Study Terms A-R

Analytical Skills

An individual's ability to identify relevant issues, recognize their importance, understand the relationship between them, and perceive the underlying causes of a situation. These skills are crucial in making most procurement decisions. (Miller, 2006)

Access to Information Office

Canadian A facility within Canadian governments for information regarding contract awards.

ABC

Canadian Aboriginal Businesses Canada, a division of Industry Canada. (Summit Magazine on-line)

Acquisition Fee

Canadian The amount billed to cover the cost of initiating a contract.

Adjustment

Canadian The amount of variation permitted by an adjustment clause in the contract generally permitting a change upward or downward in the price or obligation in case certain events transpire.

Amendment Previous Value

Canadian Value of a document as last amended.

Administrative Law

Rules, regulations, and executive orders promulgated by governmental administrative or regulatory agencies. Generally enacted to make statutes and ordinances more specific. Has the force and effect of law.

Accept with Consideration of Non-conforming Goods

Terminology that describes the process that occurs after non-conforming goods have been rejected by the buyer. The vendor offers a discount or other incentive to encourage the buyer to accept the non-conforming goods and when the buyer then accepts them, it is done with consideration of non-conforming goods. Example: Buyer contracts for black color garbage bags and the vendor ships clear garbage bags in error. Buyer notifies vendor of the nonconforming goods and the vendor offers to reduce the price of this shipment in order to entice the buyer to keep and use the non-conforming goods.

Accept without Consideration of Non-conforming Goods

Terminology used to describe the process that occurs when a supplier ships non-conforming goods and the buyer accepts them knowingly or unknowingly. Example: Buyer contracts for 3 mil plastic garbage bags but the supplier mistakenly ships 2 mil gauge thickness bags instead. When the buyer accepts, knowingly or unknowingly, the non-conforming goods and uses them, it is done without any further consideration from the supplier to offset the lower quality of the plastic garbage bags that was sent to the buyer.

Absolute Advantage

The ability of a country to produce a specific good with fewer resources per unit of output than other countries. The ability to produce something with fewer resources than other producers would use to produce the same thing. A monopoly that exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item. Also see Comparative Advantage. (Schiller, 2000)

Advance Acquisition

The acquisition of items which require long lead times, or are required in extraordinary quantities, in advance of the fiscal year in which the product, service, or construction is required.

Allocation

The act of reserving inventory items in stock for later issue to a given using agency.

Acceptance of Order

The agreement of the purchaser to an offer submitted by a vendor.

Acquisition Price

The amount paid to a vendor or contractor for the goods or services obtained.

Aggrieved Bidder/Proposer

The bidder/proposer who is adversely affected because they would be eligible to be awarded the public contract in the event that the protest or dispute was successful.

Administrative Remedies (exhaustion of)

The completion of the process of direct appeal to a governmental body as defined by the governmental bodies' administrative regulations. When all procedures for review of the appeal by public officials have been followed and the relief sought by the appealing party still has not been obtained to that party's satisfaction, administrative remedies are considered to be exhausted. The appealing party may seek legal action through the courts. (Garner, 2004)

Accountable

The concept that a person is obliged to give a reckoning or explanation for one's actions; responsible. Also see Accountability.

Accountability

The principle that employees who accept an assignment and the authority to carry it out are answerable to a superior or a higher authority for the outcome. (Business, 2002)

Accelerator

The ratio between investment expenditures and the change in gross domestic product. This is based on the notion that business investment depends on the rate of growth of aggregate output. If the economy is expanding, then the business sector invests in more capital goods to produce the extra output needed. (www.amosweb.com)

Actual Authority

The specific right to perform acts and make decisions or prescribe rules governing the conduct of others as given to an agent by a principal. Also see Apparent Authority. (Garner, 2004)

Acceptable Quality Level (AQL)

The specified minimum performance that must be achieved by a product or service to assure the buyer that the goods or services will perform as per the specifications or stipulations contained within the statement of work. The maximum allowable number of defects or defective units. A predetermined quality level which has been deemed as being acceptable; generally used in the manufacturing of material items. Example: AQL of 1% defective rate is acceptable for this item. Also see Acceptance Sampling.

Aggregate Supply

The total quantity of output producers are willing and able to supply at alternative price levels in a given time period. (Schiller, 2000)

Acquisition Cost

The total sum of all actual and administrative costs incurred by the buyer in the process of acquiring goods and services. Total acquisition cost may include indirect labor and overhead costs. The costs associated with generating and processing an order including administrative costs is also included. The price level, or value of the supplies or services, to be purchased under a contract. Also see

Aggrandizement

To extend the scope of one's influence beyond what is normal or ethically acceptable. Personal gain obtained through an agreement established and intended to be on behalf of taxpayers that is unacceptable and taints the behavior of public professionals acting as stewards of the public trust.

Aggregate

To gather or collect quantities of a specific item (product or service) in order to achieve savings by leveraging economies of scale. An enabler of the economic theory that the larger the quantity the smaller the unit price. (Schiller, 2000)

Advertise

To make a public announcement or legal notice of a forthcoming solicitation with the aim of increasing the response and enlarging the field of competition; often required by law or policy.

Amortization

To provide for the gradual reduction in the cost value. An accounting procedure that gradually reduces the cost value of limited life or intangible assets through periodic charges to income. (Business, 2002)

Affirmative Action

1. A requirement contained within Federal law (Equal Opportunity Act of 1972) that requires organizations to achieve a work force that reflects the composition of the community. A plan designed to increase the number of minority employees at all levels within an organization.2. A process of taking special or unusual steps to assure that businesses owned by specified minorities and/or women will have equal access to the purchasing process and will obtain an appropriate share of awards. (Business, 2002)

Alternate Bid (Response)

1. A substitute bid.2. A bid submitted with an intentional substantive variation to a basic provision, specification, term, or condition of the solicitation. Also see Alternative (Alternate) Bid/Proposal.

Affidavit

1. A written statement of facts provided by one party which may be made under oath before a person of authority. An affidavit may be required as part of a bid or request for proposal solicitation. 2. A written declaration made under oath before an authorized official.

Amendment

1. An agreed addition to, deletion from, correction or modification of a document or contract.2. To revise or change an existing document; a formal revision, improvement or correction. Also see Authorized Deviation, Change Order and Contract Modification.

Acquisition

1. As defined under FAR 2.101: Acquiring by contract, with appropriated funds, supplies or services (including construction) by and for the use of the Federal Government, through purchase or lease, whether the supplies or services already exist or must be created, developed, demonstrated, and evaluated. 2. The process of obtaining supplies, services, or construction through purchase, lease, or grants.

Accounts Payable

1. Financial obligations that arise as a result of making credit purchases. 2. An accounting function that is responsible for making payment to contractors and suppliers for charges incurred. 3. Liability accounts which indicate the charges owed on open accounts.

Acceptance

1. Indication that an offeree is bound by the terms of the offer. 2. An indication by one party of a willingness to act in accordance with the contract or offer. 3. The assumption of a legal obligation by a party to a contract to the terms and conditions of that contract. 4. The act of receiving by an authorized representative with the intention of retaining.

Alternative Project Delivery Method (APDM )

A collective term to refer to the use of non-traditional contracting methods. The contractor may participate in or advise on the design or may be entirely responsible for the design; the contractor's selection is based on qualifications or best value. Traditional contracting methods may include Design-bid-build or design-build where alternative methods may include Construction Management or an Alliance/Relationship Contracting.

Alien Corporation

A corporation chartered by a foreign government and conducting business in the United States. (Business, 2002)

A+B Bidding

A cost-plus-time bidding procedure that selects the low bidder based on a monetary combination of the contract bid items (A) and the time (B) needed to complete the project or a critical portion of the project. It is used to motivate the contractor to minimize the overall time on high priority and high usage projects. This encourages contractors to finish early by (1) offering bonuses for early completion and (2) assessing fines for late completion.

Ad Valorem Duty

A customs duty or tax based on the value of the goods under consideration rather than on the quantity of the goods.

Acid Test Ratio

A financial ratio calculated by subtracting the value of inventory from the current asset amount and dividing by current liabilities. (Schiller, 2000)

ABC Inventory Classification

A means in which to categorize inventory that is applicable to any size business, regardless of industry. (e.g. government, manufacturing, services etc.) ABC classification allows for a review of the inventory based on the business' approach to the management or review of its inventory. For some agencies, the ABC of categories is based on the dollar value of the items. "A" in this application would be the top 10% of the inventory items and would account for approximately 70% of the annual inventory dollar volume. "B" would be the next 20% and would account for approximately 20% of the annual dollars in the inventory and "C" the remaining 70% of the annual inventory items with 10% of the overall monetary value of the annual inventory. The use of the terms "A", "B", and "C" may also be used to classify the need for accurate inventory records (tolerance) for various items, (very accurate, moderate accuracy), how often cycle counts are needed (weekly, monthly, or quarterly), or even to note who may be responsible for the inventory itself (i.e.: "A" is controlled by fleet, "B" is by purchasing and "C" by parks and recreation). Further, "A" may denote the items in the inventory that have the longest lead times (i.e.: JIT extended lead times), how the items are purchased (term contract, spot buy) or levels of safety stock required (highest turn-over, slow movers). Location of specific items in the inventory may also be denoted by the ABC Classification system. (Janson, 1987)

ACORD (Association of Cooperative Operations Research and Development)

A non-profit association whose mission is to facilitate the development and use of standards for the insurance and reinsurance industry. ACORD is the focal point for providing standard insurance forms that meet all regulatory requirements for the U.S. property and casualty/surety market. (ACORD Corporation, 1988)

American Society for Testing and Materials (ASTM)

A not-for-profit institution that develops specifications, standards, test methods and other product testing data. (www.astm.org)

American Arbitration Association (AAA)

A not-for-profit organization that provides resources for Alternative Dispute Resolution (ADR). Arbitration and mediation are being widely used to settle contractual disputes instead of litigation.

Adjectival Ratings

A notational scoring system in which adjectives are used to describe the quality of an offeror's proposal. Proposals may be rated using such terms as Outstanding, Highly Acceptable, Excellent, Good, Fair, and Poor. (Nash, Schooner, OíBrien, 1998)

Agent

A person authorized by a superior, i.e. principal, to act for him or her. In public procurement, this designation is usually incorporated into statute and ordinance. Empowered to act for another. Also see Principal, Buyer and Law of Agency. (NASPO, 2001)

Acceptable Products List (APL)

A pre-approved list of commodities/products, usually grouped by manufacturer, which have proven to be in conformance with developed specifications and standards. The list may result from performance testing of the product or as a result of field testing or laboratory analysis. Also see Qualified Products List (QPL) and Approved Brands List (ABL).

Administered Price

A price determined by the deliberate price policy of a vendor rather than by competitive forces of the market place. Also see List Price.

Alternative Dispute Resolution (ADR)

A process or procedure used voluntarily between parties to resolve issues in controversy without the need to resort to litigation. ADR may include but are not limited to mediation, fact-finding and arbitration. Also see Litigation.

American Production and Inventory Control Society (APICS)

A professional society whose mission is to improve and advance the field of production and inventory control. Also known as The Association for Operations Management. (www.apics.org)

Acceptance Sampling (Acceptance Testing)

A quality control technique used to evaluate the overall condition of a given lot by physically inspecting only a portion or sample of the lot. Also see Acceptable Quality Level (AQL).

Alphanumeric

A set of characters that contains both letters (alpha) and numbers (numeric). These characters may include punctuation and symbols found on a standard keyboard. Generally assigned to identify a specific item such as a model number. (Jansen, 2002)

Acknowledgement

A written or electronic communication sent by the supplier to the buyer that indicates that the supplier has accepted the order (purchase order). It may be a form of acceptance and may create a bilateral contract. It may also be a form of counter-offer from the seller to the buyer. Also see Battle of the Forms.

Ad Hoc Committee

A committee created for a specific purpose that is in place for a short period of time. They are now being replaced by cross-functional teams in a less formalized setting. (Business, 2002)

Account

A list or enumeration of monetary transactions between parties to a contract showing purchases, payments, and credits for goods

Advice of Shipment

Canadian A notice sent to a purchaser advising that a shipment has been released.

Air Waybill

Documentary proof of the contract of carriage between the shipper and the carrier. It serves as a receipt of goods for shipment and is required for Customs clearance. This proof was issued by the airlines following the International Air Transportation Association (IATA) standard form. (Business, 2002)

Americans with Disabilities Act (ADA)

Federal legislation passed in 1990 that requires organizations with at least 25 employees to make reasonable accommodations for qualified workers and applicants with disabilities and to avoid discriminating against them. Compliance includes removing physical workplace barriers.

Efficiency

1. The ratio between inputs and outputs. When outputs are increased and inputs are decreased, more efficiency is generated.2. Getting the most out of the resources used.

Debarment

1. To prohibit a seller/contractor from bidding on future requirements for cause for a certain period of time.2. A sanction brought against a seller whereby they may not engage in future procurement actions.3. To exclude or shut out of future solicitations and contracting opportunities. Also see Suspension.

Accept

1. To receive as approved, adequate, or satisfactory. 2. To receive willingly with the intent of retaining.

Disposal

1. To remove an item of inventory or a capital asset from an organization in accordance with disposal and accounting procedures.2. The disposition of assets or inventory.

Buy Local

A bid preference which may be given to vendors doing business in the purchasing jurisdiction. Also see Bid Preference; Local Preference and Preference.

Firm Bid

A bid that binds a bidder until a specified time of expiration.

Authorized Deviation

A change or deviation specifically allowed by the contracting authority. Also see Amendment, Change Order and Contract Modification.

Cardinal Change

A change that is beyond the scope of the contract, and thus cannot be ordered by the contracting officer under the contract's change clause. Cardinal changes are breaches of contract. They are outside of the scope of the contract.

Archival Quality

A characteristic of paper and paper products that enables the paper to retain a specified percentage of its original physical and appearance properties for an extended period of time under specified controlled conditions. (Business, 2002)

Liability

A debt or an obligation to make future payment. (Business, 2002)

Metric System

A decimal system of weights and measures, based on the meter as the unit of length, the gram as the unit of mass or weight, and the liter as unit of volume.

Price Reduction

A decrease in the assigned value for a commodity or service exchanged relative to its worth determined in some previous time period. The act of reducing the agreed upon value of selling price where the incurred price paid is lower based upon what was previously paid; usually refers to a lower price paid by the buyer. Also see Cost Savings, Cost Reduction.

Leveraged Buyout (LBO)

A purchase in which a group of investors borrow money from banks and other institutions to acquire a company, using the assets of the purchased company to guarantee repayment of the loan. (Business, 2002)

Retainage

A specified amount or percentage of the progress payment due usually under a construction contract. Upon completion of all contract requirements, retained amounts must be paid promptly. Also see Holdback. (Harney, 1992)

Quotation

A statement of price, terms of sale, and description of goods or services offered by a vendor to a prospective purchaser; may be non-binding if solicited to obtain market information for planning purposes.

Business Plan

A statement of the rationale for a business and a step-by-step explanation of how it will achieve its goals. (Business, 2002)

Market Segmentation

A strategy whereby a business divides the total market into groups of people who have relatively similar product needs. (Ferrell, 2002)

Quick Ratio (Acid Test)

A stringent measure of liquidity that eliminates inventory. A good tool to utilize when assessing the financial health of a business. (Business, 2002)

Intergovernmental Cooperative Purchasing

A variety of arrangements under which two or more governmental entities pool their commodity and/or service requirements to purchase aggregated quantities thus achieving economies of scale. The process usually involves a single combined bid or request for proposal in which all of the participating entities are named or their participation implied.

Concession Model

Agency contracts with a person, group or company to run a portion of a government-owned facility such as the selling of food at the snack bar in an agency-owned ice skating rink. Also see Public Private Partnership.

Nonperforming Asset

An accounting term that refers to an asset that is not producing income. (Business, 2002)

Physical Distribution

All of the activities necessary to move products from producers to customers—inventory control, transportation, warehousing, and materials handling. (ISM, 2002)

Paper Trail

All of the documentation of a procurement which is required for future reference and for audit purposes. (Business, 2002)

Operating Budgets

All of the revenues and expenditures to cover the current fiscal period of the government.

Bid Bond

An insurance agreement, accompanied by a monetary commitment, by which a third party (the surety) accepts liability and guarantees that the bidder will not withdraw the bid. The bidder will furnish bonds in the required amount and if the contract is awarded to the bonded bidder, the bidder will accept the contract as bid, or else the surety will pay a specific amount.

Floater

An insurance policy that covers a changing, dynamic liability, such as the inventory of a store or warehouse, moveable property, or goods in transit.

Goodwill

An intangible asset of a company that includes factors such as reputation, contacts, and expertise for which a buyer of the company may have to pay a premium. (Business, 2002)

Public Procurement Process Model

An integrated public procurement planning model that consists of four stages: Planning-Formalization-Implementation-Evaluation.

Proprietary (Article)

An item produced and marketed by a person or company having the exclusive right to manufacturer and sell it. May result from a trade secret or patent.

NATO Standard Item

An item selected by an officially constituted NATO standardization group, which would, when manufactured in any NATO country, always meet the same performance, application, and quality standards.

Profit Margin

An item that appears on an income statement and is calculated by dividing the gross profit by sales. (Business, 2002)

Goods and Services Identification Number (GSIN)

Canadian An alphanumeric code used to categorize goods and services for the allocation of requisitions, identification of source lists, and coding of contracts. Number is allocated systematically by Supply and Services Canada.

Amendment Status

Canadian Identifies the number and description of amendments issued to a bid solicitation or contract document, and gives a description of the previous wording.

Contract, Amended Amount

Canadian Total cost in Canadian dollars of the contract reflecting the cumulative impact of the original amount and all contract amendments.

Durables

Consumer goods expected to last longer than three years. (Schiller, 2000)

Concealed Damage

Damage that may occur during shipment of goods which is not apparent or noticeable.

