DoD Freight Regulation Update: What Carriers Must Know

A new regulation set by the Department of Defense (DoD) via the Military Surface Deployment and Distribution Command (SDDC) requires freight carriers transporting military freight to post a performance bond. The “open enrollment” window is only from 1/9/2017 – 2/28/2017. Please see the information below taken directly from the SDDC regulations guide below:

NOTICE: SDDC will conduct a domestic motor carrier registration “open season” effective 09 Jan 17 thru 28 Feb 17. This will affect domestic motor Transportation Service Providers (TSPs) only. TSPs will be required to be registered in the Federal Motor Carrier Safety Administration and have valid DOT authority for 3 consecutive years (without a break) prior to the Open Season. New TSPs will notify SDDC of small business status via the Freight Carrier Registration Program (FCRP) during registration. Registration for other modes will continue to be accepted (barge, ocean, pipeline, and international carriers).

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The word “carrier” used in these instructions refers to all Transportation Service Providers (TSPs), including Brokers, Logistic Companies, and Freight Forwarders. Carriers and individuals may not conduct business with the government if they are listed on the Excluded Parties List (EPLS). The list is published by the General Services Administration (GSA) and contains the names of Contractors debarred, suspended, proposed for debarment, or declared ineligible by any agency of the Federal Government. The list can be accessed at https://www.epls.gov. Newly registered TSPs will not be approved if they are affiliated with a TSP who is currently in a disqualified status.

 

DOD Performance Bond Requirements

The Performance Bond secures performance and fulfillment of carrier obligations to deliver
DOD freight. It will cover any instance where a carrier cannot or will not deliver DOD freight
tendered to them. This includes default, abandoned shipments, and bankruptcy by the carrier.
The bond will not be utilized for operational problems such as late pickup or delivery, excessive
transit times, refusals, no shows, improper/inadequate equipment, payment of subcontractors,
or claims for lost or damaged cargo. Local drayage, commercial zone, barge, rail, sealift and
pipeline carriers are exempt from the Performance Bond requirements.

The amount of the Performance Bond is based on the size of the company and the number of states intended to service. Large companies may select one (1) state for bond amount of $25,000; two (2) to three (3) states for bond amount of $50,000; four (4) or more states for bond amount of $100,000.

Carriers registered with the Small Business Administration (SBA), http://www.sba.gov, or http://www.ccr.gov, may select up to three (3) states with a Performance Bond of $25,000, up to10 states with a Performance Bond of $50,000 and 11 or more states for $100,000. To utilize these bond amounts, when submitting your bond information, you must provide supporting 5 documentation that you are registered with the SBA. When registering, ensure you select the states for movement in accordance with the appropriate Performance Bond amounts. Movements must begin and end in one of the selected states.

Carriers that have conducted business in their own name with DOD for 3 or more years will be required to submit a Performance Bond in the amount of 2.5% of their total DOD revenue for the previous 12 months, not to exceed $100,000 and not less than $25,000.

Bulk fuel carriers are only required to submit a $25,000 Performance Bond.

The Performance Bond amount is set at $100,000 for Surface Freight Forwarders, Shipper Agents, Brokers, and Air Freight Forwarders due to the volume of traffic handled by these modes.

 

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