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Procurement Terms
Purchasing Terminology
| Question | Answer |
|---|---|
| Acceptance | Indication that an offeree is bound by the terms of the offer |
| Acquisition | Acquiring by contract, with appropriated funds, supplies or services including construction. |
| Addenda | Supplements to the bid or proposal form as originally issued, covering additions, corrections, or changes in the bidding conditions for the advertised work. These are issued to prospective bidders prior to the date set for opening of proposals. |
| Affiliates | A company effectively controlled by another or associated with others under common ownership or control. |
| Amendment | To revise or change an existing document; a formal revision, improvement or correction. |
| Award | The acceptance of a bid or proposal; the presentation of a purchase agreement or contract to a bidder or offeror. |
| Best and Final Offer (BAFO) | In a competitive negotiation, the final proposal submitted after negotiations are completed that contains the most favorable terms for price, services and products to be delivered. |
| Best Value | A procurement system that looks at factors other than only price, such as quality and expertise, when selecting vendors or contractors. |
| Bid | An offer to perform the work described in a contract at a specified cost. Government ones are generally cost-specific, based on cost of labor, materials, profit, and overhead. They are normally not negotiated and can't be changed once accepted by owner. |
| Bid Documents | The advertisement or invitation to bid, instructions to bidders, the bid form, and the proposed contract documents including any addenda issued prior to receipt of bids. |
| Prepaid | A term denoting that transportation charges have been or are to be paid at the point of shipment. |
| Consideration | Something of value which is exchanged by two parties and which serves to form or bind a contract. |
| Contract | Any written instrument or electronic document containing the elements of offer, acceptance, and consideration to which an agency is a party. |
| Appropriation | Sum of money from public funds set aside for a specific purpose. |
| Agreement | A duly executed and legally binding contract. |
| Blanket Purchase Order (BPO): | An agreement to purchase a given quantity of specific goods over a specified period of time, usually one year. |
| Bundled Contract | To purchase in volume with the expectation of reducing the unit price of an item. |
| Bundling | The practice of pooling or grouping smaller purchases to leverage purchasing power thus obtaining the benefits of economies of scale or a reduction in administrative expenses. |
| Capability | The ability of a bidder to fulfill the contract at time of award. |
| Change Order | A written alteration that is issued to modify or amend a contract and/or purchase order. |
| Claim | A written assertion or demand, by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract. |
| Closeout | The process in which the awarding agency determines that all applicable administrative actions and all required work of the award have been completed by the recipient and the awarding agency. |
| Commodity | A transportable article of trade or commerce that can be bartered or sold. |
| Competition | A procurement strategy where more than one contractor that is capable of performing the contract is solicited to submit an offer for supplies and services. |
| Contract | A mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. |
| Contract Administration | Following the award of a contract, the management actions that must be taken to assure full compliance with all of the terms and conditions contained within the contract document, including price. |
| Contract Modification | Any written change in the terms of a contract after the contract has been awarded. |
| Contractor | An individual or vendor that has entered into an agreement to provide goods, services, or construction for an agreed upon price. |
| Cooperative Agreement | An assistance instrument used when substantial involvement is anticipated between the Federal government and the state or local government or other recipient during performance of the contemplated activity. |
| Cost Sharing | A type of contract that is used when it is impossible to firmly estimate costs and there is a high probability that the contractor will receive a substantial present or future commercial benefit. This type of contract is used in research and development. |
| Cure Notice | A delinquency notice that must be issued prior to termination for default of a supply or service contract before the contract's delivery date. Failure to issue a cure notice when required may result in an invalid termination for default. |
| Debarment | To prohibit a seller/contractor from bidding on future requirements for cause for a certain period of time. To exclude or shut out of future solicitations and contracting opportunities. |
| Default | The omission or failure to perform a legal or contractual duty, to observe a promise or discharge an obligation, or to perform an agreement. |
| Deliverable | The completion of a milestone or the accomplishment of a task. Used to measure successful performance. |
| Delivery Order | An order for supplies placed against an established contract or with Government sources. |
| Direct Cost | The cost of materials or services identified with only a single cost objective. |