May

Denotes the permissive in a contract clause or specification. Also see Shall.

Historically Underutilized Business (HUB)

Generally refers to minority, women-owned, and small businesses. Also see Economically Disadvantaged Individuals, Small Disadvantaged Business, Minority-Owned Business (MBE), and Women-Owned Business Enterprises (WBE).

Independent Cost Estimate (ICE)

Generally refers to the Project Manager and/or Consultant's cost estimate for the pending project which reflects anticipated project costs for budgetary funding purposes, etc.

ISO 9000, ISO 14000

Families of standards and guidelines relating to quality management systems and processes. ISO 9000 is primarily concerned with quality; ISO 14000 is primarily concerned with environmental management. Developed by the International Organization for Standardization. (ISM, 2000)

National Association of Educational Procurement (NAEP)

Formerly known as the National Association of Educational Buyers (NAEB), its stated mission is to facilitate the development, exchange and practice of effective and ethical procurement principles and techniques within higher education and associated communities, through continuing education, networking, public information and advocacy.

Certificate of Origin

A document required by customs officials that identifies the country of origin of the imported goods, and is certified by a U.S. consular official.

Limited Liability Company (LLC)

A form of business ownership that provides limited liability and taxation like a partnership but places fewer restrictions on shareholders. (Ferrel, 2002)

Open Insurance Policy

A form of insurance covering shipments for a specified time, or a stated value, and not limited to a single shipment; the premium is determined based on values reported.

Checklist

A form or table included in a solicitation document that identifies all critical information needed to fully comply with all of the requirements of the bidder to make a proper offer. (Harney, 1992)

Job Description

A formal, written explanation of a specific job, usually including job title, tasks, relationship with other jobs, physical and mental skills required, duties, responsibilities and working conditions. (Ferrell, 2002)

Nominal Group Technique

A group decision-making technique that focuses on generating alternatives and selecting among them by asking group members to independently write down ideas, present them in turn, clarify them for the group, and rank them by voting privately. A brainstorming technique used by cross-functional purchasing teams. (Business, The Ultimate Resource, 2002)

Marketing

A group of activities designed to expedite transactions by creating, distributing, pricing, and promoting goods, services and ideas. (Ferrell, 2002)

Capital Project Funds

Monies from revenues on long-term debt that are 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.

Cross-Functional Team

A group of employees from different departments who work together on a specific team usually to accomplish a specific task. The team may be permanent or ad hoc and may include vendors and customers as appropriate. Examples of procurement specific teams may include: Commodity Procurement Strategy Team; Sourcing Team; Supplier Performance Evaluation Team; Supplier Certification Team.

Retention Schedule Records

A jurisdiction's established timetable for maintenance and destruction of purchasing records, based on administrative, historical, and legal requirements.

Net Lease

A lease that requires the lessee to pay for things that the owner usually pays for. (Business, 2002)

Multi-Step Bidding

A method of source selection involving two competitive steps, combining the elements of both competitive sealed bids and competitive sealed proposals. The first step may require the submission of technical and price proposals with only the technical proposals being evaluated and scored. The second step involves the opening of price proposals of those firms who have achieved the highest technical scores.

Initial Training

A method of training typically provided to new employees to expose them to the body of knowledge which includes agency policies and procedures that will be required to comprehend and perform the duties of their position.

Limitation of Cost

A provision that limits the total costs for which a contractor can be reimbursed under the terms of a cost reimbursement contract.

Bid Tabulation

A public document listing all vendors who received a copy of the Invitation for Bid (IFB), with a list of all items in the IFB, and showing unit prices for each item for each bidder. It may also include total prices, delivery terms and conditions, whether each bidder has met the requirements for licenses, bonds, evidence of insurance, or other information deemed appropriate by the contracting officer. Solicited vendors not responding to the IFB are shown as "no bid." Also see Bid Analysis and Bid Evaluation.

Average

A number that is calculated to summarize a group of numbers. The most commonly used average is the mean - the sum of the numbers divided by however many numbers there are in the group. The median is the middle value in a group of numbers ranked in order of size. The mode is the number that occurs most often in a group of numbers. (Bishop, 2004)

Consignor

A person or company that ships goods to another (the shipper).

Entrepreneur

A person who risks time, effort and money to start and operate a business. (Business, 2002)

Discretion

A power or right, conferred on procurement officers by law, to act officially in certain circumstances, according to the dictates of their own judgment and conscience and uncontrolled by the judgment or conscience of anyone else. Also see Best Interest. (Blackís Law Dictionary 466-67, 1990)

Cash In Advance (CIA)

Payment made to a contractor prior to initiating the performance of the contract.

Completion Payment

Payment made upon successful completion of the work.

Demobilization

The effort of a construction contractor in leaving the site after the contract work is completed. Also see Mobilization. (American Purchasing Society, Glossary of Purchasing)

Expedite

The effort to assure delivery of goods purchased in accordance with a time schedule. An attempt to rush or improve a pre-established delivery date.

Disposal Cost

The expense of removing inventory or assets from an organization. (ISM, 2000)

Double Sampling

The inspection of a second sample when the first sample does not lead to a decision to accept or reject.

Monopolistic Competition

The market structure that exists when there are fewer businesses than in a pure-competition environment and the differences among the goods they sell are small. (Schiller, 2000)

Direct Selling

The marketing of products and services to the ultimate customer through face-to-face sales presentations at home or in the office. (Business, 2002)

Management Buy-Out

The purchase of an existing business by an individual manager or management group from within the business. (Business, 2002)

Current Stock Level

The quantity currently on hand in the warehouse or storage depot.

Inspection Level

The quantity level at which samples are to be inspected, as well as the size of the sample.

Law of Demand

The quantity of a good demanded in a given time period increases as its price falls. (Schiller, 2000)

Law of Supply

The quantity of a good supplied in a given time period increases as its price increases. (Schiller, 2000)

Re-Order Cycle Quantity

The quantity of goods required to sustain operations for a specified period of time, after which time, orders will be placed for more goods.

Rescission of Contract

The relieving of a party from all obligations under a contract. A remedy for mutual mistake when reformation is not possible, and for other defects in contract formation such a duress, fraud, misrepresentation and unconscionability. (Nash, Schooner, OíBrien, 1998)

Homogenization

The removal of characteristics differences between separate markets and cultures. (Business, 2002)

Market-Oriented Pricing

Price setting that occurs when prices are defined according to the range of the quality of the product or service provided by the supplier. Example: the good, better, best models of products with extra features such as are found in automobiles and electronics.

Commercial Law

Principles and rules by which rights and obligations in commercial business transactions are determined, as found in the Uniform Commercial Code. (NASPO, 2001)

Fiscal Year

The 12-month period used for accounting purposes. Generally begins July 1 or October 1 for governments (October 1 for the Federal Government).

Advertising

The act of preparing and distributing advertisements which call attention to a contemplated public purchase or sale.

Ordering Costs

The costs associated with issuing a purchase order or placing an order.

Accessorial Transportation Charges

The costs that a carrier may charge in addition to the actual freight transportation charge such as: Inside delivery, interim storage, and redelivery charges. (ISM, 2000)

Procurement Outsourcing

The contracting out of the procurement function to a third-party or private contractor. (Miller, 2006)

Buyer's Option

The contractual right, established in a purchase document, to buy an item or service at a fixed price within a specified time.Also see Option.

Carrying Cost

The cost of keeping inventory on hand including lost opportunity cost, storage cost, handling cost, insurance cost, shrinkage, damage, breakage and obsolescence cost. Also see Acquisition Cost. (Schiller, 2000)

Direct Cost

The cost of materials or services identified with only a single cost objective.

Priority

The degree of precedence given to a particular item or task over other items or tasks.

All-Or-Nothing Bid (All or None)

A bid submitted for a number of different items, services, etc. in which the bidder states it will not accept a partial award, but will accept only an award for all the items, services, etc., included in the Invitation for Bids. Because the bidder has qualified their bid, their bid response may be deemed as non-responsive.

Aggregate Award

A contract award made to the lowest responsive, responsible bidder based on the total price for all items. While this allows the public entity to enter into a contract with a single supplier, this method does not provide the best available pricing and may be overly restrictive, unless multiple bidders are able to supply all of the items contained in the solicitation document.

Accounts Receivable Turnover

A financial ratio calculated by dividing net sales by accounts receivable. (Schiller, 2000)

Alternative (Alternate) Bid/Proposal

A response to a bid or proposal that does not meet the exact requirements of the specification or scope of work but offers an alternative for consideration. A bid/proposal submitted with an intentional substantive variation to a basic provision, specification, term or condition of the solicitation. This alternative, in the opinion of the bidder/proposer, achieves the same end result. Alternative bids and proposals may render the bid/proposal as non-responsive. Also see Alternate Bid (Response).

Administrative Change

A unilateral change to a contract in writing, that does not affect the substantive rights of the parties, such as a change in the address to which an invoice is mailed.

Alpha

A word referring to the first of two pre-release phases of a commercial hardware or software product. The early version of the product is tested at the developer's site and is then improved accordingly. The release prior to the beta test or beta version. (Jansen, 2002)

Addendum/Addenda

A written change, addition, alteration, correction or revision to a bid, proposal or contract document. Addendum/Addenda may be issued following a pre-bid/pre-proposal conference or as a result of a specification or work scope change to the solicitation. (Harney, 1998)

Actual Cost

All direct and indirect costs incurred for services, supplies, or construction, as distinguished from estimated or forecasted costs.

Fair Trade Statute

A law, in some states, which allows a manufacturer to set a minimum retail price on their products. Such a law is a violation of federal anti-trust law if it affects interstate commerce.

Cover

A remedy, (in accordance with Section 2-711 of the Uniform Commercial Code) that permits the buyer to seek the reasonable purchase of substitute goods resulting from the seller's breach of contract.

Business Cycle

Alternating periods of economic growth and contraction. Sometimes characterized as prosperity, recession, depression and recovery. (Schiller, 2000)

Budget Deficit

Amount by which government spending exceeds government revenue in a given time period. (Schiller, 2000)

Marketable Securities

Temporary investment of "extra" cash by organizations for up to one year in U.S. Treasury bills, certificates of deposit, commercial paper, or Eurodollar loans.

Predatory Pricing

Temporary price reductions designed to alter market shares or drive out competition. (Business, 2002)

Discharge By Mutual Assent

Termination of a contract by mutual agreement of all parties. Also see Cancellation Request, Termination for Convenience and Termination for Default.

Indexation

The linking of a rate to a standard index of prices, interest rates, share prices, or similar items. This is what occurs on contracts where the pricing is tied to an index. (Miller, 2006)

Point of Origin

The location where shipment is received by a transportation line from the shipper. The shipping point.

Consequential Damages

The loss of revenues and/or profits incurred by a purchaser as a result of a seller's breach; may involve injury to a person or property, including loss of life or business. (ISM, 2000)

Full Employment

The lowest rate of unemployment compatible with price stability; variously estimated at between 4 and 6 percent unemployment. (www.bls.gov, US Bureau of Labor Statistics)

Expectancy Theory

The assumption that motivation depends not only on how much a person wants something but also on how likely he or she is to get it. (Business, 2002)

Process Improvement

The increase in value (or decrease in applicable costs) resulting from a modification in any phase of the purchasing and/or supply process. (ISM, Inside Supply Management Magazine, March 2003)

Overhead Cost

The indirect recurring costs of running a business. (Business, 2002)

Order Quantity

The predetermined standard order size that will be placed with the vendor to replenish inventory.

Letter of Intent (LOI)

A letter customarily employed as a preliminary understanding of parties that intend to enter into a contract. (Blackís Law Dictionary, 904, 1990).

Economic Indicators

Economic activities that change relative to the economy. Examples include: imports, exports, unemployment, housing starts. (Schiller, 2000)

Disparagement

Making malicious or false statements of fact as to the quality or performance of an organization's product. (Business, 2002)

Regressive Tax System

One in which effective tax rates fall as income rises. The burden tends to be overly high on the state's less-affluent residents. A public policy issue that may impact governmental procurement decisions. Also see Sales Tax. (Schiller, 2000)

Rejection

Refusal of a delivered supply or service that does not meet contract specifications or requirements.

Cost-Reimbursement Contract

Reimburses the contractor for all incurred costs which are allowable and allocable under the terms of the contract and applicable laws and regulations; may include profit or fee. May also be referred to as a Cost Plus contract. Also see Cost Contract.

Repudiation

Rejection, disclaimer, or renunciation. Refusal to perform a duty or obligation owed to the other party. (Garner, 2002)

Generic (Name)

Related to or characteristic of a whole group or class; not protected by trademark registration. (Business, 2002)

Report of Partial Shipment

Report showing the items received from a vendor when an order is incomplete, or has items backordered.

Cycle Time

The time required to complete a process, such as replenishing inventory. (ISM, 2000)

OCR

See Optical Character Recognition.

Capability

The ability of a bidder to fulfill the contract at time of award.

Material Defects

Defects that are a matter of substance that affect price or quality and do not conform to the solicitation requirements.

Renegotiation

Deliberation, discussion, or conference to change or amend the terms of an existing agreement.

Risk

The chance of injury, damage or loss; the probability of some occurrence (e.g., a failure) and the consequences and impact of the occurrence.

Code of Federal Regulations (CFR)

The codification of the general and permanent rules published in the Federal Register by the Executive departments and agencies of the United States Federal Government.

In-State Preference

A bid preference given to vendors/bidders doing business in the state.

Order Record

A central record of orders issued.

Accredited Purchasing Practitioner (A.P.P.)

A certification given to qualified individuals by the Institute of Supply Management (ISM).

Pro-Forma

A document issued before all relevant details are known, usually followed by a final version. (Business, 2002)

Purchase Order Change Notice

A form documenting a change made to a purchase order.

Consumerism

All activities undertaken to protect the rights of consumers. (Business, 2002)

Invitation for Bid (IFB)

All documents used to solicit competitive or multi-step sealed bids. Also known as Invitation To Bid (ITB).

Cost-of-Living-Adjustment (COLA)

An automatic adjustment of nominal payment tied to the rate of inflation. (Schiller, 2000)

Part Category A

Canadian Accessory and miscellaneous parts and pieces which are attached to a master or host piece of equipment.

Public Property

Canadian All property, other than money, belonging to the Crown.

OMB Circular A-102

"Grants and Cooperative Agreements with state and local governments", establishes consistency and uniformity among federal agencies in the management of all federal cooperative agreements and grants with state and local governments. The 1988 version revised the 1981 version and rescinded Attachments A through P of the Circular. Also see Uniform Administrative Requirements for Grants in Aid to States and Local Governments.

OMB Circular A-110

"Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other Non-Profit Organizations." Issued by the Office of Management and Budget (OMB); governs the administration of purchases made by institutions of higher education, hospitals, and other non-profit organizations with federal funds.

Bid

(noun) The response submitted by a bidder to an invitation for bids (IFB) or to a multi-step bid. Sometimes the complete bid document may be referred to as "the bid". The response to a request for proposal (RFP) is called a proposal or offer. Also see Tender and Solicitation.

Energy Conservation

1. A deliberate approach to the efficient use of energy to preserve natural resources.2. A strategic plan that includes various elements of energy efficiency and energy reduction in all applicable areas of the supply chain.

Excess Property

1. Any supplies or equipment, other than expendable supplies having a remaining useful life, which are no longer required by the agency in possession of the material.2. Material and supplies that are acquired by a government agency but are not required or can no longer be used by the agency and it may or may not have a residual value.

Collateral

1. Anything of value that is acceptable to a lender to guarantee repayment of a loan.2. Real or personal property pledged as security for a loan.

Commodity

1. Canadian Any moveable, tangible article of trade or commerce.2. US Something useful that can be turned to commercial advantage; anything that can be processed and resold.

Air Freight

1. Freight transported by air. 2. The amount charged for air transportation.

Quasi-Legislative

1. Having a partly legislative character by possession of the right to make rules and regulations having the force of law.2. Essentially legislative in character but not within the legislative power or function especially as constitutionally defined. (Merriam-

Back-Door Buying or Selling

1. Unofficial, irregular, devious buying or selling, usually resulting from undue efforts to induce preference for a particular vendor with the intent of limiting competition; unauthorized actions.2. A direct marketing/sales effort to induce preference on the part of the program manager or requestor for a particular product, service or seller with the intent to constrain competition.3. Evasive actions taken by the seller to circumvent the Purchasing Department and agency rules and regulations trying to influence or sell directly to the agency's internal user/customer department.

Principle

A basic truth, law or assumption; a rule or standard of behavior; a rule of conduct that derives from ethical values.

Carrier

A company that transports goods or people, usually over a fixed route and on a fixed schedule. Also see Common Carrier.

Cost-Benefit Analysis (Study)

A comparative evaluation of the trade-off between the cost of a good or service and the value or benefit to be obtained in order to choose among alternatives. (Business, 2002)

Latent Defect

A defect, deficiency or imperfection that is not detected or discovered using generally accepted inspection methods. A defect that surfaces after final acceptance. It is not concealed damage. Also see Defect. (NASPO, 2001)

Downsizing

A deliberate management strategy to create a new organizational structure that will result in fewer employees on the payroll. This strategy may include outsourcing, eliminating redundant positions, layoffs and terminations. (Business, 2002)

Bank/Banker's Acceptance

A draft or bill of exchange drawn on a bank and acknowledged as valid by that bank.

Designee

A duly authorized representative.

Cost Realism

A factor considered during cost analysis of a proposal to determine if the costs proposed are realistic in light of historical experience, costs on similar projects, market conditions over the life of the proposal, or other factors.

Currency Depreciation

A fall in the price of one currency relative to another. (Business, 2002)

Bureau of Economic Analysis

A federal agency of the U.S. Department of Commerce that generates the gross domestic product (GDP). The Commerce Department also calculates personal income, corporate profits, and the current account balance. For more information: www.bea.gov.

