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CPPB Prep
| Question | Answer |
|---|---|
| budgeting | the allocation of scarce resources among competing demands |
| allotment | controls the rate of spending authorized by an appropriation |
| allocation | controls specific use of the monies appropriated |
| cash basis accounting | income is not counted until cash (or check) is actually received, and expenses are not counted until they are actually paid. |
| accrual basis accounting | Transactions are recognized at the time they are incurred, as opposed to when cash is received or spent. |
| encumber funds | To set aside or commit funds for a specified future expenditure. |
| policy document | a good budget should articulate the program priorities and goals |
| operations guide | a good budget should indicate the allocation of resources and the performance objectives and measures of the various departments, programs, and activities. |
| financial plan | a good financial plant or budget should indicate the sources of revenue or any debt financing |
| communications device | a good budget should stimulate dialogue among the public about important budge issues |
| fund | an independent fiscal entity with assets, liabilities, reserves, a residual balance or equity, and revenues and expenditures for undertaking activities. |
| expendable funds | the authorization for spending expires at the end of the fiscal period |
| non-expendable or revolving funds | spending beyond the fiscal year is allowed with reauthorization |
| GAAP (generally accepted accounting principles) | uniform minimum standard for financial accounting and recording, encompassing the conventions, rules, and procedures that define accepted accounting principles. |
| governmental funds (how are they used?) | finance the activities most citizens associate with governments (police, fire, procurement, public works) |
| governmental funds (breakdown) | general fund, special revenue fund, capital project funds, and debt service funds |
| general funds | used to track revenues and expenditures that support all services not assigned to other funds |
| special revenue funds | provide services financed from various specifically designated revenue sources, such as recreation fees used to support a specific activity |
| capital project funds | used to acquire major assets with a useful life of more than one year, which may be financed by some form of long-term debt |
| debt service fund | receive resources from other funds, taxes, grants, or proceeds from long-term debt and are used to pay the principal and interest on the debt. |
| proprietary funds (when are they used?) | used when governments engage in activities similar to private business |
| proprietary funds (what is the breakdown?) | enterprise funds and internal service funds |
| enterprise funds | control various utilities (water, water reclamation, storm water, electric) and other entities providing service financed through user charges |
| internal service funds | used by governmental organizations that provide services to other units of the government by charging fees to cover their operating costs |
| fiduciary funds | allow the government to act as a custodian of assets that must be disbursed to individual, private, and public entities, or to other funds. Ex: pension funds and the collection of lottery proceeds for distribution. |
| benchmarking | a process whereby a procurement organization identifies world-class or best in class organizations and then compares its practices, policies and performance outcomes against those organizations |
| process alignment to organization goals | goals should be the key driver for any process. All processes, people and resources should be aligned to business goals. |
| process first | process improvement focuses on incorporating cost-effective and goal-oriented processes. The purpose is to eliminate non-value-added activities and focus on value-added activities |
| customer focus | changing customer needs emphasize the importance of processes being aligned to achieve higher customer satisfaction. |
| benchmark regularly | benchmarks must be quantifiable, attainable, and realistic |
| establish who owns a process | process owners must be placed in charge of a process, be responsible for the performance and changes in the process, and be responsible for the success or failure of a process. |
| build control points into a process | frequent points where the process owners and customers/stakeholders decide if the process is meeting current benchmarks and what they should do to improve the process. This includes halting the process if it fails to meet realistic benchmarks. |
| standardize similar processes | a standardized system of preparing processes saves time, effort, staff hours, and money |
| make changes now | the change process should be done repeatedly, not merely once. Waiting for a perfect solution would mean no solution. |
| use the right measures | don't waste time taking process measurements if they are not going to be used to improve the process. The process slogan is worth remembering: No process without measurement, not measurement without analysis, not analysis without action."" |
| Six Sigma | seeks to improve the quality of process outputs by identifying and removing the causes of errors and minimizing variability in business processes. |
| Lean Thinking | a method that focuses on providing service in the most efficient manner by improving flow and eliminating waste |
| ISO 9000 | a family of standards and guidelines for quality in the manufacturing and service industries from the International Organization for Standardization. |
| Total Quality Management (TQM) | a management philosophy that seeks to integrate all organizational functions to focus on meeting customer needs and organizational objectives. |
| Just-in-Time (JIT) | its basic tenet is the elimination of waste: the waste of overproduction, unneeded motion, transporation, excessive inventory and production and labor time. |
| standard | defined as the result of a particular standardization effort, approved by the recognized authority. |
| standardization | the adoption of a single product or group of products to be used by different organizations or all parts of one organization. |
| simplification program | involves screening the agency's inventory in order to determine which items should be consolidated, updated or no longer maintained in inventory. Its intent is to intentionall reduce the number and variety of inventory items and eliminate duplication. |