| Disadvantaged Business Enterprise (DBE) | A business owned or controlled by a majority of persons who are determined to have been deprived of the opportunity to develop and maintain a competitive economic position because of specified social disadvantage. |
| Escalation Clause | Allows the contract price to be adjusted up or down in direct relationship to a defined market indicator such as the Consumer Price Index. |
| Federal Acquisition Regulations (FAR) | The body of regulations that are the primary sources of authority governing the Federal government procurement process. |
| Federal Supply Schedule (FSS) Program | Provides federal customers with the products, services, and programs to meet their supply, service, procurement, vehicle purchasing and leasing, travel and transportation, and personal property management requirements. |
| Fixed Price Contract | A type of contract that provides for a firm price or, under appropriate circumstances, for an adjustable price for the supplies or services being procured. This type of contract typically places the greater risk on the contractor. |
| Free On Board (F.O.B.) Destination | The seller or consignor delivers the goods on seller’s or consignor’s conveyance at destination. Unless the contract provides otherwise, the seller or consignor is responsible for the cost of shipping and risk of loss. |
| Free On Board (F.O.B.) Origin | The seller or consignor places the goods on the conveyance. Unless the contract provides otherwise, the buyer or consignee is responsible for the cost of shipping and risk of loss. |
| Freedom of Information Act (FOIA) | Provides that information is to be made available to the public either by publishing it in the Federal Register, providing an opportunity to read and copy records at convenient locations, or upon request, providing a copy of a reasonable described record. |
| Full and Open Competition | When used with respect to a contract action, means that all responsible sources are permitted to compete. |
| General and Administrative (G&A) Expense | Any management, financial, and other expense which is incurred by or allocated to a business unit and which is for the general management and administration of the business unit as a whole. |
| Grant Agreement | An assistance instrument used when substantial involvement is NOT anticipated between the Federal government and the state or local government or other recipient during performance of the contemplated activity. |
| Indefinite Delivery/Indefinite Quantity Contracts (ID/IQ): | A type of contract in which the exact date of delivery or the exact quantity are not specified until a delivery or task order is issued. |
| Indirect Cost | Costs incurred that are not directly related to service delivery such as insurance and employee benefits. Costs to ado not relate directly to performance such as overhead costs incurred in the normal course of business. |
| Ineligible Bidder | An individual or business entity who does not meet the stated qualifications for responding to a bid/offer or has been disqualified, suspended or debarred. |
| Inherently Governmental Function | A function that is so intimately related to the public interest as to mandate performance by Government employees. |
| Joint Venture | An association of two or more parties who combine their resources in response to a solicitation for bids or proposals. The relationship that is created is for the sole purpose of responding to the solicitation. |
| Liquidated Damages | A sum stated in a contract to be paid as ascertained damages for failure to perform in accordance with the contract. |
| Offer | A response to a solicitation that, if accepted, would bind the offeror to perform the resulting contract. |
| Offeror | Person or entity who submits a proposal in response to a RFP. One who makes an offer in response to a solicitation. |
| Option | A unilateral right in a contract by which, for a specified time, the Government may elect to purchase additional supplies or services called for by the contract, or may elect to extend the term of the contract. |
| Partial Termination | The termination of a part, but not all, of the work that has not been completed and accepted under a contract. |
| Past Performance | An offeror’s or contractor’s performance on active and physically completed contracts. |
| Performance Work Statement (PWS) | A statement of work used in performance based request for proposals. It describes the requirements in terms of outcomes rather than prescriptive specifications. |
| Pre-Bid/Pre-Proposal | A meeting held by the buyer with potential bidders, prior to the opening of the solicitation for the purpose of answering questions, clarifying any ambiguities in order to establish a common basis for understanding the required criteria. |
| Pricing | The process of establishing a reasonable amount or amounts to be paid for supplies or services. |
| Procurement | The combined functions of purchasing, inventory control, traffic and transportation, receiving, inspection, storekeeping, salvage and disposal operations. |
| Purchase Order | An offer by the Government to buy supplies or services, including construction and research and development, upon specified terms and conditions, using simplified acquisition procedures. |
| Qualified Products List Specifications (QPL) | A list of products that have been examined, tested, and have satisfied all applicable qualification requirements. |
| Request for Proposals (RFP) | All documents, whether attached or incorporated by reference, utilized for soliciting proposals; requires negotiation with offerers as distinguished from competitive bidding when using an invitation for bids. |