Bilateral Monopoly

A market with only one buyer and one seller. (Schiller, 2000)

Milestone Payment

A more sophisticated form of progress payment that shifts the risk by tying payments to the successful completion of predetermined work that are deemed significant indicators of progress toward contract completion.

Capital Improvement Plan (CIP)

A multi-year plan that forecasts spending for anticipated capital projects and equipment purchases. A typical CIP includes the following steps: identify proposed projects; evaluate proposed projects simultaneously; produce a planning document that considers both financing sources and the timing of the projects; rank the projects based on agency need and perceived community need, determine net present value and/or internal rate of return on the investment; and analyze source of funding for projects, which may include: pay-as-you-go from current income - grants and debt financing - public/private ventures, including privatization or any other financing source. Also called Capital Improvement Program (CIP)

Cash Discount

A reduction in the full cost of a good or service when payment is made within a specified period of time: e.g. 2% 10 net 30. Also see Discount, Payment Terms and Prompt Payment Discount.

Quantity Discount

A reduction in the unit price offered for a large volume contract. Economies of scale would dictate that the larger the volume/quantity the lower the unit price or total cost. Also see Economies of Scale, Volume Discount, and Volume Leveraging.

Point-Click-Buy-Ship

A reference to eProcurement and eBusiness protocol that allows buyers to access an Internet shopping site, make an authorized purchase from a pre-determined contract supplier and charge the purchase to a credit card. Frequently used for just-in-time, next day procurements. Also see Click-and-Ship.

Cash on Delivery (COD)

A requirement for full payment for goods and services at time of receipt.

Offer

A response to a solicitation that, if accepted, would bind the offeror to perform the resulting contract.

Patent

A set of exclusive rights granted by a government to an inventor or applicant for a fixed period of time usually 20 years in the U.S. It gives the grantee the right to exclude others from making, using, selling, offering for sale, or importing the patented invention. There are a number of international treaties governing patent law. The most global is the WTO TRIP's Agreement, to which almost all countries are a party. The United States, European Union and Japan are parties to all of the existing treaties governing patents. The authority for patent statutes in different countries varies. In the U.S., the Patent and Trademark Office gets its authority from Article One, Section 8 of the U.S. Constitution. (Miller, 2006)

Joint Purchasing Office

A shared administrative agency created to perform the purchasing function for two or more governmental units in a joint administrative purchasing arrangement.

Drop Shipment

A shipment made directly from a manufacturer or direct provider of goods to a buyer or purchaser in response to a request by the vendor who has received an order but does not carry the merchandise in inventory.

Free Astray

A shipment misrouted or unloaded at a wrong destination that is forwarded to the correct destination free of extra charges.

Mission Statement

A short memorable statement of the reasons for the existence of an organization which may encompass its core values. (Business, 2002)

Aggregator

A technology reference to a website that contains product catalogs from many suppliers in one place as a convenience to supply management organizations. (Jansen, 2002)

Data Warehouse

A technology term that refers to a collection of data received from various transaction systems, which are accessible to various personnel throughout the organization. (ISM, 2000)

Buying Allowance

A temporary price reduction to resellers for purchasing specified quantities of a product. (ISM, 2000)

Change Order

A written alteration that is issued to modify or amend a contract or purchase order. A bilateral (agreed to by all parties) or unilateral (government orders a contract change without the consent of the contractor) request which directs the contractor to make changes to the contracted scope of work or specifications. In reference to construction contracts, it relates primarily to changes caused by unanticipated conditions encountered during construction not covered by the drawings, plans or specifications of the project. Also see Amendment, Authorized Deviation, Change Order Authority, Contract Modification and Modification.

Ad Valorem

According to value. Customs duty (rate) that is generally charged on the value of goods irrespective of weight or other material considerations. Generally expressed as a percentage of the value of the goods as indicated on an invoice or bill of materials. (ISM, 2000)

Procurement Records

Accounts maintained by a procurement organization sufficient to detail the significant history of a procurement and which may be needed for future audit purposes. Typically defined in a retention schedule description.

Arbitrary and Capricious

Actions by whim or caprice, with irrational disregard of facts or circumstances. May be the basis for courts to overrule or remand an administrative decision or ministerial action by a purchaser. A public official's improper use of discretionary powers to the detriment of the public good.

Incurred Costs

Actual costs rather than Estimated Costs.

Advance Payments

Agreed upon payments between buyer and seller made prior to the actual receipt and delivery of the contracted goods and services. Payments may be for a stated amount or for a percentage of the purchase price. Sometimes referred to as cash in advance. Also see Partial Payment and Progress Payment.

Contract Rates

Agreed upon transportation rates between a shipper and a carrier.

Joint-Use (Agreements)

Agreements between various government agencies that may involve the joint-use of public property such as buildings and equipment. For example, a public school district may share the use of a high school swimming pool with a county recreation and parks agency.

Inflation

An increase in the average level of prices of goods and services usually measured incrementally over a given time period. Also see Deflation. (Schiller, 2000)

Delivery Order Contract

An indefinite delivery/indefinite quantity contract for supplies or services that provides for the issuance of orders for services or supplies during the contract period. May also be referred to as a task order contract.

Federal Communication Commission (FCC)

An independent Federal Government agency that regulates interstate and international communications by radio, television, wire, cable and satellite. It was created by an act of Congress and is independent of the executive departments. (www.fcc.gov)

Competitive Re-engineering

An outsourcing issue that allows the employees of a public agency the opportunity to re-design their work process in order to achieve efficiency and cost savings. This may be done prior to subjecting the targeted work function to competition against private contractors. (Business, 2002)

Regulatory Body

An independent organization, usually set up by government, that regulates the activities of companies in an industry.

Consul

An official appointed by a government to look after its business in a foreign city.

Purchasing Officer

An official in charge of the procurement operation, from the determination of needs to follow-up, ensures timely delivery.

Legacy System

Any outdated computer/software system that remains in use despite the availability of more current technology. It usually is an archaic data management platform that may contain proprietary custom designed software. An old database management system running on mainframes. May run financials, payroll, human resources, purchasing, supply management, inventory control and other business processes. The name given to a "home grown" technology-database management system. (Business, 2002)

Modification

Any written alteration to a provision of any contract accomplished by mutual agreement of the parties to the contract. Also see Change Order.

Bank Reserves

Assets held by a bank to fulfill its deposit obligations. (Schiller, 2000)

Order

Canadian A written requirement; direction or prescription made or issued to obtain a good or service.

Frictional Unemployment

Brief periods of unemployment experienced by people moving between jobs or into the labor market.

Ratio Analysis

Calculations that measure an organization's financial health. Often mentioned in financial information provided by a public company to determine if they are a responsible bidder/offeror. (Business, 2002)

Materiel Management Institute

Canadian A Canadian non-profit organization offering professional development in the field of public sector materiel and supply management. (www.mmi-igm.ca)

MERX

Canadian A Canadian online service that advertises government contracting opportunities to potential bidders. (Summit Magazine, On-Line)

Cure Period

Canadian When a contractee is in default of the deliveries in a contract, the cure period is the period of time that the contractor can give to the contractee to make good on the services required to be delivered, or additional time for the product contracted for to be delivered. The period of time is ultimately up to the contractor. The cure period would come before the contractor deems the contract to be terminated for reasons of default. (Summit Magazine, On-Line)

Business Interruption Insurance

Commercial insurance protection for a business whose operations are interrupted because of a fire, storm, or other natural disaster. (Business, 2002)

Ancillary Services

Commercial type support services required by a government such as custodial, landscape maintenance, and refuse collection, etc.

Receiving Inspection

Comparing material and services received to the specifications.

Punitive Damages

Damages that are awarded in a civil action, in addition to compensatory damages, to punish a defendant for gross or willful misconduct. Generally are not recoverable in breach of contract actions. (Garner, 2004)

Current Liabilities

Debts that will be repaid in one year or less. (Ferrell, Hirt, 2003)

Discretionary Income

Disposable income less savings and expenditures on food, clothing and housing. (Schiller, 2000)

LEAP (Learning and Education to Advance Procurement)

Educational services offered by NIGP that offer opportunities for purchasing interns, practitioners and scholars to elevate professional recognition. The curriculum provides foundation courses leading to professional certification and advanced courses leading to an Executive Certificate in Public Procurement.

Interstate Commerce Commission Termination Act of 1995

Eliminated the ICC; Surface Transportation Board was established within the Department of Transportation to take over the ICC functions.

Purchasing Organization

Employees responsible for purchasing needed supplies, services, and construction; the purchasing department.

Price Fixing

Explicit agreements among producers regarding the prices at which goods are to be sold. See Sherman Antitrust Act and the Clayton Act.

Dumping

Exportation of large quantities of a product at a price lower than that of the same product in the home market. The sale of goods in export markets at prices below domestic prices. (ISM, 2000)

Federal Acquisition Institute (FAI)

FAI promotes the development of a professional acquisition workforce. In addition, FAI collects and analyzes acquisition workforce data, coordinates government-wide research and studies to improve the procurement process, and assists agencies with recruitment of qualified candidates for acquisition fields.

Pricing Data

Factual information about prices for goods and services substantially similar to those being procured; can include offered or proposed selling prices, historical selling prices and current selling prices.

Cost (Pricing) Data

Factual information about the actual or estimated costs of labor, material, overhead and other cost elements which are expected to be incurred by the contractor in performing the contract and which are allowable and allocable.

Product Differentiation

Features that make one product appear different from competing products in the same market. Automobiles and breakfast cereal are examples of markets that have products that are greatly differentiated for consumer choice. (Business, 2002)

International Organization for Standardization (ISO)

Headquartered in Geneva Switzerland, it is an international body composed of members representing standards organizations. The objective of the organization is to promote the development of standards, testing and certification in order to encourage the international trade of goods and services. As of 2002, ISO reports that its standards have resulted in certification of over 400,000 organizations around the world. ISO has concentrated on quality improvement and has issued the ISO 9000 series of quality system standards. ISO 14000 standards certify an organization's environment performance. For more information: www.iso.ch.

Dutiable Goods

Imported or exported goods upon which duties are to be imposed.

Misuse

Improper or incorrect use of something of value that was intended for another purpose.

Bargaining

In a competitive negotiation, discussion, persuasion, alteration of initial assumptions and positions, and give and take with respect to price, schedule, technical requirements, or contract terms.

Export Bill of Lading

Issued by a carrier covering the transportation of goods from a domestic point of origin to a foreign destination.

Pareto, Vilfredo (Pareto Principle)

Italian economist and sociologist born in 1848. He created the 80/20 theory of income distribution which suggested that 80% of the wealth is created by only 20% of the income producers in an economy. This theory was adapted to a modernistic interpretation of the critical few and the trivial many. It has been further adapted to many supply management situations such as, " 80% of the purchasing volume is created by 20% of the purchase orders issued". In the supply management area this is known as the 80-20 Rule or the Pareto Principal in its application to inventory control methodology. (Business, 2006)

Open Order

Items of supply not delivered or not accepted by the ordering organization.

Mass Production

Large scale manufacturing, often designed to meet the demand of a particular product. (Business, The Ultimate Resource, 2002)

Dictum Meum Pactum

Latin phrase that means "My word is my bond." It reflects the public trust of those in positions of authority in public procurement. (Miller, 2006)

Caveat Emptor

Latin term which translates to "Let the buyer beware." It implies that the purchaser/buyer is responsible for the quality assurance of a product or service.

Caveat Venditor

Latin term which translates to "Let the seller beware." It implies that the seller/vendor bears responsibility for product defects and inferior quality issues and must satisfy these concerns to the buyer's satisfaction.

Anti-trust Legislation

Laws that attempt to prevent or eliminate monopolies or oligopolies and to prevent noncompetitive practices.

Articles of Partnership

Legal documents that set forth the basic agreement between partners. (Garner, 2004)

Assignment

Legal transfer of a claim, right, interest or property.

Appropriation

Legislative authorization to expend public funds for a specific purpose. Funds that have been set aside for a specific purpose.

Perishable Goods

Material subject to spoilage or deterioration within a relatively short time if proper conditions, such as temperature, are not maintained.

Preconsumer Material

Materials generated in manufacturing and converting processes, such as manufacturing scrap and trimmings/cuttings. (www.epa.gov/cpg/glossary)

Contract Ceiling

Maximum amount available for payment of cost and fee, which the contractor cannot exceed without approval of the purchasing authority.

Mandatory Requirements (Conditions)

May apply to RFP's and IFB's and are conditions set out in the specifications/statement of work that must be met without alteration. Mandatory requirements should be clearly identified. Not meeting mandatory requirements may be grounds for disqualification.

Benefits

Non-financial forms of compensation provided to employees, such as health benefits, life insurance, pension benefits, paid holidays and vacation, etc. (Business, 2002)

Fringe Benefits

Non-salaried incentives and rewards used to recruit and retain employees. An area that is negotiated by unions in their labor contracts with employers. May include health, life insurance, deferred compensation, childcare, and a variety of other benefits. (Business, 2002)

Mandatory

Obligatory, required by order, a provision that may not be waived.

Merchantable

Of commercially acceptable quality: the quality and condition of the item to be sold to fulfill the requirements of the purchaser.

Constructive Change

Oral or written communications, an act or omission by the contracting officer or other authorized government official that is construed as having the same effect as a written Change Order. Claims for constructive changes are the primary means used by contractors to obtain additional compensation for performing fixed price contracts. Common types of constructive changes are claims concerning contract interpretation, defective specifications, nondisclosure of information, impracticability of performance, breach of the duty to cooperate and acceleration.

Periodic Ordering

Orders placed at intervals for quantities needed to bring stocks up to the desired levels.

Globalization

Oversees business expansion and operation on a world-wide level. The Internet and other technology developments have facilitated this concept. Specific to public procurement, purchasers are part of a global economic community and products and services are now provided globally. (Miller, 2006)

Proprietary (Information)

Owned by a private individual or corporation under a patent, copyright, trademark or other exclusive right. Usually protected from release to the general public. Not subject to public disclosure. Also see Trade Secret and Confidential Information. (Business, 2002)

Joint Ownership

Ownership by more than one party, each with equal rights in the item owned. Frequently applied to the ownership of property or other assets. (Business, 2002)

Credible

Plausible or believable.

Producers

People who use resources to make goods and services. (Ferrell, 2002)

Growth Rate

Percentage change in real output from one period to another. (Schiller, 2000)

Job Sharing

Performing one full-time job by two part-time employees. (Ferrell, 2002)

Authorization to Release

Permission to release requested goods to the using agency against existing supply agreements.

Integrity

Personal adherence to a strict moral or ethical code of conduct. The National Institute of Governmental Purchasing has published an ethical code of conduct for its membership and a guide to those in the public purchasing profession. Also see Ethics. (Miller, 2006)

Indirect Labor

Personnel not directly engaged in the manufacturing of products or the provision of services. Includes white-collar workers and office and support staff. (Business, 2002)

Fixed Asset

Physical assets such as property, plant and equipment.

Program Budgeting

Program budgets relate expenditures and revenues to public goals.

Liquidity Ratios

Ratios that measure the speed with which a company can turn its assets into cash to meet short-term debt. (Schiller, 2000)

Actual Damages

Real damages to compensate for loss or injuries that have actually occured. This is in contrast to "nominal" damages (a small amount paid where there is no real loss) or "punitive" damages (intended to punish the party who must pay damages). When damages, which have been suffered by someone as a result of another's wrongdoing, can be precisely measured, they are called actual damages. Examples of actual damages are: loss of income because of an injury; medical expenses; costs of repairing damaged property; and specific business losses occurring because of a breach of a contract.

Debt Service Funds

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.

Rules of Interpretation

Refers to a set of well-established principles in common law that courts use to interpret the meaning of contracts.

Closing Date/Time

Refers to the date and time for bid closing. The latest date and time a bid will be accepted by the entity. Bids received after the closing time will be rejected as non-responsive. (Business, 2002)

Model Procurement Code

See ABA Model Procurement Code for State and Local

ADA

See American with Disabilities Act.

EDP (Electronic Data Processing)

See Automated Data Processing.

BAFO

See Best and Final Offer.

Business Continuity Plan

See Continuity of Operations Plan (COOP).

Consortium

See Cooperative Purchasing. A group of purchasing entities that focuses on the purchasing of selected products and services used by the group. The aggregation of need and joint purchase usually results in lower pricing as a result of economies of scale. Also see Cooperative Procurement. (Burt, Dobler, Starling, 2003)

Electronic Signatures in Global and National Commerce Act (E-Sign)

Signed on June 30, 2000, by President Bill Clinton, an act that made contracts sealed by a computer as binding as those signed in pen and ink. Online contracts have the same legal force as equivalent paper contracts.

Performance Work Statement (PWS)

Similar to a scope of work and is used in performance based request for proposals. It describes the requirements in terms of outcomes rather than prescriptive specifications.

Quality Assurance Teams (Quality Circles)

Small groups of workers brought together from throughout the organization to solve specific quality issues in order to improve a process, procedure, or production method. (Burt, Dobler, Starling, 2003)

Appeal Rights

The legal right to challenge the agency and to ask for a decision to be reviewed and changed. Also see Appeal and Appeal Process.

Order Level

The level of stock of any item at which an order is initiated for more supplies of that item.

Re-Order Point

The level of stock or inventory, above the safety stock level, at which orders are placed to obtain more goods.

Maximum Stock Level

The level which represents the maximum amount of stock of an item that may be held.

Horizontal Integration

The merging of functions or organizations that operate on a similar level. Involves the union of companies producing the same kinds of goods or operating at the same stage of the supply chain. A strategic plan where most business functions are outsourced except a few core activities. (Business the Ultimate Resource, Bloomsbury Publishing, 2002)

Median

The mid-point in a list of numbers or occurrences. (Business, 2002)

Mock-Up

The model of a device or item of equipment, either full sized or built to scale, used for analysis, display, testing or to study the details or features of design.