| Standardization Committee | used to create standards |
| Sharp practices | typically illustrated as evasion and indirect misrepresentation, just short of actual fraud. Should be avoided. |
| cost-based pricing | a margin of profit that is added to labor, material, and overhead costs. |
| market-based pricing | focuses on the supply and demand principle. |
| supply and demand | the qty of goods available for sale at a given price, and the lvl of consumer need for those goods at a given price. |
| value-based pricing | based on the perceived or actual value gained by the buyer. |
| market-oriented pricing | price setting based upon analysis and research compiled from the targeted market. |
| total cost of ownership (TCO) (measure) | a measure of all of the cost components associated with the procurement of a product or service |
| total cost of ownership (TCO) (sum) | the sum of all fixed and variable costs attributed to a product or service |
| total cost of ownership (TCO) (philosophy) | a philosophy for understanding all supply chain related costs of doing business with a particular supplier for a particular good or service |
| make, lease, or buy concepts (3 principles) | compare apples to apples, evaluate only costs that differ, assure costs evaluated are for the same level of service and quality |
| four-step approach to make or buy analysis | 1. define outputs to be analyzed 2. determine costs to be saved using an outside provider 3. compute cost of contracting from private sector 4. compare difference in net cost and made the final decision." |
| term contract | agreement for a supplier to provide the purchaser's requirement for items or svcs on an "as needed" basis. |
| schedule contract | contract that consolidates requirements by pre-establishing a bid opening date, such as monthly or quarterly. |
| cost plus award fee contract | a contract that provides for a base amount fee fixed t inception of a contract and an additional fee at the time of award. |
| cost plus incentive fee | a contract that provides for an initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs. |
| fixed price contracts include: | firm fixed price, fixed price with economic adjustment, and fixed price re-determination |
| fixed price, price re-determination | provides for a firm fixed price for a stated period of time after which the price may be predetermined for a subsequent period of time. |
| Contract plus award fee contract | A contract that provides for a base amount fee fixed at inception of a contract and an additional fee at the time of award. |
| Express contract | Contracts, either written or oral, in which all the formal elements for a contract creation exist. |
| Time and materials contracts | A contract that provides for the acquisiton of services based on direct labor hours and materials. |
| Fixed price with economic adjustment | Provides a fixed price that can be adjusted upward or downward upon the occurrence of certain contingencies specified in the contract. |
| Implied-in-law contract | Instances in which the law imposed an obligation on a person to achieve justice even though no true contract exists. |
| Bid evaluation criteria table | Identifies the mandatory and main point-rated evaluation criteria areas to be evaluated. |
| Contract | The process by which the agreement is formed |
| Types of contracts | Incentive, fixed price, and cost-type |
| Cost type contracts are used: | Where the risk is minimized for the vendor and maximized for the client. |
| Cost reimbursement contracts | A family of pricing arrangements or contract types that provide for payment of allowable, allocable and reasonable costs incurred in the performance of a contractor to the extent such costs are prescribed or permitted. |
| Waiving irregularities | Must be done in such a manner as to assure that no vendor is given an unfair advantage over competitors. |
| 6 elements of a contract | Offer and acceptance, Definiteness, Consideration, Mutuality of obligation, Capacity of the parties, and Legality of purpose |
| All or none bids | A bid which the vendor qualifies the bid by stipulating that it will only accept a conract for all items in the bid. Difficult for the buyer when the overall total is higher than a vendor with lower individual items. |
| An ONLY bid happens when: | Sole source, specs were to restrictive, sale is controlled through territorial distribution, poor selection of vendors |
| Evaluation Plan should identify: | Evaluation criteria, weight factors, scoring grid for evaluation scoring method, vendor selection |
| Cancel or re-issue a bid when: | A significant change has occurred in a requirement, no bids were received or all were non-responsive, no bids represented a fair value, acceptance period has expired, substantial changes to specs or evaluation criteria |
| Bid evaluation Plan | Documents the evaluation criteria, rating factors, contractor selection method and scoring method. |
| Mistakes in bids (rule) | The essential rule is that no change or correction be permitted that would prejudice the interest of the public or would be unfair to other bidders. |
| Competitive sealed proposals | A means for achieving the best value |
| RFP should include: | Performance spec, time frames, vendor instructions, pricing requirements, criteria used in evaluation, terms and conditions, facility and capability data, milestone list, pricing, vendor, understanding |
| Informal bid | A competitive bid or price quotation for supplies or services that is conveyed by letter, telephone, or other means and does not require a sealed bid, public opening, or public reading of the bid. |
| Competitive sealed bidding | A process that enables the organization to acquire products and services at a good value. |
| RFP | All documents utilized for soliciting competitive proposals |
| Functional specification | A spec setting for the results required from the supply or services. |
| Brand name | A trade name or trademark that identifies a product or service |
| Brand name or equal specification | A spec using one or more manufacturer's brand names, with identifying model numbers, to describe the standards of quality, performance, and other characteristics. |
| Solicitation documents should include: | advertising, standard bid clauses, instructions to vendors, general and special terms and conditions, specs/statement of work and proposed schedule, bid proposal form |
| Materials management | Embraces all functions related to the control and coordination of the movement of goods, and maintenance, repair and operation items, to, through, and out of the organization including purchasing, storage, disposal, forecasting, inventory control, etc. |
