitations for the next rate cycles beginning October 1 and November 1, 2009, respectively. Other carriers should carefully review further announcements and solicitations from the defense agencies on the subject. Carriers, brokers, and forwarders should begin review and revision of their agreements with contractors and other motor carriers, forwarders, and brokers as necessary to ensure compliance. Those who pay flat per-mile or “adjusted” or “imputed” fuel surcharges, or who pass through less than 100% of the surcharge as shown on the government invoice, should pay special attention to these requirements.

Comments on the interim rule will be accepted until September 28, 2009. These new requirements relate only to Defense Department shipments, though legislative efforts to expand pass-through requirements are not unexpected.