Governmental Accounting Standards Board (GASB)

The organization that establishes generally accepted accounting principles for state and local governments. (www.gasb.org)

Employer Identification Number (EIN)

The number assigned to a business unit or individual for purposes of withholding tax; used by many purchasing organizations as a vendor identification number. In governments entities referred to as FEIN (9-digit Federal Employer Identification Number).

Defects-Per-Hundred Units

The number of defects found in any quantity of a product, divided by the total number of units then multiplied by one hundred; the average number of defects per hundred.

Breakeven Quantity

The number of units that must be sold for the total revenue (from all units sold) to equal the total cost (of all units sold). (Schiller, 2000)

Contract Management

The overarching process that a governmental agency will use to ensure that the contractor has performed in accordance with the performance standards contained within the statement of work (SOW) or the Performance Work Statement (PWS). A quality assurance plan contained within the contract. May include: 100% Inspection, Random Sampling, Periodic Inspection, Customer Input, as well as other methodologies. May also be referred to as Surveillance. Also see Contract Administration and Surveillance.

Consumption Rate

The pace at which items are used or expended during a given time interval.

Job Shadowing

The pairing up of a less-experienced employee with a veteran employee to transfer knowledge. The veteran is asked to share knowledge (and perhaps hands-on practice) in dealing with everyday issues or tasks in addition to the most difficult situations he or she has faced on the job.

Balance of Trade

The part of a nation's balance of payments that deals with imports and exports. (Schiller, 2000)

Lessee

The party to whom a lease is granted.

Lessor

The party who owns the property in question and grants the lease.

Fair Market Value

The price for an item upon which purchaser and vendor agree in an open market when both are fully acquainted with market conditions.

Delivery Required By

The requested date by which all goods have to be delivered.

Price Elasticity

The responsiveness of demand to price changes. An elastic situation is one in which small changes in prices charged result in large differences in the quantity demanded. (ISM, 2000)

Inspection Report

The result of an organized examination. A document made as a result of an analysis, informing the purchasing authority of a product's compliance with advertised specifications.

Lien

The right exercised by one party to take or keep possession of or to control the property of another for the purpose of satisfying a debt or obligation. (Harney, 1992)

Free Enterprise

The system of business in which individuals are free to decide what to produce, how to produce it, and at what price to sell it. (Business, 2002)

Economy

The system through which a society answers the two economic questions-how wealth is created and distributed. (Schiller, 2000)

Price Range

The variety of prices at which competitive products or services are available in the market. (Business, 2002)

Prompt Payment Act

This law provides requirements to government procurement offices that ensure that federal contractors supplying goods and services are paid on time and within agreed upon payment terms. Many states and local governments have enacted similar laws. (ISM, 2000)

Free on Board (F.O.B.) Destination, Freight Prepaid and Added

Title to the goods passes from the supplier to the agency at the point of destination and supplier pays the freight expense and then adds the freight expense to the agency's invoice. Supplier owns goods in transit and files claims, if any.

Parol Evidence Rule

To ascertain, in an orderly fashion, the specific terms of an agreement between two parties. The ability of either party to produce evidence of orally agreed upon additional terms to a written contract is governed by the Parol Evidence Rule. In the absence of fraud, duress, mutual mistake, or something of the kind, the Parol Evidence Rule will preclude a party from presenting prior written or oral agreements to prove that the words of a contract have a meaning contrary to their clear meaning. (Nash, Schooner, OíBrien, 1998)

Allot

To divide an appropriation into amounts which may be encumbered or expended during an allotment period.

Normal Inspection

Type of examination used when there is no statistically significant evidence that the quality of the product being submitted is better or poorer than the specified quality level.

Letter Contract

Typically, a quickly crafted document, where exigency requires an immediate binding agreement so work can begin, but time does not permit the development of a definitive contract. An interim contractual agreement.

Force Majeure

Unexpected or uncontrollable events, including those caused by nature that can impact the contracts price, terms and conditions. These events are not due to contractor negligence and may excuse contractor performance during the events and under certain conditions caused by them. Acts of God or disruptive conditions for which a contractor or carrier will not be held responsible.

Generally Accepted Accounting Principals (GAAP)

Uniform minimum standards for financial accounting and recording, encompassing the conventions, rules and procedures that define accepted accounting principles.

Price Ceiling

Upper limit imposed on the price of a good. The highest price that a buyer is willing to pay. (Business, 2002)

Authority

The right to perform certain acts or prescribe rules governing the conduct of others. (Nash, Rawicz, 1997)

Corporate Culture

The rites, rituals, heroes, stories, history and values of an organization. (Business, 2002)

Functions of Money

The roles played by money in an economy. These roles include the medium of exchange, standard of value, and the store of value. (Schiller, 2000)

Price Discrimination

The sale of an identical good at different prices to different consumers by a single seller. (Business, 2002)

Commodity Classification

The schema that identifies commodities according to type, class, size, composition, or manufacturer.

Negotiate

To communicate or confer with another party to reach an agreement or compromise to settle some matter.

Contract

1. A contract is an obligation, such as an accepted offer, between competent parties upon a legal consideration, to do or abstain from doing some act. The essentials elements of a contract are: an offer and an acceptance of that offer; the capacity of the parties to contract; consideration to support the contract; a mutual identity of consent; legality of purpose; and definiteness.2. A legally binding promise, enforceable by law.3. An agreement between parties with binding legal and moral force, usually exchanging goods or services for money or other considerations. 4. Under the Canadian Government Contracts Regulations, a contract means a construction contract, a goods contract, a service contract, or a lease entered into by or on behalf of Her Majesty by contracting authority.

Identical Bid

A bid that is exactly the same in all respects with another bid submitted at the same time and for the same requirements. Bids that are the same price but submitted by two or more bidders. In some cases terms and conditions may be the same. Identical bids may raise an antitrust concern when there is reason to suspect collusion between the bidders. Also see Collusion.

Delay Claim

A claim filed by a contractor or an owner for unanticipated delays to a project. Delay claims require significant documentation and are based in part on cost accounting concepts. When the contractor delays the project, the owner can recover one of two types of damages: Liquidated damages or Actual damages. The components of a contractor delay claim include: (1) indirect costs that occurred during the extended performance period; (2) home office overhead that was incurred during the extended performance period; (3) increased material direct costs that occur during the delay; (4) lost productivity caused by the delay and (5) other damages directly related to and attributable to the delay. (library.findlaw.com)

Contingent Fee

A commission, percentage or other fee that is conditional upon the success that a person or concern has in securing a contract.

Reference

A component of due diligence to determine the capability of performing contractual requirements whereby previous businesses are contacted concerning the potential contractors skills, qualifications and capabilities.

Legally Flawed

A document or situation that contains terms or conditions that are contrary to law which may make an award impossible.

Bid Documentation

A file containing all of the information and records relating to the bid, which may include all of the original bids received, specifications, insurance requirements, addenda, bonds, correspondence and all other relevant data that may be subject to audit and further review.

Current Ratio

A financial ratio computed by dividing current assets by current liabilities.

Qualified Products List (QPL)

A list of items (products) that have been examined and tested and have satisfied all applicable qualification requirements. These lists are used on procurements to restrict bidders/offerors to those products on the lists. May also be referred to as an Approved Brands List (ABL) or an Approved Products List (APL). (Nash, Schooner, OíBrien, 1998)

Approved Products List

A list of vendors or products that have been evaluated and have been determined to be capable of satisfactory performance for a specific application. Also see Qualified Products List (QPL), Acceptable Products List (APL), and Approved Source List. Also known as Approved Brands List (ABL).

Bill of Materials (BOM)

A list specifying the quantity and the specification, description or character of various materials and parts required to manufacture, produce or assemble a certain quantity of a finished product. A critical element of an automated Material Requirement Planning (MRP) system.

Bidders' List

A listing of names and addresses of vendors from whom bids, proposals or quotations can be solicited. The list is generally retained in a retrievable data base. Also see Source List.

Discount Schedule

A listing of various discounts offered to the buyer for varying amounts of goods or services. May be requested as part of a bid or a request for proposal.

Forfeiture of deposit or bond

A loss of bid bond, bid deposit, or performance bond resulting from non-performance of the obligation the bond was to insure by one's own act, negligence, or fault.

Inherently Governmental Functions

A nebulous term that has been defined as those governmental functions or services which are so intimately related to the public interest as to mandate performance by government employees. These functions include those activities that require either the exercise of discretion in applying governmental authority or the making of value judgments in making decisions for the government.

Financial Ratio

A number that shows the relationship between two elements of a firm's financial statement. (Schiller, 2000)

Coinsurance Clause

A part of a fire insurance policy that requires the policyholder to purchase coverage at least equal to a specified percentage of the replacement cost of the property to obtain full reimbursement for losses. (Business, 2002)

Percentage Preference

A policy of adding a fixed percentage to the bid price of a non-preferred business unit.

Political Subdivision

A political entity within a state, which has been delegated certain functions of local government. May include counties, cities, towns, villages, hamlets, boroughs, or parishes.

Council of Logistics Management

A professional and educational organization whose goal is to promote the understanding and development of the logistics concept.

Public Agency

A public entity subject to or created by a governmental jurisdiction.

Confirmation Order

A purchase order issued to a supplier, listing the commodities and terms of an order placed verbally, or otherwise, in advance of the issuance of the purchase order. Also see Confirming Purchase Order.

Contract Renewal

A renewal clause allows an agreement to continue for a defined period if the existing agreement isn't renegotiated within a specified time measured from the expiration of the current contract. The term of renewal depends on the specific contract language, but such clauses generally provide that the contract shall be automatically renewed for the same period (or some lesser term) unless either party, at some stipulated and predetermined time (i.e., 60 days before expiration), gives notice to the other of its desire to end the agreement.

Easement

A right held by a person to some limited and specified use of land held by another person.

Level-of-Effort (LOE) Contract

A type of contract stating the work in terms of an amount of effort (usually labor-hours or labor-years) to be performed by specified classes of employees over a given period of time. (Nash, Schooner,

Mediation

A voluntary, flexible technique for resolving disputes. The contracting parties present their positions to a mediator who then works with them in negotiating a settlement. Generally each party appoints a principal with the authority to settle the dispute. (Nash, Schooner, OíBrien, 1998)

Bill of Entry

A written account of goods entered at customs, whether they are to be imported or are intended for export.

Invoice

A written account or itemized statement, addressed to the purchaser, of merchandise shipped or services performed, together with the quantity and the prices and other charges. An invoice is the sellers bill or written request for payment of work or services performed under the contract. (Nash, Schooner, OíBrien, 1998)

Bill of Sale

A written statement transferring ownership of something from seller to buyer.

Cost or Pricing Data

All facts which prudent purchasers and vendors would reasonably expect to affect price negotiations significantly.

Grantee

An entity, an agency that receives a grant of monetary funds from a grantor. Also see Third Party.

Lean Thinking

An organizational culture that is characterized by a comprehensive effort to identify and remove waste and thus improve efficiency in all areas including time, materials, people, money, facilities, quality, schedules, policies, customers, transportation and logistics.

Decentralized Organization

An organizational design in which authority is widely distributed to lower levels of the organization. Broadly based organizational decision making within and among lower levels of the organization. (Business, 2002)

Line and Staff

An organizational structure having a traditional line relationship between superiors and subordinates and also specialized managers, called staff managers, who are available to assist line managers. (Ferrell, 2002)

Centralized Purchasing

An organizational structure where all of the rights, powers, duties and authority relating to purchasing are vested in the Chief Procurement Officer (CPO). While the CPO may often delegate some of these powers to others, the final authority nevertheless reside with the CPO. Example: Individual operating departments are permitted to release materials from blanket orders that have been issued by the Purchasing Department or they may use the agency's Procurement Card to make individual purchases for their department. Also see Decentralized Purchasing.

Green Municipal Investment Fund (GMIF)

Canadian A revolving fund providing financial services (including loan guarantees and interest-bearing loans) that allow Canadian municipalities to fund projects that protect the climate and improve air, water and soil quality. (Summit Magazine, On-Line)

Letter of Interest (LOI)

Canadian Letter sent to the buyer to measure interest in receiving feedback from suppliers. This may lead to re-opening or re-issuing of the opportunity for an open tender at a later date. An LOI or a Request for Information (RFI) is not open for bidding.

Goods and Incidental Services

Canadian Materiel items and the services needed to acquire, operate and maintain them; represent the end products of materiel expenditures.

Consumable Item

Canadian Materiel that is expended or consumed in use and for which no records are maintained after issue.

Originator

Canadian One who initiates a procurement, issue, or disposal transaction.

Contract Management

Canadian Pertains to the activities of the contracting or purchasing authority and centers around such areas as issuance of a request for proposal, tendering activities, contract award and subsequent amending activities.

Directive

Canadian A statement indicating the mandatory features of a policy. In those cases where the Treasury Board is prepared to permit deviations, departments must obtain prior approval by means of submissions. Directives are characterized by the use of the verbs shall, must, and will and appear in bold Italics throughout the manual.

Inflation Index

Canadian A statistical table which reflects trends of inflation or deflation for classes of materiel items; can be used to forecast replacement costs.

Purchase Requisition Status

Canadian A status report on a purchase requisition. Also called milestone status.

Electronic Catalogue and Order Taking System (ECOTS)

Canadian A system that allows clients to send requisitions electronically to Supply and Services Canada to obtain requisition status information and to browse, select and download catalogue information.

External Procurement Authority

Any buying organization not located in the state or jurisdiction which, if located in the state or jurisdiction, would qualify as a public procurement unit.

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. (Harney, 1992)

Business

Any corporation, partnership, individual, sole proprietorship, joint stock company, joint venture, or any other private legal entity.

Local Public Procurement Unit

Any county, city, town, school district, special authority, or any other subdivision of the state, or public agency of any such subdivision, or educational, health, or other institution spending public funds for the procurement of services, supplies, or construction.

Governmental Body

Any department, commission, council, board, bureau, committee, institution, legislative body, agency, Government Corporation, or other establishment, or official of the executive, legislative, or judicial branch of the jurisdiction.

Purchasing Agency

Any governmental body which is authorized to enter into contracts.

Contractor

Any individual or business having a contract with a governmental body to furnish goods, services, or construction for an agreed-upon price.

Diversity Suppliers

Business entities including individuals that have challenges in becoming successfully established and gaining economic representation proportional to their demographic representation. Usually applicable to certain ethnic groups as well as the physically challenged and women-owned businesses. (ISM, 2000)

Contract Status Code

Canadian A code assigned to each milestone in the procurement process.

Cost, Labour

Canadian An expenditure for manual labour measured by the amount paid.

Crown Property

Canadian Property to which title is vested in the Crown. This includes Crown-owned property usually in the care, custody and control of contractors. Examples of Crown property usually in the custody of contractors are: capital assistance assets, special production tooling, special test equipment, equipment undergoing repair and overhaul, contract issue materials and equipment, work-in-process and finished work to which title is vested in the Crown as a result of progress payments, accountable advances or by any other means. (Summit Magazine, On-Line)

Performance Requirement

Canadian Requirements that define what the product or service is to do.

ECP

Canadian See Environmental Choice Program.

Contract Original Amount

Canadian The original award value for a contract.

Normative Economics

Considers "what ought to be"—value judgments, or goals of public policy. (Schiller, 2000)

Certification of Cost and Pricing Data

Contractor certification that to the best of the contractor's knowledge and belief, the cost or pricing data submitted was accurate, complete and current as of a mutually determined date prior to the date of the pricing of any contract, change order or modification.

Multiple Award

Contracts awarded to more than one supplier for comparable supplies and services. Awards are made for the same generic types of items at various prices. Usually the result of aggregated line item bids of similar product categories.

Hybrid Contracts

Contracts containing both services and product and are usually governed by the "predominant purpose" doctrine in order to determine whether the contract is one for goods or services.

Futures

Contracts for immediate purchase or sale of something to be delivered at a definite time in the future at a specified price. Used as a hedging device against market price fluctuations or unforeseen supply shortages. Also see Forward Contract and Spot Price.

Freedom of Information Acts

Designed to make government bodies more open (by requiring release of information collected by the public body) and, at the same time, more accountable (by controlling what information may be released). Also known as Freedom of Information Legislation (FOIL). (www.american-purchasing.com/glossary)

Material/Materiel Forecasting

Estimating future needs to avoid stock outs or oversupply.

Cultural Diversity

Ethnic, gender, racial, and socioeconomic variety in a situation, institution, or group; the coexistence of different ethnic, gender, racial, and socioeconomic groups within one social unit. (Websterís New Millenium Dictonary of English)

Outsourcing of Non-Core Activities

Evaluating purchasing and supply activities in order to place non-core activities with outside contractors or suppliers. A form of "second-level" cost savings. (Crimi, Kauffman, Inside Supply Management Magazine, March 2003)

Inspection

Examining and testing supplies or services to determine whether they conform to contract requirements. Comparing material and services received to the specifications. The buyer's legal right to inspect goods is stated in the Uniform Commercial Code (U.C.C.), Section 2-513(1).

Institute of Supply Management (ISM)

Founded in 1915, ISM's mission is to lead the supply management profession through its standards of excellence, research, promotional activities, and education. ISM's membership base includes more than 45,000 supply management professionals with a network of domestic and international affiliated associations. ISM is a not-for-profit association that provides opportunities for the promotion of the profession and the expansion of professional skills and knowledge. Formerly National Association of Purchasing Management (NAPM).

Fiscal Policy

Government influence on the amount of savings and expenditures; accomplished by altering the tax structure and by changing the levels of government spending. The Federal Reserve impacts fiscal policy by their actions to raise or lower interest rates and to monitor and control inflation. (Schiller, 2000)

Best and Final Offer (BAFO)

In a competitive negotiation, the final proposal submitted after negotiations are completed that contains the proposer's most favorable terms for price, services and products to be delivered. Sometimes referred to as BAFO and utilized during the Request for Proposal method of procurement.