| Requirement | The specific supplies, services, or construction and time period within which they are needed. |
| Upon receipt of a requisition, the purchasing agent... | Check for availability from existing stock, determines if requirement can be bundled, determines source, method, solicits bid, evaluates bids, prepares contract, awards contract, administers contract |
| Specification | A complete and concise description |
| 10 types of specs | design, material & method of manufacture, drawings, performance, brand name, brand name or equal, sample, market grade, qualified products list (QPL), combinations |
| Describe how materials management relates to the purchasing cycle | They are the same. |
| 4 objectives of a specification | identify requirements, allow for competition, list reproducible test methods, and provide for equitable award |
| 4 elements of a specification | identifies a minimum requirement, allows for maximum competition, identifies test methods to be used to verify compliance, contributes to obtaining best value at the lowest possible cost |
| 2 types of measurement | Quantitative (physical counts) and qualitative (suitability or effectiveness) |
| What hat does purchasing wear? | Services other departments and agencies, advises management, performs work of contracting, inventory management, warehousing, traffic, etc. |
| Procedure manuals should include: | Goals, objectives, and responsibilities, step-by-step outline of the process, guidelines for RX, outline of supply management, spec procs, listing of forms |
| Certificate of damage | A document issued by the receiving office stating that the merchandise was damaged, plus precise description of damage. |
| Roles of purchasing include: | Expertise, decision making, adviser, implementer, marketer, and central stores |
| Articles of model procurement code include: | General provisions, organization, source select and contract formation, specs, procurement of construction, modification and termination, cost principles, supply management, legal, government regulation, small and disadvantages business, ethics. |
| Describe the purchasing cycle | The process of planning, acquiring and receipt of goods and services. It has a starting and ending point. |
| Values | enduring beliefs or ideals shared by public procurement and our stakeholders about what is good or desirable and what is not in our actions. |
| Goals | long-term, tangible, attainable targets for an organization. |
| Objectives | long-term, tangible, attainable targets for an organization. |
| Policies | plans, courses of action, or governing principles which establish the general parameters for the organization to follow in carrying out its responsibilities. |
| SMART | Specific, Measurable, Assignable, Realistic and Time-based |
| Demand | A measure that assesses the severity of a problem or the scope of work to be performed. |
| Workload | A measure that indicates the amount of work which must be performed to accomplish a specific task. |
| Efficiency | A measure that compares resources used with results obtained. Examples include ratio of procurement department operating expenses to dollar purchases and ratio of procurement personnel to total employees. |
| Effectiveness | A measure that determines how well a program or activity meets an objective or fulfills a need. This measure is results oriented and is the most useful in determining priorities and allocating resources. |
| Regulations | Statements by a governmental body to implement, interpret, or prescribe law or policy, or to describe organization, procedure, or practice, often promulgated in accordance with an administrative procedures act. |
| Policy | A governing principle or plan which established the general parameters for the organization to follow when carrying out its responsibilities. |
| Procedures | The detailed series of related activities that must be completed, and the order in which they must be done, to accomplish a given task. |
| Cost Avoidance | Actions taken to avoid having to pay some sort of cost. Ex: extend a contract at the same cost. |
| Cost Reduction | Generally realized when manufacturer is able to lower its material or labor costs used to make its products; interchangeably used to indicate a lower price paid by the buyer from what was previously paid. |
| Effectiveness look on work computer budgeting | the allocation of scare resources among competing demands |
| What is meant by the term force majeure and where are we likely to find it being used? | Force majeure means that something happens that is beyond anyone's control and occurs without fault or negligence. This clause is generally found in supply and construction contracts. |
| Smart cards | Like the pCard, but is considered an "electronic wallet" because it is embedded with a chip that stores data for a variety of uses including an individual's personnel and medical records. |
| pCard | a payment method |
| Budget Cycle | Planning, Formalization, Implementation, and Evaluation |
| Results-oriented budgeting | An approach that attempts to link resource allocation decisions to performance criteria that include both output and outcomes measures. |
| Retraining | Prepares the employee for revisions in the current processes and procedures. |
| Groupthink | A phenomenon that occurs during decision making or problem solving when a team's desire to reach an agreement overrides its ability to appraise the problem properly. |
| Cross-functional teams | Represent a variety of functions and levels in the organization but they share a clear purpose and their combined efforts are needed to achieve that purpose. |
| Self-directed team | Responsible for carrying out an entire process all the way to the customer. |
| Adjourning | Goal has been accomplished, the team mandate expires, or mgmt ends it. Either way, the team winds up and disbands. |
| Performing | When the team has reached a level of maturity that should allow for the accomplishment of the goal and the ability to cope with conflicts or problems. |
| Norming | When group interaction changes as members agree on a common goal, assign individual tasks, and define a set of rules and roles to ensure effective and productive team interaction. |
| Storming | Clarifying and understanding goals and priorities and determining whether the goals can be met without creating problems for any members. |
| Forming | Team comes together, members get acquainted, learn what each one brings to the table. |
