Hi: I'm currently looking to see if I can find any information to help you. In the FAR, I did find the following sections that may be able to help for federal contracts: Part 30 - Cost Accounting Standards Part 31 - Contract Cost Principles and Procedures In the meantime, do you have any more information that you could provide? For instance, are you looking for federal, state, or local government contracts? Does anyone have an best practice advice to offer on cost negotiations for government contracts?

One of my customers has also mentioned this to me however I can't find any information on it. Does anyone know if this is true? Or where this might be described. Thanks, Andrew

Freight charges should be equal to the actual cost of shipping the freight. The charges however can and often do include handling. Handling charges have come under government scrutiny lately. The amounts charged for handling should be able to be justified with a costing analysis usually through a generally recognized business method of allocating costs. If the handling portion of fees charged are significantly higher than the costs allocated to handling, this could cause legal issues for the company.

Markup of freight costs are also dictated by the type of contract you have with the government. If you are bidding a Firm/Fixed/Price (FFP) contract you would have estimated the freight costs and possibly added a little to account for escalation depending on when during the period of performance the shipping occurs. You have to be reasonable with the escalation since your pricing is generally auditable. On a Time & Material (T&M) contract you may be required to charge the exact freight cost, but charge the time your employees handled or processed the shipment. There are several different ways contracts can be negotiated as well. Frequently travel, material and ODCs (other direct costs, which would include freight charges) are cost reimbursable with no mark up. You can't make a blanket statement that it is illegal to markup freight costs. It is really defined by the type of contract and how it was negotiated. Part 12 of the FAR covers the different contract types, but your contract is what will define if you can markup freight.

I have a little problem just trying to find markup info on contruction projects. I'm trying to find in the FAR where it limits a construction project change order on the amount of overhead and profit markup %. I found the VA FAR section 852.236.88 section but I need to find the general FAR markup requirement since I'm doing construction contract work for the other branch of governments. Can anyone help me find this FAR markup info?

I don't know much about construction contracting, but FAR 47.302 and the paragraphs following deal with shipping. Normally I don't markup shipping, but do charge for handling. There's no limit for what you can charge for handling. It's only limited by what you can do and remain competitive.