Option to Extend

In accordance with contract terms, an option that allows a continuance of the contract for an additional period of time. Also see option to renew.

Legal Standing

In common law, and under many statutes, standing is the ability of a party to demonstrate to the court sufficient connection to and harm from the law for action challenged to support that party's participation in the case. Also reference Interested Party.

Confidential Information

Information, such as trade secrets or test data, which is made known only to those who need to know, only because of a compelling reason. Such information must be protected and is not a matter of public knowledge. Best practice would require that such information be clearly identified and labeled. Also see Proprietary Information and Trade Secret. (Harney, 1992)

Automated Data Processing (ADP)

Input, storage, and manipulation of information using computer systems, and the discipline which deals with related methods and techniques. Also called Electronic Data Processing.

One Hundred Percent (100%) Inspection

Inspection of every unit of product, each of which is accepted or rejected individually for the characteristics inspected.

Reduced Inspection

Inspection under a sampling plan using the same quality levels for normal inspection, but requiring a smaller sample.

Fidelity Bond

Insurance against losses due to the dishonesty of an employee.

Discount-From-List

Mathematical calculation to determine the buyer's price from a manufacturer's price list. On non-automated term contracts the manufacturer must submit a printed price list/catalog from which prices are to be figured. Prices in this category cannot be increased for a specified time after the contract begins, unless otherwise noted in the contract.

MBE

Minority Business Enterprises. Also see Economically Disadvantaged Individuals, Small Disadvantaged Business, Historically Underutilized Business (HUB), and Women-Owned Business (WBE).

Bribe

Money or favor given or promised in order to influence the judgment or conduct of a person in a position of trust.

Fiduciary Funds

Monies used to account for assets held in a trustee or agency capacity for others and which cannot be used to support the agency's own programs.

Apparent Authority

Occurs when a principal allows or permits a person to function in a capacity that creates the illusion that the person is an authorized agent of the principal. Also see Actual Authority. (Garner, 2004)

Cancellation of a Contract

Occurs when the authority has determined that the contract should be terminated for cause, default or convenience. Also see Termination for Convenience and Termination for Default.

Line Function

One of the three identified functions of a procurement department. This function includes its own authorized work to issue bids, requests for proposals, and contracts with vendors in order to obtain the necessary materials and services in support of agency operations; the procurement department is the primary point of contact when doing business with the agency under the principles of the law of agency; functions as a specific department within the agency that has its own budget and organizational hierarchy and appears as an individual department on the agency's organizational chart with other departments such as personnel, finance, police, fire, etc. Also see Staff Function and Service Function.

Contingency Planning

Planning that applies to issues resulting from a crisis, emergency or interruption of a critical service.

Federal Trade Commission Act (U.S. Law)

Passed by the U.S. Congress in 1914, this Act established the Federal Trade Commission as an independent regulatory agency of the Federal Government empowered to enforce the Clayton Antitrust Act and the Robinson-Patman Act.

Cross-Organizational Synergies

Proactive activities by supply management in order to identify opportunities to share best practices or coordinate sourcing programs to reduce costs, usually accomplished through cross-functional teams.

Environmental Compliance

Procurement decisions that impact the environment such as energy consumption, recycled products and waste disposal. Governmental buying decisions should also incorporate environmental and societal costs and benefits not contained in the purchase price of a product or service, such as the pollution produced or avoided when using a particular product or service. (Miller, 2006)

Legal Barriers

Refers to the effect that existing laws, statutes, or ordinances may have on governmental decision making or the lack thereof. (Business, 2002)

Gross Income

Revenues minus the cost of goods sold required to generate the revenues. (Schiller, 2000)

Order Picking

Selecting and withdrawing goods or components from a store or warehouse of inventory system to meet production requirements or to satisfy customer orders. Also see Picking. (Business, 2002)

Price prevailing at the Date of Shipment

Sales agreement that states the selling price may be modified by the vendor/seller between the order and the shipment dates. Also see Open End Pricing and Price at Time of Delivery.

DAR

See Defense Acquisition Regulations.

Price Competition

Selection of a contractor, from two or more vendors, based either solely on prices submitted, or on the final prices resulting from a negotiation with all contractors within a competitive range.

Consulting Services

Services of an advisory nature required to support policy development, decision-making, administration, or management of a business or public entity; generally provided by individuals or organizations who possess specific knowledge, technical skills or unique abilities not usually available in-house or from within the entity. Also see Consultant.

Professional Services

Services rendered by members of a recognized profession or possessing a special skill. Such services are generally acquired to obtain information, advice, training, or direct assistance.

Corporate Stock

Shares of ownership in a corporation. (Business, 2002)

Quantity Demanded

The amount of a product consumers will purchase at a specific price. An economic impact on pricing that is relational to supply and demand. (Schiller, 2000)

Quantity Supplied

The amount of a product producers will produce and sell at a specific price. Consumer demand influences producer production and pricing. (Schiller, 2002)

National Income

The amount of aggregate income earned by suppliers of resources employed to produce GNP; net national product plus government subsidies minus indirect business taxes. (Schiller, 2000)

Capacity

The amount of goods and services that an organization can produce or provide in a given time interval. (Schiller, 2000)

Mean

The arithmetic average. The average value of a set of numbers. (Business, 2002)

Entrepreneurship

The assembling of resources to produce new or improved products and technologies. (Business, 2002)

Acceptance of Offer

The agreement of the vendor to deliver the goods ordered for the price offered.

Mitigation

The alleviation, reduction, abatement or diminution of a penalty or punishment imposed by law. (Blackís Law Dictionary, 1002, 1990)

Prime Contractor

The business entity that has entered into a contract with a jurisdiction.

Privity of Contract

The direct contractual relationship existing between parties that allows either party to enforce contractual rights against the other and seek remedy directly from the other party with whom the relationship exists.

Accounting Cycle

The four-step procedure of an accounting system: examining source documents, recording transactions in an accounting journal, posting recorded transactions, and preparing financial statements. (Business, 2002)

Production

The making of goods available for use; total output especially of a commodity or industry. (Schiller, 2000)

Equilibrium Price

The market clearing price at which the quantity demanded by buyers equals the quantity supplied by sellers. The point of intersection on a supply and demand curve. (Schiller, 2000)

Remedy

The means by which a contractual right or obligation is enforced or the violation of such a right is prevented, reduced or compensated. Remedies may be defined in the contract, by agreement between the parties such as by accord and satisfaction, by arbitration, by operation of law or judicial remedy such as by action or suit.

Bid Opening

The official process in which sealed bids are opened, usually in the presence of one or more witnesses, at the time and place specified in the invitation for bid. The amount of each bid is recorded and bids are made available for public inspection. It may be open to the public.

Cost, Original

The original cost for which a good or service was acquired; for equipment purchases it may include shipping, installation and other associated costs.

Public Purchasing

The processes utilized by public entities for the procurement of construction, supplies, materials and services at the most favorable overall total cost through the utilization of accepted practices that encourage competition, including best value and quality considerations, thus ensuring that the public good is best served.

Hypertext Markup Language (HTML)

The standard for publishing hypertext on the Web. It is a mark-up language not a programming language that uses tags to structure text into headings, paragraphs, links and lists. It tells a Web browser how to display text and images. (Jansen, 2002)

In Bond

The state of goods that are manufactured, stored, or transported under the care of a bonded agency until duties or taxes are paid on the goods.

Risk Analysis

The stated findings of a factor, element or cause involving uncertain harm or loss.

Life Cycle Cost (LCC)

The total cost of ownership over the life span of the asset. A procurement technique that takes into account operating, maintenance, the time value of money, disposal and other associated costs of ownership as well as the residual value of the item.

Landed Item Cost

The total external item-related costs incurred by the purchaser in obtaining an item from the vendor; i.e. sum of the individual directly-related costs such as the expenses (if any), taxes, custom duty fees, etc. This is especially helpful to the agency in determining its total cost to procure that specific item. It does not include any internal agency costs such as salary and overhead expenses, etc.

Procurement Lead Time

The total lead time required to obtain a purchased item. Includes purchasing lead time, vendor lead time, transportation time, receiving and inspection.

Net Income

The total profit (or loss) after all expenses including taxes have been deducted from revenue; also called net earnings.

Maintenance

The upkeep of property that neither adds to its permanent value nor prolongs its intended life appreciably, but instead keeps it in an efficient operating condition.

Deficit Spending

The use of borrowed funds to finance government expenditures that exceed tax revenues. (Schiller, 2000)

Computer-Aided Design (CAD)

The use of computer systems to assist in the design and development of products. (Jansen, 2002)

Computer-Aided Manufacturing (CAM)

The use of computer systems to design, plan and control manufacturing processes. (Burt, Dobler, Starling, 2003)

Monetary Policy

The use of money and credit controls to influence macroeconomic outcomes. The Federal Reserve is the chief monetary policy setter in the United States. (Business, 2002)

Exclusive Distribution

The use of only a single retail outlet or distributor for a product in each geographic area. (Business, 2002)

Pull Strategy

The use of promotion to create consumer demand for a product so that consumers exert pressure on marketing channel members to make the product available.

Jawboning

The use of verbal encouragement or discouragement by political and economic leaders to achieve a targeted outcome or a particular result. It is an attempt to change public sentiment and move the economy in a certain direction without implementing formal economic policies. (Schiller, 2000)

Express Contract

Those contracts, either written or oral, in which all of the formal elements for contract creation exist.

Discretionary Fiscal Spending

Those elements of the federal budget not determined by past legislative or executive commitments. (Nash, Schooner, OíBrien, 1998)

Core Competencies

Those functions of an organization in which the business is most competent. The critical areas of expertise within the organization. (Business, 2002)

Free on Board (F.O.B.) Destination

Title changes hands from the supplier to the public entity at the destination of the shipment when the public entity signs for the goods; the supplier owns the goods in transit, assumes responsibility for carrier selection, and files any claims for damages incurred during this period. It does not address the responsibility for the cost of transportation (freight charges) which must be specified with the inclusion of additional language. See further definitions below which must state who is responsible for freight charges.

Free on Board (F.O.B.) Destination, Freight Collect and Allowed

Title passes at destination, and buyer pays the freight and deducts it from the seller's invoice.

Free on Board (F.O.B.) Origin, Freight Prepaid and Allowed

Title to the goods passes from the supplier to the agency at point of origin and supplier pays and bears the freight expense. Agency owns goods in transit and files claims, if any.

Allocation of Cost

To assign or charge an item of cost to one or more cost objectives, either as a direct cost or as a share of an indirect cost pool, based on the relative benefits received or other equitable relationship.

Job Enrichment

To include various motivational factors, such as opportunity for achievement, recognition, responsibility, and advancement into a job. An attempt by management to make a job more interesting and exciting. (Ferrell, 2002)

Haggle

To negotiate a price with a buyer or seller by the gradual raising of offers and lowering of asking prices until a mutually agreeable price is reached. (Business, 2002)

Bulk Purchasing

To purchase in volume with the expectation of reducing the unit price of an item. To aggregate quantities of material in hope of achieving deeper discounts and better pricing. Also see Bundling.

Follow-Up

To review the status of a transaction; in connection with purchasing transactions.

Attach

To take legal possession.

Guarantee

To warrant or insure performance or quality. A warranty. A written assurance attesting to the quality or durability of a product.

Fair Use

Use of a work that is not an infringement of a copyright because it is used for the purpose of criticism, comment, news reporting, teaching, scholarship, or research. (Nash, Schooner, OíBrien, 1998)

Equal or Approved Equal

Used to indicate that an item may be substituted for a required item if it is equal in quality, performance and other characteristics. (NASPO, 2001)

Requirements Analysis

Value analysis applied to the writing of specifications to eliminate products or services that are not cost effective.

Ex Dock

Vendor bears cost and responsibility for placing goods on the dock at the port of destination; all costs from that point are on the buyer.

Ex Warehouse

Vendor makes delivery at port of origin, and all risks and costs from that point on are the purchaser.

Gross Weight

Weight of an item including the container and the packing materials.

Present Value

The value in current dollars of work, goods and services to be performed or supplied in the future. Used frequently in long term lease and rental transactions. (Business, 2002)

Bill of Exchange

A document drawn by the seller on the buyer, instructing the buyer to pay the amount of the purchase under specified circumstances. (ISM, 2000)

Request for Comments (RFC)

A document generated prior to an authorized procurement in order to request feedback from the contracting community or potential proposers/bidders, to seek information about a product or service in order to assist in the finalization of technical specifications, design specifications, or a statement of work. Also see Pre-Solicitation Conference and Request for Information (RFI). (ISM, 2000)

Letter of Credit

A document issued by a bank or lending institution authorizing the bearer to draw a specific amount from the bank or its agents. A letter extending credit up to a given amount at a certain affiliated bank for a person who has paid or guaranteed that amount to the issuing bank. This may be considered in lieu of a Performance Bond. (ISM, 2000)

Export Permit

A document issued by the government of the exporting country granting an exporter permission to export the merchandise described in the document.

National Institute of Municipal Law Officers (NIMLO) Model Code

A document prepared by the National Institute of Municipal Law Officers which includes standards against which a jurisdiction can compare its procurement laws.

Certificate of Compliance

A document submitted by a vendor or manufacturer that provides the buyer with a written assurance that the goods or services delivered fulfill the contractual requirements.

Purchasing Manual

A document that describes rules, regulations, policies and procedures to be followed by the purchasing organization and the agencies/departments it serves.

Packing List (Slip)

A document that itemizes in detail the contents of a particular package or shipment. It is provided to the carrier by the shipper and accompanies the shipment.

Certificate of Non-Collusion

A document that may be required, usually by public purchasers, affirming that the bid/offer is made freely and without collusion with another vendor. Sometimes included in the template of the invitation for bids.

Prospectus

A document that sets out corporate and financial information for prospective investors. May be submitted by a company in response to a due diligence search by purchasing in an attempt to determine financial responsibility. (Business, 2002)

Receiving Report

A document used in the receiving and inspection process that identifies the item, quantity, and date of delivery. It may also note any discrepancies or problems.

Request for Qualifications (RFQu)

A document which is issued by a procurement entity to obtain statements of the qualifications of potential development teams or individuals (i.e. consultants) to gauge potential competition in the marketplace, prior to issuing the solicitation.

Bureau of Labor Statistics

A federal agency of the U.S. Labor Department that tracks all aspects of the labor market such as employment projections, unemployment numbers, employee compensation reports and a host of other labor related information. For more information:

Cooperative Agreement

A federal grant to support a joint federal/state program in which the grantor (Federal Government) and the grantee (state government) share in the management decisions about the funded activity.

Energy Star

A federal standard applied to office equipment for the purpose of rating the energy efficiency of the equipment. Energy Star rated-computers, monitors, and printers save energy by powering down when not in use, resulting in a reduction in electrical bills and pollution levels. (Miller, 2006)

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. The term is also used by suppliers of material delivered in a variety of returnable containers, such as gas cylinders, rail containers and equipment.

Bid File

A file containing the individual bids from all vendors solicited by the Invitation for Bids (IFB).

Portable Document Format (PDF)

A file format developed by Adobe Systems for representing documents in a manner that is independent of the original application software, hardware and operating system used to create the document. A PDF file can describe documents containing any combination of text, graphics, and images in a device independent and resolution independent format. (Jansen, 2002)

Factor

A finance company to which businesses sell their accounts receivable—usually for a percentage of the total face value. (Schiller, 2000)

Hypothecate

A finance, banking and accounting reference to the use of property as collateral for a loan. (Schiller, 2000)

Certified Check

A financial instrument whose value is guaranteed by the financial institution upon which the check is drawn. May be required in lieu of a bid bond as a form of bid guarantee.

Cash Basis Accounting

A financial managing tool that records income when cash is actually received, and records expenses when cash is paid out. Cash basis accounting does not conform with Generally Accepted Accounting Principals (GAAP) and is generally not considered a good financial management tool because there is a time differential between recording the cause of the action (sale or provision of a service) and its results (payment or receipt of money). Also see Accrual Basis Accounting.

Payment Bond

A financial or contractual instrument, issued by a surety that guarantees that subcontractors will be paid for labor and materials expended on the contract. Acceptable forms of payment bonds may include: cashier's check, certified check, or irrevocable letter of credit issued by a financial institution; a surety or blanket bond; United States Treasury bond; or certificate of deposit. Also known as Labor and Materials Bond.

Earnings Per Share

A financial ratio calculated by dividing net income after taxes by the number of shares of common stock outstanding. (Business, 2002)

Debt-To-Owners' Equity

A financial ratio calculated by dividing total liabilities by owners' equity. (Schiller, 2000)

Income Statement

A financial report that shows an organization's profitability over a period of time- months, quarter or year. (Business, 2002)

Capital Budget

A financial statement that estimates expenditures for major assets and an entities long-term financing needs. Governmental capital budgets generally reflect large asset expenditures for equipment and buildings over certain dollar thresholds. (Nash, Schooner, OíBrien, 1998)

Budget

A financial statement that projects income and/or expenditures over a specified period, sometimes referred to as a fiscal year. Governmental budgets generally are classified as operating budgets or capital budgets.

Balance Sheet

A financial summary of the dollar amounts of a firm's assets, liabilities, and owner's equity accounts at the end of an accounting period. (Business, 2002)

Federal Trade Commission (FTC)

A five-member committee charged with the responsibility of investigating illegal trade practices and enforcing anti-trust laws. (www.ftc.gov)

Fixed-Price Contract with Price Redetermination

A fixed-price contract that provides a firm fixed price for an initial period of performance, after which the price may be recalculated for subsequent periods of performance based on experience during the initial period.

Fixed-Price Incentive

A fixed-price contract that provides an incentive to reduce cost by allowing for the adjustment of profit and establishing the final contract price by a formula based on the relationship of final negotiated cost to total target cost.