| Encouragers | Praise, agree, and express warmth and solidarity. |
| Gatekeepers | Encourage (not an encourager) participation from all team members. |
| Initiators | Offer new ideas and new solutions. |
| Information givers | Offer facts or relate experiences that are pertinent to the problem. |
| Information seekers | Clarify suggestions and obtain pertinent information and facts. |
| Team recorder | Responsible for writing down the team's key points, ideas, and decisions. |
| Team facilitator | Usually not a member of the team |
| Piggybacking | A form of intergovernmental cooperative purchasing in which an entity will be extended the pricing and terms of a contract entered into by a larger entity. |
| Value analysis | An organized effort directed at analyzing the functions of a product or service (really anything - specs, standards, practices, documentation, software, hardware, etc) with the intent to satisfy the required function at the lowest possible cost. |
| Efficiency measures | The ratio of inputs to outputs or outcomes. |
| Inputs | Measures resources used (includes labor, materials, equipment, supplies) |
| Outputs | Record activity or effort that can be expressed in quantitative or qualitative manner (ex: number of new contracts, total spend) |
| Supplier manuals | Provide formal and extensive information for suppliers seeking to do business with the organization. |
| "Policy manuals | Centrally written, controlled, and used to guide behavior toward specific organizational objectives. Ex: a policy that directs us to buy local or a policy that encourages and promotes recycling." |
| Implied authority | Authority that is not defined expressly but is only determined by inferences and reasonable deductions arising out of the conduct of the principal toward the agent and the agent's actions. |
| Express authority | Authority that is explicitly given in direct language, rather than inferred from conduct. |
| Pre-consumer material | Those that are left over in the manufacturing process and then reused in a consumer product. |
| Post-consumer material | Materials that have been used by consumers, recycled, and reprocessed back into a consumer product. |
| Substitute | Use less hazardous, more environmentally preferable commodity whenever possible. |
| Recycle | Recycle commodities that cannot be reused in their present form (paper, cans, toner cartridges) |
| Reuse | Reuse the commodities that can be repurposed (ex: wooden pallets, shipping containers) |
| Key terms of sustainabiltiy | Reduce |
| Preference | An advantage given to bidders in a competition for contract award which may be granted based on pre-established criteria such as MBE, SBE |
| eSourcing | The process of obtaining bids from different suppliers via a single online portal. |
| eCommerce | The integration of electronic data interchange, electronic funds transfer,and similar techniques into a comprehensive electronic-based system of procurement functions. |
| eProcurement | Conducting all or some of the procurement function over the Internet. |
| Higher level management reports | Issued to senior management and other key personnel. |
| Interdepartmental reports | to be issued to other departments on a need-to-know basis. |
| Intradepartmental reports | provide information to management regarding departmental matters. |
| Performance audits | Review all the operations of a governmental unit and encompass the following types of audits: |
| Program audits or evaluations | These audits monitor results to determine the extent to which a governmental unit has achieved program objectives. |
| Economy and efficiency audits | They are management or operational audits. They examine a governmental unit's managerial and administrative practices for economy and cost efficiency and strive to identify the cause of any cost inefficiencies. |
| Used to gather information that will be used in an RFP | RFI, LOI (letter of interest), pre-solicitation conference |
| Solicitation methods award contracts to bidder whose solutions offer the best overall value. | RFP, ITN (invitation to negotiate), RFQu |
| Statement of work | The proposed solution by the successful proposer responding to the Scope of Work in the solicitation. |
| market research | collecting and analyzing information about capabilities within the market to satisfy agency needs. |
| perfect competition | exists when there is free and open competition |
| imperfect competition | includes the artificial restriction of available competition through the use of preference policies, restraint of trade by suppliers, or by the business practices of the jurisdiction. |
| oligopoly | a market situation in which a few companies control or dominate the market for a particular product or service. |
| monopoly | a situation in which there are many buyers and only one seller of a product that no close substitute. |
| demand analysis | used to estimate annual requirements based on the previous year plus anticipated use for the upcoming year. |
| market analysis | involves researching product availability, market volatility, supply and demand, and price. |
| supplier analysis | evaluates potential new sources along with current providers. |
| the service functions of purchasing include: | providing a cohesive, organized operation that delivers adequate and timely material support to all. |
| staff function | The function of staff in an org is to advise and assist affected groups w/in the org w/out the connotation of authority. |
| staff function of Purchasing | advise mgmt and user agencies on new products & svcs; new policies, regs, or legislation; market conditions; current trends |
| recovery | the ability of the purchasing dept to obtain urgently required materials and svcs from a supplier at premium cost. |
| statutory laws | based on statutes or laws passed by governments (constitutions, statutes, ordinances, charters) |
| administrative laws | written rules and regs, entity policy (developed and promulgated by administrative and regulatory governmental agencies). Has equal force and effect as legislative law as long as it does not supersede the context of legislative law. |
| common law | based on customs and traditions and codified through the legal system. Laws confirmed by the courts. |
| Illegal practices (anti-competitive practice laws) | price fixing, territorial market allocation, tying arrangements, bid rigging, boycotts, dumping, exclusive dealing |
| criminal law | imposes punishment such as imprisonment or fines for an act deemed to be criminal |
| tort law | permits parties to sue each other for damage to a person or property |
