XL EagleFOB origin and FOB destination (Free on Board origin and Free on Board destination)
FOB origin and FOB destination stands for Free on Board origin and Free on Board destination. FOB, or Free on Board, sets who pays shipping and who bears the risk of loss during delivery. Under FOB destination, the seller pays to ship the goods and owns the risk until they arrive at the delivery point. Under FOB origin, the government generally takes on the risk once the goods are handed to the carrier and arranges or pays for transportation.
Most supply contracts and quotes specify one or the other. FOB also affects where inspection and acceptance usually happen and how price comparisons are made, since FOB origin offers may have transportation costs added during evaluation.
Why it matters to a small contractor
If a solicitation says FOB destination, include freight, packaging, and insurance in your price, and expect to replace anything damaged on the way. If you quote something different from what the solicitation asks, your quote can be rejected.
Example
A small supplier quotes 50 office desks FOB destination to a base 800 miles away. They get a freight quote first and include it in their unit price, because the risk and cost are theirs until delivery.
FOB origin and FOB destination: common questions
Who pays shipping on FOB destination?
The seller pays and bears the risk of loss until the goods reach the delivery point.
Which is more common in federal contracts?
FOB destination is very common for supply buys from small vendors, but always check the solicitation.
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