Fixed-Price Level-of-Effort

A fixed-price contract that requires the contractor to provide a specified level of effort for a specified period of time for work which can only be described in general terms.

Cost Estimate

A forecast amount as distinguished from an actual outlay, based upon related cost information available at the time and anticipated future conditions. The process of calculating the probable cost of a job.

Delphi Method

A forecasting method that utilizes a panel of experts who are polled repetitively in writing or over the Internet to develop a consensus prediction of future anticipated conditions. (Business, 2002)

Non Excusable Delay

A foreseeable delay caused by either party to the contract which often occurs as a result of financial difficulties, lack of equipment and facilities, lack of materials or lack of knowledge .

Dispute Panels

A form of ADR (alternative dispute resolution) which uses one or more neutral or impartial individuals who are available to the parties as a means to clarify misperceptions, fill in information gaps, or resolve differences over data or facts.

Partnership

A form of business organization defined by the Uniform Partnership Act as "an association of two or more persons who carry on as co-owners of a business for profit." Each partner is liable for losses to the extent of his or her personal assets. (Ferrell, 2002)

Profit Sharing

A form of compensation whereby a percentage of company profits is distributed to the employees based on a variety of factors such as longevity, company status, etc. (Business, 2002)

Offshoring

A form of corporate downsizing and outsourcing, where manufacturing and other business processes are moved abroad in order to improve profit by taking advantage of lower labor costs and other expenses which may be more favorable in the host country. (Business, 2002)

Class Rate

The transportation charge applicable for groups of similar commodities shipped by common carrier if no specific commodity rate, or exception, has been established. The most expensive LTL (Less than truck load) freight rate. Also see Commodity Rate, Uniform Freight Classification and National Motor Freight Classification.

Customs

Taxes, tolls, or duties levied upon goods which pass a frontier: generally an import duty. A customs duty is a tariff or tax on the import of or export of goods.

Retraining

Techniques used to prepare the employee for revisions in current processes and procedures or to reinforce existing skills and abilities.

Matériel

Term commonly used by warehouse environments and the military to refer to equipment, apparatus and supplies used by an organization or institution. . (Merriam Webster). (ISM, 2000)

Organizational (Corporate) Culture

The companies shared values, beliefs, traditions, philosophies, rules and heroes. (Business, 2002)

Deliverable

The completion of a milestone or the accomplishment of a task. Deliverables are used to measure successful performance. Also see Milestones. (Harney, 1992)

Mode

The type of average that indicates the most frequent instance of a number or happening. The number in a distribution that occurs the most frequently. (Business, 2002)

International Federation of Purchasing and Supply Management (IFPSM)

The union of 42 National Purchasing Associations worldwide. Within this circle, about 200,000 purchasing professionals can be reached. It is a non-profit organization registered in Aarau, Switzerland. (www.ifpmm.org)

Packaging

The use of wrappings, cushioning materials, containers, markings, and related techniques to protect items from deterioration, prevent loss or damage, facilitate handling and identify the item packaged.

Human Capital

The knowledge and skills possessed by the workforce. The health, strength, education, training, and skills which people bring to their jobs. (Schiller, 2000)

Direct Labor Hours

The labor portion of a contract that denotes the time spent working solely to satisfy the specific requirements of the contract as detailed in the specifications or statement of work.

Law of Agency

The law of agency states that an agent is someone who acts on behalf of a principal. A product of common law that focuses not only on the creation of agent relationships but also the liability for losses suffered by others who deal with agents. There are two ways to create an agency relationship - by agreement between principal and agent or by law. Also see Agent, Buyer and Principal.

Chain of Command

The line of authority that extends from the highest to the lowest levels of an organization. A hierarchical representation of the organization. May be depicted in an organizational chart. (Business, 2002)

Opportunity Cost

The most desired goods or services that are forgone in order to obtain something else. The next best alternative that must be given up when a choice is made.

Cash Flow

The movement of money through an organization over a daily, weekly, monthly, or yearly basis. The management and monitoring of the cash flow within a business is critical to its financial well being. (Business, 2002)

Free Rider

The name given to individuals who reap direct benefits from someone else's purchase or consumption of a public good. (Schiller, 2000)

Microeconomics

The study of individual behavior in the economy, of the components of the larger economy such as consumers or individual households. Also see Macroeconomics.

Performance

The technical, operational, and quality characteristics of the end item.

Metric

The term given to the measurement of performance. An analytical application of measurements that allows comparison of performance standards.

Payment Terms

The terms applicable to the payment including any discount. Also see Cash Discount, Discount, and Prompt Payment Discount.

Payback Period

The time required to recover an investment through net cash flow.

Board of Directors (BOD)

The top governing body of a corporation, the members of which are elected by the stockholders. (Business, 2002)

Gross Domestic Product (GDP)

The total market value of all final goods and services produced within a nation's borders in a given time period. (Schiller, 2000)

Net Present Value (NPV)

The total present value (PV) of a time series of cash flows. It is a standard method for using the time value of money to appraise long-term projects. Used for capital budgeting, and widely throughout economics, it measures the excess or shortfall of cash flows, in present value terms, once financing charges are met. In short, it is today's value of future cost and benefits.

Market Demand

The total quantities of a good or service people are willing and able to buy at alternative prices in a given time period; the sum of individual demands. (Schiller, 2000)

Market Supply

The total quantities of a good that sellers are willing and able to sell at alternative prices in a given time period. (Schiller, 2000)

Design-Bid-Build

The traditional delivery method for construction projects where design and construction are sequential and contracted for separately with two contracts. (ISM, 2000)

Redistribution

The transfer of control, utilization, or location of material between organizations or activities.

Conversion

The transformation of materials into economic goods and services. Manufacturing is a conversion activity. (Schiller, 2000)

Affiliate

1. A branch or unit of a larger organization. 2. A company effectively controlled by another or associated with others under common ownership or control.

Agency

1. A legal relationship that exists between two parties by which one (the agent) is authorized to perform or transact specified business activities for the other (the principal). 2. An administrative or organizational division of a government.

Accounts Receivables

Amounts that are due and payable to a firm as a result of sales to its customers. An accounting function that is responsible for the collection and deposit of payments received on open customer accounts for goods and services sold.

Accrual Basis Accounting

An accounting system that encumbers or sets aside funds for a specified future expenditure. Using this system, transactions are recognized at the time they are incurred, as opposed to when cash is received or spent. This method of accounting is the most commonly used, especially among governmental entities. All agencies in the United States and Canada require an encumbrance and a receipt before payment can be authorized by demanding procedural separation between the ordering of goods and services; encumbrance of funds; and authorization of payment. Also see Cash Basis Accounting.

Agreement

An understanding, usually in writing, between two or more competent parties, under which one party agrees to certain performance as defined in the agreement and the second party agrees to compensation for the performance rendered in accordance with the conditions of the agreement. Agreements and contracts are sometimes used synonymously. Generally agreements are approved by an attorney "as to form" and legal sufficiency prior to execution. Also see As To Form. (Harney, 1992)

Act of God

An unforeseen occurrence beyond human control, caused by nature, such as a tornado or hurricane. Not attributable to the negligence of the contractor. Also see Force Majeure. May be cause for contract termination and usually appears in the general conditions or boilerplate section of the solicitation. (Harney, 1998)

Air Freight Forwarder

As described in FAR 47.401: An indirect air carrier that is responsible for the transportation of property, from the point of receipt to the point of destination, and utilizes for the whole or any part of such transportation the services of a direct air carrier or its agent, or of another air freight forwarder.

Accounting Equation

Assets equal liabilities plus owners' equity. (Schiller, 2000)

Accountable Item

Canadian Any item of equipment separately accounted for upon acquisition, removal, transfer, sale, demolition, abandonment, or write-off.

Access to Information Program (ATIP)

Canadian Mandated by the Access to Information Act and the Privacy Act, this program gives any person in Canada the right to access information held in government records, subject to certain exceptions and limitations.

Agreement Type

Canadian Refers to the agreement under which the opportunity is governed, such as the Agreement on Internal Trade (AIT), North American Free Trade Agreement (NAFTA), etc. (Summit Magazine, On-Line)

Accountable Advance

Canadian The advance of funds provided for a specific purpose and chargeable to a specific appropriation.

Advanced Contract Award Notice (ACAN)

Canadian A notice of intent to solicit a bid and negotiate with a single firm. Other suppliers are not invited to bid on these requirements but can forward letters of intent indicating their interest before the closing date. Notice of bidding requests will then be solicited from letters of interest that have been received. (Summit Magazine, On-Line)

Alternate Service Delivery (ASD)

Canadian An agency's process of looking at new ways of delivering some of its services, frequently by contracting to suppliers for services that were previously provided in-house. (Summit Magazine, On-Line)

Ambiguity

Contract language that is capable of being understood to have more than one meaning. Such language is generally subject to more than one interpretation.

Adhesion Contracts

Contracts where the buyer is in no position to bargain effectively with the seller. In this context, the seller presents a "take it or leave it" contract for the purchase of goods with the intent to take advantage of the buyer's lack of knowledge and sophistication in order to get the buyer to enter into a patently unfair contract.

American National Standards Institute (ANSI)

Coordinates the development and use of voluntary consensus standards in the United States and represents the needs and views of U.S. stakeholders in standardization forums around the globe. The Institute oversees the creation, promulgation and use of thousands of norms and guidelines that directly impact businesses in nearly every sector. ANSI is also actively engaged in accrediting programs that assess conformance to standards. (www.ansi.org, 2006)

Allowable Costs

Costs that are recognized by law, regulation, or the contract. (Harney, 1992) A cost that is reasonable.

Allocable Costs

Costs that are specifically related to the contract. (Harney, 1992) A cost that can be assigned or charged as an item of cost to one or more cost objectives, in accordance with the terms of the contract and applicable laws and regulations.

American Bar Association (ABA)

With more than 400,000 members, the ABA provides law school accreditation, continuing legal education, legal information, programs to assist lawyers and judges in their work and initiatives to improve the legal system for the public.

Chattel

An article of personal, movable property.

Contract Number

An alpha-numeric code which uniquely identifies a contract.

Management Audit

An audit conducted to determine the degree of management efficiency and effectiveness.

Net Weight

The actual weight of the contents of a container or the cargo of a vehicle.

Royalty (Royalties)

Compensation for the use of property.

Groupware

Software that allows individuals to share documents and work collaboratively. (Jansen, 2002)

Demand Level

The amount of inventory required for a given item.

Encoding

The process of rewriting or transferring media sources from one format to another. (Jansen, 2002)

Free Trade

The uninhibited flow of goods and services across international borders.

Implied Warranty of Fitness for a Particular Purpose

A warranty that applies to an instance where the seller, at time of contracting, has reason to know that the buyer wants the goods for a particular purpose and the buyer is relying on the seller's skill or judgment to select or furnish suitable goods. Example: A sawmill operator described in detail the mill's hydraulic system and asked a major oil company's representative to recommend proper oil. After some time, the operator discovered that the oil was not the proper product and was the cause of the hydraulic system's frequent breakdowns. The oil company's representative had to pay damages to the mill operator due to a breach of the implied warranty of fitness for a particular purpose.

Collaborative Learning System

A work environment that allows problem-solving participation by all team members. Used by procurement managers to obtain a more participatory work environment. (Business, 2002)

Independent Contractor

A worker hired by a business or public entity to accomplish a given result who has the right to control or direct his or her own work as to the details and means by which the desired results are achieved.

Non-Waiver Agreement

A written agreement signed by the parties to the agreement that they understand the agreement in its entirety and nothing shall be deemed to constitute a waiver of the agreement.

Claim

A written assertion or demand, by one of the parties to a contract, which seeks, as a contractual right, payment of money, adjustment of contract terms, or other relief, for injury, loss, or damage arising under or relating to the contract.

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. Also see Implied Warranty.

Notice of Award

A written notification from the public entity to the successful bidder, or offeror stating that there is an award of a contract in accordance with a bid or proposal previously submitted, and that effective with receipt the vendor or contractor shall proceed with performance; allows work to start while contract is printed and readied for distribution.

Protest

A written objection by an interested party to a solicitation or award of a contract with the intention of receiving a remedial result. In order to be considered, protests must be filed in accordance with agency policy and procedure within established time limits. Also see Bid Protest (pre-award), Award Protest (post-award) and Dispute. (Harney, 1992 - modified)

Draft

A written order drawn by a creditor directing a debtor to pay a sum of money to a third party or to the bearer.

Cost Avoidance

Actions taken to avoid having to pay some sort of cost - this could be financial (i.e. by negotiating an extension to current prices when the entity becomes aware that price increases are likely to occur) or in resource terms (i.e. the use of cooperative arrangements mean the organization "avoids" the time and work involved in completing a bidding or contracting exercise on its own behalf). Well defined specifications and value analysis will help to avoid extraneous costs. (Spikes Cavell, 2011). (Business, 2002)

Job Order Contracting (JOC)

Based on a competitively bid indefinite delivery-indefinite quantity (IDIQ) contract between a facility owner and a construction contractor. The contract typically has a base year with 2 to 4 option years. The contract sets parameters such as the types of work that can be done, location of work, design criteria and maximum amount of work to be awarded. The contract also has a unit-price book (UPB) that establishes a unit price to be paid for each of a multitude of construction line items. The contract's price is put in terms of a coefficient, which is a multiplier that covers the contractor's overhead and profit as well as any adjustments between the UPB and actual local prices. (Burt, Dobler, Starling, 2003)

Debt Capital

Borrowed money obtained from loans of various types generally used to capitalize a business and allow it to meet operating expenses. (Business, 2002)

Horizontal Training

Broad-based training to develop employee diversification and focus on special skills. Training that provides experiences with those who can share the corporate knowledge base needed to continue the evolution of the profession. Also known as cross training.

Facilities

Buildings, land, equipment and any tangible capital asset, wherever located, whether owned or leased.

Bid

Canadian A tender, proposal or quotation submitted in response to a solicitation from a contracting authority. Also see Tender and Solicitation.

Retained Earnings

Earnings after expenses and taxes that are reinvested in the assets of the firm and belong to the owners in the form of equity. (Business, 2002)

Liquidated Damages

Damages paid usually in the form of a monetary payment, agreed by the parties to a contract which are due and payable as damages by the party who breaches all or part of the contract. May be applied on a daily basis for as long as the breach is in effect. May not be imposed as an arbitrary penalty. The key to establishing liquidated damages is reasonableness. It is incumbent upon the buyer to demonstrate, through quantifiable means, that damages did exist. Also see Damages and Penalty Charge.

Long-Term Liabilities

Debts that will be repaid over a number of years, such as long-term loans and bond issues. (Business, 2002)

Project Manager

Designated individual within the agency to administer a specific task or contract.

Net Price

Price after all discounts, rebates, etc. have been allowed.

Mistake of Fact

A misunderstanding of the facts or flawed perception of the real state of affairs, which may be remedied by the Court.

Bonded Warehouse

1. A warehouse under bond to the government for payment of customs duties and taxes on goods stored or processed there.2. A warehouse insured against damage or loss to goods stored there.

Monopsony

A market in which there is only one buyer. (Schiller, 2000)

Ocean Bill of Lading

A bill of lading used by ocean carriers for marine transportation of goods.

Delivery Date

A single date, phased date and/or date of a contract.

Disposable Income

After tax income of households; personal income less personal taxes. (Schiller, 2000)

Counteroffer

An adjusted proposal made in response to another offer, by the one who rejected the initial offer.

Project Duration

Canadian Duration of time from project announcement to completion.

Performance Record

Documentation of a vendor's past history regarding reliability, on-time delivery, quality issues, and other data that allows the buyer to evaluate overall performance.

Open Market Operations

Federal Reserve purchases and sales of government bonds for the purpose of altering bank reserves. (Schiller, 2000)

Line Item Budget

Fixed budgets with monies appropriated for a particular period, usually one year, which can be tied to a specific project or item. This money is specifically allocated to that project or item and cannot be spent on other uses. They are easy to understand and are designed to maximize control and ensure financial accountability.

By-Law

Most commonly refers to a city or municipal law or ordinance, passed under the authority of a charter or provincial/state law specifying what things may be regulated by the municipality. Also see Ordinances.

Deming, W. Edwards

Most influential quality guru of the last century. Best known for his 14 points summarizing the philosophy of quality management he developed while working with Japan following WWII. (Burt, Dobler, Starling, 2003)

Binding Arbitration

Specific to ADR, it involves the presentation of a dispute to an impartial or neutral individual or panel for issuance of a binding decision. The parties usually have the ability to decide who the individuals are that serve as arbitrators. Also see Arbitration.

Liquidity

The ability of an asset to be converted into cash. (Schiller, 2000)

Inflation Rate

The annul percentage rate of increase in the average price level. (Schiller, 2000)

Life Expectancy

The number of years during which the asset is expected to remain in

Contracting Out

The process of having services performed by private contractors rather than by employees of the public agency. Also see Outsourcing and Insourcing. (Harney, 1992)

Public Bid Opening

The process of opening and reading bids at the time and place specified in the solicitation and in the presence of anyone who wishes to attend.

Local Purchase Authority

Canadian Delegated authority to initiate and administer a purchase instrument.

Pricing Method

Canadian The method by which the contract price is determined, such as fixed, lot, cost plus, or target.

Industrial Revenue Bond

A bond that a private company uses to finance construction. (Business, the Ultimate Resource,2002)

Bid

(verb) To submit a bid response. By submitting a bid response, one person (the vendor/contractor) gives the buyer the legal power to create a contract with the responding seller in accordance with the bid response. Also see Tender and Solicitation.

Bond

1. A certificate reflecting a firm's promise to pay the holder a periodic interest payment until the date of maturity and a fixed sum of money on the designated maturity date. 2. An interest bearing security issued by governments.