| budget/finance laws | prohibit a governmental agency from spending funds beyond those that the legislative body appropriates for it. |
| authority | the right to perform certain acts or prescribe rules governing the conduct of others |
| law of agency | states that an agent is someone who acts on behalf of a principal. Two ways to create an agency relationship: by agreement between principal and agent or by law. |
| principal | one who employs an agent. A person who has authorized another to act for him/her. |
| agent | a person authorized by a superior (principal) to act for him or her. In public procurement, this designation is usually incorporated into statute and ordinance. Empowered to act for another. |
| inherent authoirty | based on a government's sovereignty, to enter into contracts, although not explicitly authorized. |
| requirements analysis | value analysis applied to the writing of specs to eliminate products or svcs that are not cost effective. |
| design specification | establishes the characteristics an item must possess, including detail indicating how it is to be manufactured. |
| routing | a determination of how a shipment will move from the point of origin to the destination, including the selection of carriers and geographic routes. |
| demurrage | a fee charged by a carrier against a consignee, consignor, or other responsible party to compensate for the detention of the carrier's equipment in excess of allowable free time for loading, unloading, re-consigning, or stopping in transit. |
| follow-up | seeing how things are going |
| expedite | trying to the get the product shipped sooner rather than on time or later |
| known loss | carrier fails to deliver the shipment intact to the consignee due to destruction, disappearance, or damage. |
| concealed loss | loss not visibly apparent at time of delivery, but is discovered later upon opening containers and checking contents. |
| known damage | damage that is apparent and acknowledged by the carrier at the time of delivery by |
| concealed damage | damage that is not readily visible at the time of delivery by the carrier or the receiver. |
| performance specification | a description of a product or svc that provides a general functional recital of performance characteristics required to achieve an end result or outcome desired. It does not require the bidder to comply with specific design requirements. |
| combination specs | a spec that incorporates, to the degree necessary, the attributes of both design and performance specs. |
| regulatory and testing agency | Certain products must meet regulatory approval and testing for compliance. These products must be labels w/a certification stamp - such as UL, CSA (Canadian Standards Association). |
| QPL - qualified products list | A list of items that have been examined and tested and have satisfied all applicable qualification requirements. |
| Market grades | used when procuring commodities that are traded regularly on the commodity exchanges. Usually limited to natural products such as lumber, cotton, tobacco, food products, wheat, animal hides, fuel, etc. |
| Tolerance | a specified allowance for variation in weight or other designated measurement; the range of allowable deviation within which an item or service is classified as acceptable. |
| Contract types | Blanket contracts, term contracts, systems contract, requirements contract, and open end contract |
| term contract | agreement for a supplier to provide the purchaser's requirement for items or svcs on an "as needed" basis. |
| systems contract | a contract that establishes a source of supply for a specified period for a large group materials; a method of procurement designed to improve reordering of materials used repeatedly. |
| requirements contract | a form of indefinite delivery/indefinite quantity contract where all actual purchase requirements for specific supplies or services during the contract |
| open end contracts | a contract whick sets forth the general provision of supplies and services that may be delivered or performed within a given period of time, but in which quantity and/or duration is not specified. |
| blanket contracts (blanket orders) | supply items or svcs on an "as needed basis," often in an over-the-counter basis. |
| blanket order | an agreement to purchase a given quantity of specific goods over a specified period of time, usually one year. |
| systems contract | a contract that establishes a source of supply for a specified period for a large group or related family of materials; a method of procurement designed to improve reordering of materials used repeatedly. |
| spot purchases | These are used for one-time purchases. Also used when requirements cannot be forecasted with accuracy. |
| incentive contract | any contract that includes a means to reward the contractor for reaching certain predetermined goals to reduce cost, reach a level of performance above the level contracted for or produce results that are beneficial and exceed contract requirements. |
| fixed price contract | the most commonly used type of contract because the pricing remains constant for the duration of the contract period. |
| fixed-price w/economic price adjustment (aka fixed price with escalation) | provides for upward or downward adjustment of price based on certain contingencies that are specified in the contract. |
| fixed-price incentive | provides for adjustment of profit and establishment of a final price through the use of a formula that compares the total actual cost to initial target costs. |
| fixed-price with re-determination | used when a realistic price can be determined for initial periods but not for subsequent periods. |
| cost reimbursement | appropriate when there is uncertainty and a variety of unknown potential cost risks, and when it is unreasonable to ask a supplier to assume these risks alone. |
| cost sharing | used when it is impossible to estimate costs firmly and there is a high probability that the supplier will receive a substantial present or future commercial benefit. |
| cost-plus incentive fee | used when a formula can provide an incentive for effective management. |
| cost-plus fixed fee | used when it is appropriate to reimburse the supplier for all reasonable, allowable, and allowable costs. The supplier receives a fixed fee (profit) amount negotiated at the time of award. |
| cost-plus award fee | provides for a base fee amount fixed at inception of contract, and an additional fee that is based on evaluation by the purchaser to the quality of contract performance, and evaluator's assessment as to the fee amount necessary to motivate the contractor |