| Request for Quotation (RFQ) | A type of solicitation used typically with small orders under a certain dollar threshold. |
| Requisition | An internal document that a functional department (stores, maintenance, production, etc.) sends to the purchasing department containing details of materials to meet its needs, replenish stocks or obtain materials for specific jobs or contracts. |
| Shall | Denotes the imperative in contract clauses or specifications. |
| Should | An expected course of action or policy that is to be followed unless inappropriate for a particular circumstance. |
| Sole Source Procurement | A situation created due to the inability to obtain competition. May result because only one vendor or supplier possesses the unique ability or capability to meet the particular requirements of the solicitation. |
| Solicitation | An invitation for bids, a request for proposal, telephone calls or any document used to obtain bids or proposals for the purpose of entering into a contract. |
| Specification | A precise description of the physical or functional characteristics of a product, good or construction items. |
| Subcontract | A contract that assigns some of the obligations of a prior contract to another party. |
| Taxpayer Identification Number (TIN) | The number required by the IRS to be used by the offeror in reporting income tax and other returns. The TIN may be either a Social Security Number or an Employer Identification Number. |
| Termination for Convenience (T4C) | A contract clause which may be contained within the boilerplate language that allows for contract to be ended at the discretion of the governmental entity with no reflection on the contractor's performance. |
| Termination for Default (T4D) | The exercise of the Government’s right to completely or partially terminate a contract because of the contractor’s actual or anticipated failure to perform its contractual obligations. |
| Terms And Conditions | Standard boilerplate language that includes standard clauses an rules which apply to bids and offers formally solicited that many become incorporated into the final contract. |
| Time and Materials Contract | A contract providing for the procurement of supplies or services on the basis of direct labor hours at specified fixed hourly rates and material at cost, or at some bid percentage discount from manufacturer's catalog or list prices. |
| Unsolicited Proposal | A written proposal for a new or innovative idea that is submitted to an agency on the initiative of the offeror for the purpose of obtaining a contract with the Government, |
| Warranty | A promise made by a seller to a buyer that is legally enforceable. The promise may be expressed or implied and is legally binding. |
| Tabulation of Bids | The recording of responses to bids and proposals for the purpose of comparison, analysis, and record keeping |
| Express Warranty | A written explanation of the responsibilities of the seller in the event that the product is found to be defective or otherwise unsatisfactory. |
| Implied Warranty | A warranty not specifically written into a contract but expected to be valid through law. |
| Advance Payment Guarantee | A bond or bank guarantee the supplier, contractor or service provider is required to provider to the client as a security so that the client is able to recover the advance payment in the event of the bidder’s default. |
| Bid (same as Offer, Proposal, Quotation and Tender) | A response from a supplier, contractor or service provider to a solicitation request that, if recommended for award, would bind the supplier, contractor or service provider to perform in accordance with the contract. |
| Bid Bond | An obligation, usually assured by a bank or other third party, to release the bid security amount to the client if the selected bidder fails to sign the contract. |
| Bid Opening | The opening and public reading of all bids received, at a designated date and time stipulated in the solicitation documents. The bid opening event is a formal process where bidders are invited to attend and the bids prices are read out loud. |
| Bid Validity | A certification from a bidder of the period of time their bid can be considered valid. After this period, the bidder is at liberty to change their bid price if the contract is not signed by the last date of the bid validity period. |
| Bid Validity Period. | The period within which a bidder’s offer is considered legally binding. After this period, the bidder is at liberty to change their bid if the contract has not been signed. |
| Bidding Documents (same as Tender Documents and Solicitation Documents) | A set of documents issued by the procuring entity, inviting offers (bids, proposals or quotations) for the selection of suppliers, contractors or service providers to fulfill specific requirements. |
| Client | One of the parties to the contract. The one with the requirement that needs to be fulfilled. Also called: “employer”, “buyer” or “purchaser”. |
| Consulting Services | A procurement category focusing on the hiring of firms or individuals to provide services that are primarily intellectual in nature. Studies, training, advice, etc. |
| Contract Commencement | Is the same as the effective date of the contract. The date on which the contractor, supplier or services provider is obliged to begin work on the contract. |
| Contract Effective Date | The same as the contract commencement date. |