Boilerplate

1. A common term used to refer to standard clauses used in a bid or contract document, often prepared as a preprinted insert. The general terms and conditions and instructions to bidders may be sections of a bid document's boilerplate. Also see General Terms and Conditions and General Provisions. 2. A colloquialism, used in procurement to identify standard terms and conditions incorporated in solicitations, contracts, or purchase orders and agreements which are often preprinted or incorporated by reference. Also see Terms and Conditions and General Provisions. (Harney, 1998)

Evaluation Committee/Team

1. A component of the Request For Proposal (RFP) process, whereby a committee is established to conduct interviews and negotiations during proposal evaluation for a specific product or service. Usually is composed of representatives from the functional area identified in the Statement of Work (SOW) and may be chaired by a procurement representative.2. A group of individuals established to conduct interviews and negotiations during proposal evaluation for a specific product or service. The teams typically represent the functional areas to be addressed in the discussions with a purchasing representative chairing the team. Also see Negotiation Team.

Dispute

1. A contractual disagreement or misunderstanding between contracting parties specific to contract provisions or language. Resolution is generally through pre-established administrative procedures or agreed upon alternative dispute resolution provisions.2. A difference between a contractor/seller and a buyer over a bid, solicitation or contract calling for appropriate administrative action with the intent of achieving a remedial or amicable resolution. When a resolution cannot be achieved the parties may resort to alternative dispute resolution or litigation. Also see Bid Protest and Protest.

Brand Name (or Equivalent) Specification

1. A descriptive form of specification whereby the commodity or product is described by a unique identifier specific to a particular seller or manufacturer that distinguishes it from its competition. It may be a name, term, symbol, design or any combination thereof.2. Using one or more manufacturers' brand name, with identifying model numbers, to describe the standards of quality, performance and other characteristics needed to meet the requirements of the solicitation, and which invites bids for equivalent products from any manufacturer. A requested single brand name tends to limit competition as vendors may not sell that particular brand and all other items will be excluded from further consideration. Also see Equivalent Items.

Discrepancy

1. A deviation between the contract or purchase order and the material or services received or delivered.2. A variance or difference in identification, condition, or quantity between the supplies or services delivered and the contracting documents.

Conveyance

1. A formal written instrument, usually called a deed, by which title or other interest in real property is transferred from one person to another.2. A means of transporting goods or people; a carrier such as a railroad, car, truck, vessel, barge, or airplane.

Market

1. A group of individuals who have a collective need, purchasing power, and the desire and authority to spend money on goods, services, and ideas. 2. A setting where buyers and sellers establish prices for identical or very similar products, and exchange goods and/or services.3. The aggregate forces (including economics) at work in trade and commerce in a specific service or commodity.

Due Process of Law

1. A guarantee, found in the Fifth and Fourteenth amendments of the U.S. Constitution, of fundamentally fair treatment by the Government. Substantive due process requires that no person be arbitrarily denied life, liberty or property by Government action. (Blackís Law Dictionary, 500-01, 1990).2. In government contracting, the issue of due process arises whenever a contractor claims that it has been denied a liberty or property right without proper procedures. (Nash, Schooner, OíBrien, 1998)

Quality Control (QC)

1. A manufacturing or service delivery process that incorporates tools and methodologies to provide assurance that the standards criteria specified will be delivered to the customer.2. The processes an organization uses to maintain its established standards.

Depression

1. A phase of the economic cycle which follows a recession.2. A drastic decline in the economy that includes high unemployment and wage stagnation. (Schiller, 2000)

Buy American

1. A policy or philosophy usually expressed in law or by executive order which mandates the purchase, at a certain dollar threshold, of products with a substantial percentage of American made components.2. A preference policy generally adopted by a governmental body that requires the purchase of American-made products or products with a defined percentage of American-made components

Ethics

1. A principle of right or good conduct or a body of such principles.2. A system of moral principles or values.3. A code of conduct. 4. Prohibits breach of the public trust by any attempt to realize personal gain by a public employee through conduct inconsistent with the proper discharge of the employee's duties. Strong ethical principles are required for public procurement personnel and both the National Institute of Governmental Purchasing (NIGP), Inc. and the Institute of Supply Management (ISM) have articulated ethical codes for their membership. The Universal Public Procurement Certification Council (UPPCC) has also published a Code of Ethics. Also see Integrity and Norm.

Capital

1. Final goods produced for use in the production of other goods, e.g. equipment, buildings.2. Wealth in the form of money or property.3. All buildings, equipment and human skills used to produce goods and services. (Schiller, 2000)

Re-consignment

1. A privilege extended to shippers allowing goods to be forwarded to a point other than the original destination without removal from the carrier and at the through rate from initial point to that of final delivery.2. A change, as in consignee, destination, or route, in the original billing of goods in transit.

Arbitration

1. A process by which a dispute between parties is presented to one or more disinterested parties (arbitrators or neutrals) for a decision whose decision the contending parties agree to accept with no further appeal process also known as binding arbitration. 2. The resolution of a conflict between parties by a party removed from the dispute. 3. A form of Alternative Dispute Resolution.

Material

1. A substance from which something is made or can be made such as building materials, paper, plastic, or other materials 2. A substance that has a particular quality such as a sticky material, explosive materials, genetic material. (Merriam Webster)

Fee

1. A sum of money paid for some service. 2. A charge or payment, usually for professional or technical services.

Grant

1. A transfer of Federal Government funds to state or local governments to support or stimulate programs authorized by federal or state laws, to accomplish objectives that are locally defined and managed under a broad federal or state program.2. The furnishing of assistance by a jurisdiction whether financial or otherwise, to any person to support a program authorized by law; does not include an award whose primary purpose is to procure supplies, services or construction.

Price

1. A value placed on an object or service provided by a seller to a buyer. 2. The money value of a unit of a good, service, or resource. 3. The total amount, in money or other consideration, to be paid or charged for a commodity or service; normally includes all costs (direct labor, overhead, materials) and profit or fee.

Depreciation

1. An accounting term which denotes a loss or decrease in the acquired value over a specified period of time. Usually applies to a loss of value of a fixed asset (capital equipment).2. The systematic transfer of the cost of a capital expenditure (an asset on the balance sheet) to expense (on the Income Statement).3. To diminish in price or value. 4. The consumption of capital in the production process. 5. The wearing out of plant and equipment over a specified time.

Blanket Order

1. An agreement to purchase a given quantity of specific goods over a specified period of time, usually one year.2. The contract generally establishes prices, terms, conditions, and the period covered, although no quantities are specified; shipments are to be made when and as required by the purchaser which in certain cases may be the end user. Also see Price Demand contract, Price agreement, Schedule contract, and Systems contract.

Asset

1. An amount recorded on a contractor's balance sheet representing the value of property owned by or debts owed to the contractor. Assets may be cash, near-cash, or non-monetary.2. The economic resources of a business. (Schiller, 2000)

Best Value

1. An assessment of the return which can be achieved based on the total life cycle cost of the item; may include an analysis of the functionality of the item; can use cost/benefit analysis to define the best combinations of quality, services, time, and cost considerations over the useful life of the acquired item. 2. A procurement method that emphasizes value over price. The best value might not be the lowest cost. Generally achieved through the Request for Proposal (RFP) method.

Quality Assurance (QA)

1. Assuring that quality performance criteria contained within the contract is provided during contract delivery. A contract administration process that assures technical performance that conforms to the quality performance criteria.2. Specific to technology, a planned and systematic pattern of all actions necessary to provide adequate confidence that the product optimally fulfills customers' expectations. When a new technology product is introduced it may involve an alpha and beta testing. Faults are identified and fixed before the product is released commercially. Also see Monitoring.

Award

1. Canadian The notification to a bidder or tenderer of acceptance of a bid or tender which brings the contract into existence.2. US The acceptance of a bid or proposal; the presentation of a purchase agreement or contract to a bidder or offeror.

Investment

1. Expenditures on new plant, equipment, and structures in a given period plus changes in business inventory.2. The purchase of something of value that will generate a return.3. The purchase of a security, such as a stock or bond. (Business, 2002)

General Ledger

A book or computer file with separate sections for each financial account. (Business, 2002)

Quality

1. In absolute terms, quality is a function of excellence, intrinsic value, or grade, as determined over time by society generally or by designated bodies in specialized fields.2. The composite of all attributes or characteristics, including performance, that satisfy a user's needs.3. Conformance with the stated requirements.

Real Property

1. Land and its permanently affixed buildings or structures.2. Any property which is not personal property.

Natural Resources

1. Land, forests, minerals, water, and other things that occur naturally without human intervention. 2. "Gifts of nature" that are used to produce goods and services. (Schiller, 2000)

Common Law

1. Law based on custom and usage, or confirmed by court decisions, rather than law created by the enactment of legislative bodies.2. The body of law created by court decisions rendered by judges; also known as case law or judicial law.3. Principles and rules by which rights and obligations in commercial transactions are determined, found in the Uniform Commercial Code (2) business law.

Goals

1. Observable and measurable end results that help to further define an organization by giving it direction; long term target and vision of the future. 2. A contract term often used in seeking MBE/WBE (Minority and Women Owned Business Enterprises) participation. A level of expectation that a vendor will make a good faith effort to achieve the pre-determined percentage of this participation upon award. Also see Contract Goals and Set-Aside.

Outsourcing

1. Occurs when an organization makes an informed decision to contract out a product, service or business process that was previously provided by internal (in-house) resources. 2. The transferring of manufacturing or other tasks and business processes to other companies and countries where labor and supplies are less expensive. 3. A form of privatization. Also see Contracting Out and Insourcing.

Purchaser

1. One who acquires goods, construction and services on behalf of an organization.2. A buyer agent who purchases on behalf of an organization.3. A procurer of goods, commodities, services, and construction.

Financial Interest

1. Ownership of any interest in, or involvement in any relationship which, or as a result of which, a person has recently received, or will receive, a sum of money (or something of value). 2. Holding any position in a business or any position of management.

Per Diem

1. Paid by the day; based on use or service by the day.2. A daily allowance for travel, meals, hotel, car rental, etc.

Consideration

1. Something of value which is exchanged by two parties and which serves to form or bind a contract.2. A type of mutual commitment that must exist to form an express contract.3. That which is given or promised in order to bring a binding contract into existence.

Freight

1. Supplies, goods, and transportable property being moved between locations.2. Compensation paid for the transportation of goods or for the use of a carrier.

Personal Property

1. Tangible or intangible property, other than real property.2. Movable property subject to ownership, with exchangeable value.

Reciprocity

1. The act of buying from or selling to another business in return for sales or purchases from the first organization.2. Illegal under the antitrust provisions of the Sherman Act.3. A reciprocal condition or relationship. 4. A mutual or cooperative interchange of favors. (ISM, 2000)

Cartage

1. The act of carting or transporting, generally used to identify local delivery of goods received from a carrier.2. The cost of such transportation.

Cooperative Procurement (Purchasing)

1. The action taken when two or more entities combine their requirements to obtain advantages of volume purchases including administrative savings and other benefits.2. A variety of arrangements whereby two or more public procurement units purchase from the same supplier or multiple suppliers using a single IFB or RFP.3. Cooperative procurement efforts may result in contracts that other entities may "piggyback". Also see Consortium.

Ergonomics

1. The applied science of product/equipment design intended to reduce operator fatigue and discomfort.2. To design the physical environment to enable the worker to work more effectively and safely.

Public Law

1. The body of law, such as criminal, administrative and constitutional law, that is not civil law. It also is the name given to a law that Congress or a state legislature has passed, and that the President or a governor of a state has signed. Public laws become statutes when they are integrated into existing statutes.2. Public law is the law governing the relationship between individuals and the state. Constitutional law, administrative law and criminal law are sub-divisions of public law. (Wikepedia, 2006)

Commission

1. The compensation of an agent or broker when calculated as a percentage of the amount of the transaction or the profit to the principal.2. An allowance to a sales representative or agent for services rendered.

Profit

1. The difference between total revenue and total cost. (P=TR-TC). The difference between total revenues and the full costs involved in producing or selling a good or service; it is a return for risk taking. 2. The difference between what it cost to make and sell a product and its final selling price. 3. The difference between the costs incurred by the contractor to provide the supplies, services, or construction and the amount received from the purchaser in payment.

Electronic Data Interchange (EDI)

1. The electronic transfer and exchange of business documents, such as bid requests, quotations, purchase orders, invoices and payments, from one computer directly to another computer, using established technical standards.2. The transfer of data between two or more companies, using networks and the Internet. (Jansen, 2002)

Disposal Value

1. The estimated value of excess or surplus property prior to actual disposal.2. The proceeds obtained from a sale of surplus property.

Copyright

1. The exclusive right to publish, perform, copy, or sell an original work. The length of copyright protection is based on the author's life plus 70 years. (Copyright Act of l976)2. The legal right to exclusive publication, production, sale or distribution of a literary or artistic work. Provides its holder the right to restrict unauthorized copying and reproduction of an original expression. (www.encyclopedia.thefreedictionery.com)3. Canadian An exclusive statutory right of those such as authors, publishers, composers, etc. to control the publication/dispositions of their works of art, literature, music, films, pictures, etc., which is protected by the Copyright Act of Canada, under the Geneva Convention of 1952 to which Canada became a party in 1962. (Summit Magazine, On-Line)

Protocol

1. The forms of ceremony and etiquette observed by diplomats and heads of state.2. A code of correct conduct: safety protocols; academic protocol.3. The first copy of a treaty or other such document before its ratification. 4. A preliminary draft or record of a transaction. 5. The plan for a course of medical treatment or for a scientific experiment. 6. Computer Science: A standard procedure for regulating data transmission between computers. (Heritage Dictionary, 2007)

Inventory Shrinkage

1. The loss of inventory value due to various factors such as breakage, evaporation, deterioration, theft or scrap.2. A deliberate management attempt to downsize inventory value.

Carload

1. The minimum weight, as defined by law, of a shipment entitled to a reduced freight rate.2. The shipment amount that fills a freight car (or truck).3. A load that fills the maximum capacity of a transporting unit.

Declared Value

1. The monetary value placed on a shipment of goods by the shipper when delivered to the carrier.2. The value placed upon imported goods by the importer for clearance through customs.

Distribution

1. The movement of goods from the seller to the buyer.2. The logistical aspects involved in the transfer of goods from manufacturer to user.

Default

1. The omission or failure to perform a legal or contractual duty, to observe a promise or discharge an obligation, or to perform an agreement. (Black's Law Dictionary, 417, 1990) 2. Failure to make scheduled payments of interest or principal on a loan, bond, or other types of debt.

Market Share

1. The percentage of total market output produced by a single firm. 2. The ability of a business entity to capture a large segment of a particular market. 3. A company's percentage of the total market in which it is a dominant player. (Ferrell, 2002)

Infrastructure

1. The physical facilities that support a country's economic activities, such as railroads, highways, ports, airports, schools, hospitals, communication systems and commercial distribution systems.2. The transportation, communication, education, judicial and other institutional systems that facilitate market exchanges. (Schiller, 2000)

Back Order

1. The portion of a purchase order that a vendor does not deliver at the scheduled time and has re-entered for shipment at a later date.2. Items ordered but not shipped due to insufficient inventory or some other reason. Also see Partial Shipment/Delivery.

Capital Gain

1. The positive difference between a security's purchase price over the selling price (assuming that the selling price is greater than the purchase price).2. An increase in the market or accounting value of an asset. (Schiller, 2000)

Human Resources

1. The quantity and quality of human effort directed toward producing goods and services Also called labor.2. The physical and mental abilities that people use to produce goods and services. (Business, 2002)

Deviation

1. To differ or move away from an established course.2. To offer an alternative product, service or business solution from what has been established or specified. (TheFreeDictionary.com)

Cardinal Rule

1. To give plain meaning to contract terms unless the agency or legislation assigned a special meaning to the term. 2. When silent to an interpretation, cardinal rule allows for the meaning which fits most logically and comfortably into the body of both previously and subsequently enacted law to be utilized.

Indemnify

1. To protect against hurt or loss; to exempt from incurred penalties or liabilities.2. To compensate or pay for damage.

Consultant

1. To work or serve in an advisory capacity.2. A person or company that possesses unique qualifications which allow them to perform specialized advisory services usually for a fee. Also see Consulting Services.

NATO Stock Number

A 13 digit number used to identify items of supply consisting of the NATO Supply Classification, the NATO Nation Code Number, National Item Identification Number, and the NATO Item Identification Number.

Clayton Act (The Clayton Anti-Trust Act) (U.S. Law)

A 1914 supplement to the Sherman Anti-Trust Act. Regulates general business practices that may be detrimental to fair competition. Some of the business practices regulated by the Clayton Act are: price discrimination; exclusive dealing contracts; mergers and acquisitions and interlocking directorates. Also see Sherman Antitrust Act and Price Fixing.

Environmental Protection Agency (EPA)

A Federal Government agency established to implement and enforce federal laws relating to clean air, clean water, waste disposal and related environmental issues.

Davis-Bacon Act

A Federal Law (1931) which requires contractors who perform public works construction projects that are federally funded to pay their workers the prevailing wage rate paid in the area for similar work, as set by the Secretary of Labor.

Laissez Faire

A French phrase meaning "let it be". An economic doctrine that opposes government involvement in business and commerce. The philosophy of "leave the economy alone" of non-intervention by government in the market mechanism. (Schiller, 2000)

Keiretsu

A Japanese loose conglomerate company that promotes interdependencies between firms with interlocking interests in each other and is characterized by close internal control, policy coordination and cohesiveness. Keiretsu business groups are alliances between firms that share close buyer-supplier relationships. (Business, The Ultimate Resource, 2002)

Kanban

A Japanese production management technique that uses cards attached to components to monitor and control workflow in a factory. It was first developed by the car manufacturer Toyota. Its theory became part of the total quality management movement. (Business, The Ultimate Resource, 2002)

Nolo Contendere

A Latin phrase meaning "I will not contest it." As a plea in criminal proceeding, it has an effect similar to pleading guilty; however, the defendant neither admits nor denies the charges, and the plea cannot be used against the defendant in a civil action based on the same acts. (Blackís Law Dictionary, 1048, 1990)

Quid Pro Quo

A Latin phrase meaning, what for what or something for something. An equal exchange or substitution. Used to describe a negotiation technique where two or more parties agree to give something in order to receive something in return. (Harney, 1992)

Formal Bid

A bid which must be submitted in a sealed envelope and in conformance with a prescribed format to be opened in public at a specified date and time. Also see Competitive Sealed Bidding.