| time and materials contract | provides for contractor payment based on a direct labor, hourly rate that includes benefits, payroll taxes, overhead and contractor profit and for the cost of materials and equipment used in performance of the contract. |
| terms and conditions | standard boilerplate language that includes standard clause and rules which apply to bids and offers formally solicited that may become incorporated into the final contract. |
| proposal risk | describes the item of service purchased through specs and legal documents |
| surety and liability risk | protects the financial and legal interests of the agency through insurance requirements, licensing, indemnity, bonds, nondiscrimination |
| contractual risk | establishes change/amendment/modification procedures, dispute resolution, and breach procedures |
| schedule risk | ensures timely delivery (it addresses deliverables, delivery terms, penalties) |
| performance risk | defines conditions under which acceptance will occur and what inspection is required. |
| price risk | defines payment terms and how the contractor will be paid (deals with prepayment, progress payment, final payment) |
| requirement delivery contracts | used when the public agency agrees to purchase all requirements for a certain period of time from the contractor |
| definite (delivery requirement) | A specific requirement quantity and delivery date has been established. The focus of contract administration efforts is on monitoring the delivery schedule, inspection, and liquidated damages for delays. |
| indefinite delivery with a definite quantity | occurs when a quantity of supplies or svcs is specified, but the time of delivery is flexible. |
| indefinite quantity and indefinite delivery | used to establish a minimum and maximum quantity that can be ordered within a definite delivery period. |
| requirement delivery contracts | used when the public agency agrees to purchase all requirements for a certain period of time from the contractor. |
| FOB origin, freight collect | Agency takes title at point of origin, pays freight, bears freight, owns goods in transit, must file claims for loss or damage or overcharges |
| FOB origin, freight prepaid and allowed | Agency owns product at point of origin, owns goods in transit, files claims. Supplier pays and bears freight. |
| FOB origin, freight prepaid and added | Agency owns product at point of origin, owns goods in transit, bears freight. Supplier pays freight and adds to the invoice. |
| FOB destination, freight collect | Agency owns product at destination, pays and bears freight. Supplier owns goods in transit and files claims. |
| FOB destination freight prepaid and added | Agency owns product at destination and bears freight. Supplier pays freight, adds freight to invoice, and owns goods in transit. |
| FOB destination, freight prepaid and allowed | Agency owns product at destination. supplier pays freight, bears freight, owns goods in transit and files claims. |
| small purchases | It is likely that 80% or more of all transactions fall within the category of "small purchases." In general, these purchases amount to 20% or less of the dollar value of all money flowing through a purchasing office. |
| sole source procurement | only one vendor or supplier possesses the unique ability or capability to meet the particular requirements of a solicitation. |
| single sourcing | A procurement decision whereby purchases are directed to one source because of standardization, warranty, or other factors, even though other competitive sources may be available. |
| emergency purchase | a purchase made due to an unexpected and urgent request where health and safety or the conservation of public resources is at risk. |
| joint-use agreements | agreements between various gov't agencies that may involve the shared use of public property such as buildings and equipment. Ex: a public school district may share the use of a high school swimming pool with a county recreation and parks agency. |
| design-bid-build | The traditional sequentially phased approach that involves contracting for design and architectural/engineering services before the construction solicitation document is prepared. (two bids). |
| design-build | These contract involve two primary parties: the entity and a single contractor. The contractor is responsible for everything - the construction part of it as well as the design part. |
| JOC | Based on a competitively bid indefinite-delivery-indefinite-quantity (IDIQ) contract between an entity and a construction contractor. |
| price analysis | the process of examining and evaluating a prospective price without performing cost analysis; that is, without evaluating the separate cost elements and profit of the offeror included in that price (price comparison). |
| pricing strategies representative of the public procurement theory | cost-based pricing |
| market-based pricing | focuses on the supply and demand principle |
| value-based pricing | based on the perceived or actual value gained by the buyer. |
| market-oriented pricing | price setting based upon analysis and research compiled from the targeted market |
| cost analysis | The review and evaluation of cost data for the purpose of arriving at costs actually incurred or estimates of costs to be incurred. Most usefully when purchasing nonstandard items and services (when there really isn't any price comparison). |
| debriefing | A practice used primarily during the RFP process, whereby the contracting authority will meet with those parties whose proposals were not deemed appropriate for award. |
| focus on interests | when a problem is defined in terms of the parties' underlying interests, it is often possible to find a solution which satisfies both parties' interests. |
| generate options | brainstorm options, shifting among four approaches: stating the problem, analyzing the problem, considering general options and considering specific actions. |
| use objective criteria | Used when interests are directly opposed. |
| spiraling agreements | reach an agreement about something, even if it's not related. Work your way to what you need to negotiate. |
| changing of position | formulate the proposals in a different way, without changing the final result. |
| gathering information | ask for info from the other party to clarify their position. |
| making the cake bigger | offer alternatives that may be agreeable to the the party without changing the terms. |