| Contract Signing | Marks the date of entry into force of a contract, making it legally binding between the parties to the contract. |
| Contract Termination | The permanent cessation of work under a contract resulting from unforeseen events, breach if the contract terms and conditions or mutual agreement between the parties to the contract. |
| Defects Liability | Is the legal responsibility that a contractor has to repair and/or cover the cost of any defects found in a completed or renovated infrastructure works. This responsibility last only for a period of time stipulated in the contract. |
| Effective Date of the Contract | Same as the contract commencement date. |
| Infrastructure Works | One of the main procurement categories that exclusively deal with construction, refurbishment, demolition and rebuilding of infrastructure. This includes: buildings, bridges, roads, utilities, etc. (see also Works). |
| Kickoff Meeting | A meeting scheduled to take place soon after the contract is signed & before contract commencement, where the parties to the contract meet to introduce the principal representatives on each side and to discuss details of contract execution & deliverables. |
| Manufacturer | The producer of the goods delivered to the client by the supplier. Sometimes the manufacturer is also the supplier. |
| Mobilization | The period of time between the signing of the contract and the contract commencement date. This period is given to the contractor to begin executing the contract scope of work. |
| Offer | Same as Bid. |
| Parties | Those involved in the signing of the contract and having rights and responsibilities towards each other. They also comprise, on the one hand, the client, and on the other the supplier, contractor or service provider. |
| Procurement Entity | An appointed public body engaged and responsible for the purchasing and awarding contracts for goods, services and works. |
| Procurement Lead-time | The timeframe from the issuing and/or publication of the solicitation documents to the point at which the contract is signed by the parties. |
| Procurement Legal and Regulatory Framework | Comprises all laws, regulations and guidelines that govern the management and practice of public procurement. |
| Procurement Method | Procedures used to procure goods, services and works. Some examples are competitive; others, non-competitive. Preference is given to a competitive one of these. |
| Procurement Principles | The primary values that govern the management of public procurement. They also guide the conduct of public procurement practitioners and other actors and stakeholders involved in the public procurement process. |
| Procurement Requisition | A formal request to begin procurement proceedings to fulfill a specific procurement requirement. |
| Public Procurement | The purchasing of goods, services and works with public funds to support government operations and/or provide public goods and services. |
| Purchaser | The client, party responsible for the payment of the goods services or works procured. |
| Requesting Entity | The entity for which a specific procurement action is being carried out. |
| Scope of Services | Describes the services required and that need to be carried out in order to fulfill the contract requirements. |
| Scope of Work | Describes the works required and that need to be carried out in order to fulfill the contract requirements. |
| Selected Bidder | What kind of bidder is recommended for contract award as a result of the evaluation of bids received in response to an invitation for bids. |
| Selected Consultant | Consultant firm or individual recommended for contract award of as a result of the evaluation of proposals or applications received in response to a request for offers. |
| Services | One of the primary procurement categories that deal with all consultant and non-consultant types. |
| Service Provider | Firm or individual engaged the client to fulfill a service requirement (consultant or non-consultant). |
| Subcontractor | A firm or other entity engaged by the selected bidder to carryout a portion of the contract requirement. They are usually responsible only to the contractor that signed the contract with the client. |
| Supplier | The entity with which the client reaches an agreement to fulfill a requirement for goods and/or services, on a one-off basis or over a definite or indefinite period. |
| Technical Specifications | Describes the details of the required good and/or related services in a contract in such as manner that the contractor, supplier or services provider can easily understand and determine their capability to fulfill the requirement. |
| Tender Board | An entity created by law to oversee the public procurement process and to ensure that all public procurement activities are carried out in accordance with the public procurement principles and legal and regulatory framework. |
| Tender Box | A receptacle or container used for receiving tenders (bids/proposals). The use of the tender box for receiving tender submissions is dependent on the legal and regulatory framework stipulations. There a two types of tender boxes: electronic and physical. |
| Terms of Reference | A document describing the details of a requirement for consultant services. It includes, as a minimum, the background and objectives of the assignment, tasks to be completed, personnel requirement & qualifications, duration, & location of the assignment. |
| Vendor | Same as Supplier |
| Works Procurement | Same as Infrastructure Works. |
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