When does the risk of loss transfer to the Government in FOB destination contracts?

In FOB (Free On Board) destination contracts, risk of loss transfers to the Government upon acceptance by the Government or delivery at the destination. This means that until the supplies are delivered to the designated location and accepted by the Government, the responsibility for any loss or damage to those supplies remains with the contractor. This is significant because it means that the contractor must ensure that the items arrive safely at the specified destination, as they bear the risk until that point.

This principle is rooted in the FOB destination shipping terms, which clearly establish that the seller (or contractor) retains the risk until the buyer (in this case, the Government) receives the goods. This approach protects the Government from potential losses during transport, ensuring that any damages or losses incurred in transit are the responsibility of the contractor. Thus, the correct understanding of risk transfer in this context is essential for both contractors and the Government when engaging in procurement activities.