| mediation | A voluntary, flexible technique used to resolve disputes. |
| arbitration | A process by which a dispute between parties is presented to one or more disinterested parties for a decision whose decision the contending parties agree to accept with no further appeal process. |
| litigation | A process by which one party to a contract brings suit against the other party in a court of law. |
| planning for negotiations | 70/30 rule - spend 70% of time in preparation and 30% on implementation. |
| typical negotiating teams represent the following interests: | procurement, finance (price analyst), project mgmt, legal, technical |
| Class A items | Mission critical to the agency's operation and cannot be without; long supplier lead time; sole source; high dollar value items. |
| Class B items | General commodity items, off-the-shelf materials, high usage rates. |
| Class C items | Very low dollar value and generally high volume activity such as office supplies, MRO materials such as tools, oils, rage, shop supplies, etc. |
| scrap | consists of ferrous and non-ferrous metals as well as non-metallic scrap such as wood, paper, plastic, and other materials that do not meet requirements or standards and cannot be reworked economically. |
| waste | the non-metallic scrap that has some market value |
| rubbish | refuse that does not have any market value but must be disposed of |
| excess | refers to materials no longer needed by the current owner but designated for transfer to another unit within the entity. |
| surplus equipment | gov't equipment that is no longer needed by the agency and is designated for disposal outside of a gov't org. |
| SWOT analysis | Strengths, weaknesses, opportunities, threats. |
| strengths | internal situations that will help achieve the org's objectives, to overcome threats and weaknesses, and to take advantange of opportunities. |
| opportunities | can be internal or external |
| threats | external challenges to the success of the entity's objectives |
| the Pareto Principle | Pareto theorized that 20% of the people yielded 80% of the production while 80% of the people yield only 20% of the production...20% of wha tyou do yields 80% of the results. |
| spend analysis | the process of collecting, cleansing, classifying, and analyzing expenditure data from all sources w/in the org. |
| analytical techniques for strategic procurement planning | SWOT analysis |
| the Pareto Principle | Pareto theorized that 20% of the people yielded 80% of the production while 80% of the people yield only 20% of the production. 20% of what you do yields 80% of the result |
| inventory forecasting | use fixed period method, moving average method, mean absolute deviation (to forecast errors) |
| fixed period average | an average for a fix period |
| moving average method | average last 12 months. Next month comes, data from month 1 drops off, month 13 gets added. New average found. |
| mission (statement) | States the purpose of the org's existence and its core values. No more than three sentences long. Identifies the purpose of the org, the svcs it provides, the customers it seeks to serve. |
| Public procurement values include: | transparency, ethics, accountability,svc, professionalism, impartiality |
| vision | defines the desired or intended future state of a specific org in terms of its fundamental objective or strategic direction. It's a long-term objective. |
| planning and evaluation framework | (pyramid - top to bottom) mission, vision, goals, objectives, strategies, performance measurement, evaluation |
| strategic procurement planning (SP2) | The transformation of the org's mission, goals, and objectives into measurable activities to be used to plan, budget and manage the procurement function w/in the org. |
| strategic sourcing | a methodology and process that enables procurement professionals to analyze what and how they acquire products and services, with the objectives of lowering costs to the org, and improvements in supply fulfillment from the producer level to the end-user. |
| Quadrant I | Goods & svcs w/a low degree of risk and a low expenditure relative to total procurement spend. These items make up a relatively small proportion of the total expenditure on purchased items. |
| Quadrant II | Goods & svcs w/a low degree of risk and a high expenditure relative to total procurement spend. These items make up about a quarter of the total expenditure on purchased items. |
| Quadrant III | Goods & svcs w/a high degree of risk and a low expenditure relative to total procurement spend. These items make up relatively small proportion of the total expenditure on purchased items. |
| Quadrant IV | Goods & svcs w/a high degree of risk and a high expenditure relative to total procurement spend. These items make up over half of the expenditure on purchased items. |
| cost-benefit analysis | A comparative evaluation of the trade-off between the cost of a good or svc and the value or benefit to be obtained in order to choose among alternatives. |
| essential functions | Functions that can be continued throughout, or resumed rapidly after, a disruption of normal activities. |
| orders of succession | Know who's next in line for being in charge. |
| delegations of authority | Establish who has the right to make key decisions during a continuity situation. |
| continuity facilities | Alternate facilities from which an agency and org can perform its essential functions in a threat-free environment. |
| continuity communications | The availability and redundancy of critical communications systems to support connectivity to internal and external orgs, customers, and the public. |
| reconstitution | The process by which surviving and/or replacement agency and organizational personnel resume normal agency operations from the original or replacement primary operating facility |
| vital records mgmt | The identification, protection and ready availability of electronic and hard copy of docs, references, records, information systems, data mgmt software and equipment. |
| human capital | Provides guidance to emergency employees and other special categories of employees who are activated by an agency and org to perform assigned response duties during a continuity event. |
| tests, training and exercise | Provisions made for the identification, training and preparedness of personnel capable of relocating to alternate facilities to support the continuation of the performance of essential functions. |
| essential elements to be included in every procurement COOP | definition of essential svcs to be provided during the situation |
| hierarchy of authority including how authority will be delegated and by whom | who will be in charge and then who, define how much authority and responsibility will be delegated to clients and users |
| location of ops | the COOP should include plans for operating from alternate facilitites |
| communication | connectivity to online needs to be discussed, what happens if there's no phone lines or cell towers |
| documentation, records, and recordkeeping | Documentation is critical during and after an emergency; therefore, a system must be in place to expediently document activities and tasks. |
| list of suppliers shippers, resources and other businesses | Develop professional relationships with these companies and keep a paper copy of their names, phone numbers, addresses, etc. |
| succession planning | the process of identifying and preparing suitable employees through mentoring, training, and job rotation, to replace key players within an org as they retire or leave. |
| CAP | Defines how the contract will be administered. Provides the framework for effective contract administration with an emphasis on process, output, and outcome. The length and detail of the CAP depends on the complexity and potential risk of the contract. |
| PAP | Based on the contract performance requirements and outlines the evaluation process to be used to measure the contractor's performance. Tells the seller what tasks will be inspected, when they'll be inspected, what standards will be used. |
| Elements of a contract | O&A, definiteness, legal consideration, mutuality of obligation, competent parties, legal purpose |
| definiteness | The important terms of an agreement, which are specifically expressed. |
| legal consideration | Something of consideration which is exchanged between parties that serves to form, or bind a contract. Usually money, but could be services or other items (like in bartering). |
| implied-in-fact contract | Occurs when some of the formal contractual elements occur through a person's conduct rather than being explicitly stated in words. |
| interpretations of terms and conditions | Courts use common law rules of interpretation. They look for the meaning that a reasonable person would give it. |
| protocols | There is a hierarchy of guidelines for interpreting contracts. The top of the hierarchy - cardinal rule; next is the secondary rules, then the mechanical rules |
| cardinal rule | This focuses on the plain language of the contract and the meaning that both parties gave to the text at the time of the contract signing. |
| secondary rules | whole instrument rule-gives priority to the meaning of the overall contract as opposed to a section or clause of the contract. |
| mechanical rules | These include handwritten notes taking precedence over printed text, quantities spelled out in words over the use of numbers, and anything written in a conspicuous manner such as larger font. |
| contract management | commonly used to describe the entire contracting process from pre-solicitation activities through contract closeout. Consists of two cycles: contract formation and contract administration. |
| contract administration | a term used to describe the functions that are performed after the parties have signed the contract. |
| contract formation | includes identifying contract risks, establishing contract goals to manage risk, and pre-award procurement activities that result in the development of a contract. |
| contract risks and potential problems | proposal risk |
| surety/liability risk | protects the financial and legal interests of the agency through insurance requirements, licensing, indemnity, bonds, nondiscrimination |
| schedule risk | ensures timely delivery (it addresses deliverables, delivery terms, and penalties) |
| performance risk | defines conditions under which acceptance will occur and what inspeciton is required |
| price risk | defines payment terms and how the contractor will be paid (deals with prepayment, progress payment, and final payment) |
| implied warranties | obligations of the contractor that have not been assumed in express language. |
| express warranties | explicit, written promises by the contractor to provide a specified level of quality, condition, description, or performance of a good or service. |
| rights to electronic data | unlimited rights, limited rights, no rights |
| unlimited rights | The public agency gains the right to use, reproduce, alter, and disclose the technical data as it sees fit. |
| limited rights | The agency retains the right to use the technical data under certain circumstances, as negotiated by the contracting parties. |
| request for equitable adjustment | a vendor has to additional work, they have the right to ask for compensation (reasonably incurred costs) |
| reasonably incurred costs | allowable costs |
| subcontractor costs | If a change affects a subcontractor's cost, the contractor will negotiate an equitable adjustment with the subcontractor and include the amount with the REA |
| impact and delay | An REA for impact and delays provides compensation to the contractor for performing unneeded work, performing enefficiently, stoppage of work, performing work during different hours, or changing the work process |
| changes in material and labor costs | If the REA is due to a delay caused by a public agency, increases in material and labor costs that have been incurred are allowable |
| overhead and profit | A REA for any changes in overhead or profit must be a result of costs that were directly increased or decreased as a result of a change |
| allowable costs | to qualify as an allowable cost, the cost must be for work performed within the terms of the contract the public agency has agreed to reimburse, and the costs must be reasonable. |
| subcontractor costs | If a change affects a subcontractor's costs, the contractor will negotiate an equitable adjustment with the subcontractor and include this amount with the REA. |
| impact and delay | An REA for impact and delays provides compensation to the contractor for performing unneeded work, performing inefficiently, stoppage of work, performing work during different hours, or changing the work process. |
| changes in material and labor costs | If the REA is due to a delay caused by a public agency, increases in material and labor costs that have been incurred are allowable. |
| overhead and profit | An REA for any changes in overhead or profit must be a result of costs that were directly increased or decreased as a result of a change. |
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