Late Bid/Proposal

A bid, proposal, withdrawal, or modification received, at the designated place for receipt, after the established due date and time. Procurement policies should be established in order to provide guidance regarding how late bids/proposals are handled administratively. In most public entities, late bids/proposals are not opened and may be returned to the bidder/proposer advising that the bid was received late (after the due date and time) and cannot be accepted.

Qualified Bidder

A bidder determined by the purchasing organization to meet the minimum standards of business competence, reputation, financial ability, and product quality for placement on the bidders list. Also see Responsible Bidder.

Government Bill of Lading (GBL)

A bill of lading used by the United States Government for shipment of government-owned property or for goods being delivered to the government.

Demand Contract

A binding legal agreement that links spend data by dates and allows for rebates and discounts through automated contract management systems. Pricing is based on historical usage. A contract under which a contractor/vendor agrees to provide goods or services to a purchaser on a demand basis. Also see Market Analysis and Blanket order.

Corporation

A body formed and authorized by law to act as a single person, with most of the legal rights of a real person, including the rights to start and operate a business, to buy or sell property, to borrow money, to sue or be sued, and to enter into binding contracts. A legal entity owned by stockholders whose liability is limited to the value of their stock. (Business, 2002)

General Obligation Bond

A bond backed by the full faith, credit, and unlimited taxing power of the government agency that issued it.

Bid Security

A bond or deposit which guarantees that the bidder/offeror, if awarded the contract, will accept the contract as bid.

Revenue Bond

A bond that a government issues, to be repaid from the money made from the project financed with it. (Business, 2002)

Performance Budget

A budget that links the consumption of resources (inputs) to outputs/outcomes of services for each unit of an organization. This type of budget is commonly used by the government to show the link between the funds provided by the public and the outcome of these services. Decisions made on these types of budgets focus more on outputs or outcomes of services than on decisions made based on inputs.

Due Diligence

A business and legal term which refers to research and inquiry made prior to committing to a purchase or making a major business decision. A thorough investigation into the performance and background of a business entity prior to making a decision to purchase. (Business, 2002)

Hollow Corporation

A business entity that has outsourced most of its internal support operations such as payroll, purchasing, human resources, IT, etc. (Business, 2002)

Disadvantaged Business

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. Also see Minority-Owned and Women-Owned Business Enterprises (MBE and WBE), and Historically Underutilized Businesses (HUB). (Harney, 1992)

Enterprise Resource Planning (ERP)

A business process software system that manages multiple management systems. May include finance, accounting, human resources, purchasing, inventory control and other activities. Deploying ERP is generally an enterprise-wide process, involving analysis, replacement of legacy systems and the development of new work procedures. (Jansen, 2002)

Best Practice

A business process, activity or operation that is considered outstanding, innovative or exceptionally creative by a recognized peer group. It may be considered as a leading-edge activity that has been successfully adopted or implemented and has brought efficiency and effectiveness to an organization. It may result in improved productivity, quality, reduced costs and increased customer service. (Business, 2002)

Loss

A business situation in which the total cost of production exceeds total revenue; negative profit. (Schiller, 2000)

eBusiness

A business that is deriving some or all of its revenue via the Internet. A business that has an online business strategy. A business that generates sales via the Internet and embraces other Internet based business strategies.

Bonded Carrier

A business transporting goods and operating under a bond to guarantee performance.

Minority-Owned Business Enterprise (MBE)

A business which is owned or controlled by a member of a recognized minority group, as defined by the public entity. Also see Economically Disadvantaged Individuals, Small Disadvantaged Business, Women-Owned Business (WBE) and Historically Underutilized Business (HUB).

Buying (Seasonal) Calendar

A buying plan which is designed to take advantage of lower seasonal prices, such a road ice chemicals in summer.

Return On Investment (ROI)

A calculation used in business to determine whether a proposed investment is a wise business decision and how well it will repay the investor. It is calculated as the ratio of the amount gained or lost relative to the basis. The analysis takes the form of a dynamic model or a statistical model. (Business, 2002)

Consolidator

A carrier that collects small shipments from several shippers and consolidates them into larger shipments (truckloads, carloads, containers) for delivery to the consignee.

Carrier's Lien

A carrier's claim on assets pending collection of freight cost or other charges.

Leadership in Energy and Environmental Design (LEED) Certification

A certification issued by the U.S. Green Building Council (USGBC). It is a voluntary, consensus-based rating system, which delivers a sound and certifiable basis for identifying buildings that represent leadership in the use of sustainable building practices and design. Referred to as LEED Certification. (www.usgb.org)

Certified Professional in Supply Management (CPSM)

A certification issued to qualified individuals by the Institute of Supply Management (ISM). The Certified Professional in Supply Management (CPSM) designation is the newest and enhanced designation for supply management professionals replacing the former Certified Purchasing Manager (C.P.M.) designation.

Certified Professional Contracts Manager (CPCM)

A certification issued to qualified individuals by the National Contract Management Association. (www.ncma.org)

Certified Professional Public Buyer (CPPB)

A certification program offered by the Universal Public Purchasing Certification Council (UPPCC). This designation certifies competency in the essential areas of public procurement at the buyer level through application and examination. Unlike other certification programs available in the purchasing field, UPPCC certifications are the only programs designed to meet the needs of purchasing professionals employed in the public sector. (www.uppcc.org)

Drayage

A charge for hauling something between various locations by a transportation company.

Dockage

A charge for the use of a dock.

Calendar of Events

A chronology of dates that is significant to a project. In the procurement of services it reflects key events that will occur between the issuance of the RFP and the award of the contract. (Harney, 1992)

Conflict of Interest

A clash between the public interest and the private pecuniary interest of the individual concerned. (Blacks Law Dictionary, 299, 1990). The term identifies those situations where contractors or public officials may obtain a benefit from a public contract. Conflicts of Interest may result in a breach of ethics or an ethical code. Actual or Perceived Conflict of Interest: Any action, decision or recommendation by an agent or public official acting in an official capacity, the effect of which could be to the private pecuniary benefit or detriment of the person or person's relative.

Demand Curve

A curve describing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period. (Schiller, 2000)

Price Adjustment Clause

A clause in a contract allowing for adjustment in price in accordance with circumstances arising during the term of the contract. A provision that must be included in contracts requiring contractor certification of cost and pricing data stating that price, including profit or fee, shall be adjusted to exclude any significant sums by which the jurisdiction finds the price was increased because the contractor-furnished cost or pricing data was inaccurate, incomplete, or not current.

Penalty Charge

A clause in a contract specifying the sum of money to be paid if the contractor defaults on the terms of the contract, particularly with respect to time. Also see Damages and Liquidated Damages.

Golden Parachute

A clause that is inserted in the contract of employment generally for top management employees that creates a financial package payable if the employee is dismissed and provides a measure of financial security. It may also protect the employee if mergers or takeovers take place or if the employee is dismissed due to poor corporate performance. (Business, 2002)

Hold Harmless

A clause that requires the contractor to assume liability for damages resulting from an action taken by the contractor and absolves the government or other contracting body from any responsibility for the consequences of the action. (Harney, 1992)

Battle of the Forms

A colloquial reference to various forms that are exchanged between buyer and seller in an attempt to have their document prevail in the event of a disagreement between the contracting parties. Also see Acknowledgement.

Private Goods

A commodity that benefits the individual. An example is a pen I own is a private good; a bridge built with governmental funds and usable by all is a public good. (Guess, 2002)

Mailbox Rule

A common-law rule providing that an acceptance of an offer becomes effective and creates a binding contract when it is transmitted rather than when it is received. (Nash, Schooner, OíBrien, 1998)

Budget Message

A communication normally written by the chief executive that accompanies the budget estimate. Its purpose is to explain: (1) the main points of the budget; (2) the assumptions under which it was assembled; and (3) the major policy recommendations.

Clarification

A communication with an offeror for the sole purpose of eliminating minor irregularities or apparent clerical mistakes in a proposal; may be initiated by either offeror or purchaser; does not give offeror an opportunity to revise or modify its proposal, except to the extent the correction of apparent clerical mistakes results in revision.

eBay (eBay Inc.)

A company with an on-line auction site that enables people and businesses to buy and sell goods and services on a local, national, and international basis. Founded by Pierre Omidyar in 1995 it transacts billions of dollars in gross merchandise sales over the Internet. (Jansen, 2002)

Informal Bid/Proposal

A competitive bid, price quotation or proposal for supplies or services that is conveyed by a letter, fax, e-mail or other manner that does not require a formal sealed bid or proposal, public opening or other formalities. Generally relegated to requirements that may be considered low value or fall under a stipulated price/cost threshold.

Invitation to Negotiate (ITN)

A competitive negotiation process that is used when the procurement authority deems it is in their best interest to negotiate with offerors to achieve "best value". A form of source selection that is similar to the Request for Proposal process. A short list of acceptable proposers is created. Two negotiation methods are allowed: single negotiation and concurrent negotiation. For more information: Journal of Public Procurement, Volume 3, Issue 3, 301-319-2003; Florida Department of Transportation-ATIS case study-6/24/99.

Materiel Management

A comprehensive integration of the various supply management functions within a particular organization. May include functions such as purchasing, storage, inventory control, material forecasting, receiving, transportation, inspection and quality control. Also see Supply Chain Management. (ISM, 2000)

Bid Analysis

A comprehensive review of all bids/offers received as a result of a competitive process usually for the purpose of comparing strengths and weaknesses of the bids received based on the requirements and criteria set forth in the invitation for bids. Also see Bid Evaluation and Bid Tabulation.

Purchasing Audit

A comprehensive, systematic, independent, and periodic examination of an organization's purchasing environment, objectives, strategies, and activities with a view toward identifying strengths and weaknesses, including a plan of action to improve purchasing performance. (ISM, 2000)

Learning Curve

A concept that originated in the observation that individuals performing repetitive tasks tend to improve incrementally the more frequently the task is performed. A technique that is used for projecting or estimating the amount of direct labor and material that will be used to manufacture a product on a repetitive basis. (ISM, 2000)

Comparable Worth

A concept that seeks equal compensation for jobs requiring the same level of education, training and skills. (Business, 2002)

Imperfect Competition

A condition that exists when the marketplace is dominated by only one or possibly a few sellers. This is referred to as an Oligopoly. Also see Oligopoly.

Design Deficiency

A condition which prevents a product from being useful, the correction of which would require a design change.

Commodity Group

A grouping of related items, all of which can be further refined into additional commodity classes within the commodity group.

Moving Average

A continuous average method used to gather the most current usage information about an item by taking current trends into account and always using the most recent data. For example, a 12-month period would be the average monthly usage for the immediately preceding 12 months; as the year progresses, the forecast is updated by dropping the oldest month's data (13 months ago) and adding the most recent month's data.

Monitoring

A contract administration tool, whereby certain procedures are developed to assure the public entity that contracted services are being delivered in accordance to the terms and specifications of the contract. See Quality Assurance.

Award by Group

A contract award that can be made to multiple suppliers based on the lowest total price for all items within a specific group. The public entity may group items by classification, commodity code, category, or geographic zone in its best interest. This method allows the public entity to target a logical grouping of bid items to a supplier for contract management purposes. Also known as Class Award.

Award Item by Item

A contract award that may be made to multiple suppliers because each item is awarded typically on the basis of the lowest unit price when being utilized in the bid process. This method offers the best pricing to the public entity but requires significant contract administration if multiple suppliers are selected for award. Also referred to as Line Item Award.

Insurance

A contract between an insurance company and a person or group which provides for a monetary payment in case of a covered loss, accident, death or other insurable exposure. A form of risk mitigation.

Corporate Charter

A contract between the corporation and the state, in which the state recognizes the formation of the corporation as being endowed by law with the rights and liabilities of an individual. (Ferrell, Hirt, 2003)

Lease

A contract by which one party (lessee) enters into a contract with a second party (lessor) for possession and use of property (equipment) for a specified period of time at a predetermined cost. There are two primary lease categories: Operating and Financial. Major benefits of a lease are: Obsolescence can be minimized or eliminated; Avoidance of large capital outlays; Maintenance problems may be reduced; The Lessee's working capital is not consumed and may be utilized for other projects.

Exculpatory Clause

A contract clause stating that one of the contracting parties is not liable upon the occurrence of some specified event. These clauses are most frequently used in an attempt by a public procurement agency to relieve itself of liability for defective specifications. (Nash, Schooner, OíBrien, 1998)

Excusable Delays

A contract clause that provides the contractor with protection from sanctions for late performance, such as default termination, liquidated damages, actual damages and excess costs due to delays. An excusable delay must meet two general requirements: The delay must be beyond the control of the contractor; The delay must be without the contractor's fault or negligence.

Changes Clause

A contract clause that specifies the parameters of contract modifications that can be made. Example: Supply contracts typically limit the right to make changes to the method of delivery, place of delivery, or work statements (specifications).

Prime Contract

A contract entered into by a public entity with a business entity for the purpose of obtaining supplies, services or construction items of any kind.

Future Option

A contract entered into to buy or sell a currency, security or commodity at a fixed price for delivery sometime in the future at a date to be determined. (Business, 2002)

Forward (Supply) Contract

A contract for future supply of definite quantities of supplies or services. Also see Futures and Spot Price.

Rent

A contract giving the right to use real estate or property for a specified time in return for monetary compensation. (Business, 2002)

Reinsurance

A contract in which an insurance company agrees to indemnify another insurance company in whole or in part against risks the first company has assumed.

Implied Contract

A contract not created or evidenced by an explicit agreement of the parties, but inferred, as a matter of reason and justice, from the parties' act or conduct. Implied contracts are sometimes divided into two categories: (1) those implied in fact and (2) those implied in law. Often referred to as "quasi-contracts". (Blackís Law Dictionary, 754, 1990)

Fixed-Price Contract

A contract providing for a firm price, or a price that may be adjusted only in accordance with contract clauses providing for revisions of the contract price under stated circumstances.

Option to Renew

A contract provision that allows a party to reinstate the contract for an additional term, beyond that stated in the original contract, in accordance with contract terms. Also see option to extend.

As Is

A contract term describing products offered without guarantee or warranty. All risk is assumed by the purchaser without recourse to the seller.

Fixed-Price Contract with Escalator (Economic Adjustment Clause)

A contract under which the contractor is reimbursed at a fixed price for all services and material provided that allows for periodic price increases or decreases at one or more stated intervals during the contract term. The amount of increase or decrease is based on the movement of an independent price index (escalator) for goods, services, or labor. (Harney, 1997)

Requirements Contract

A contract used to order only the material or services actually required during a contract term. An indefinite quantity contract for frequently used commodities or products. Also see Blanket Order, Price Agreement and Open-end Contract.

Cost Plus Fixed Fee Contract (CPFF)

A contract whereby the contractor is reimbursed for its actual incurred cost for material, labor and other agreed to

Cost Plus Fixed Fee Contract (CPFF)

A contract whereby the contractor is reimbursed for its actual incurred cost for material, labor and other agreed to incidentals, plus a fixed sum established in the contract. (Harney, 1992)

Cost Plus Incentive Fee Contract (CPIF)

A contract whereby the contractor receives additional compensation for keeping the total amount expended below the agreed-upon maximum contract amount or for achieving certain pre-specified goals during the performance of the contract. Often used in construction contracts in order to assure completion of the building project prior to the targeted completion date.

Open-End Contract

A contract which sets forth the general provisions 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. The quantity and delivery are specified with the placement of orders. Also see Blanket Order, Price Agreement and Requirements Contract.

Revenue Generating Contract

A contract whose primary purpose is to generate revenue or to create a business opportunity for the organization. This type of contract may also serve a need such as operating an organization-owned golf course or tennis center.

Personal Liability

A contracting risk whereby an individual (an agent) may be held personally liable if they have committed an unlawful, negligent or criminal act in the performance of their duties. (Ferrell, 2002)

General Contractor (GC)

A contractor with the entire responsibility for performing a construction contract. A contractor that bids for a construction contract and bears the entire risk if the contract cannot be performed at the contract price. (Nash, Schooner, OíBrien, 1998)

Responsive Bidder/Offeror

A contractor, business entity or individual who has submitted a bid or proposal that fully conforms in all material respects to the IFB/RFP and all of its requirements, including all form and substance.

Responsible Bidder/Offeror

A contractor, business entity or individual who is fully capable to meet all of the requirements of the solicitation and subsequent contract. Must possess the full capability, including financial and technical, to perform as contractually required. Must be able to fully document the ability to provide good faith performance. Also see Qualified Bidder.

Price Agreement

A contractual agreement in which a purchaser contracts with a vendor to provide the purchaser's requirements at a predetermined price. Also see Blanket order, Open end contract, and Requirements contract.

Installment Sale

A contractual exchange made with the agreement that the purchased goods will be paid for in fractional amounts over a specified period of time.

Grandfather Clause

A contractual provision that protects the existing interests of affected parties. (ISM, 2000)

Foreign Corporation

A corporation in any state in which it does business except the one in which it is incorporated. Also see Domestic Corporation. (Schiller, 2000)

Domestic Corporation

A corporation in the state in which it is incorporated. Also see foreign corporation. (Business, 2002)

Multinational Corporation

A corporation that operates on a world-wide or global scale, without significant ties to any one nation or region. (Business, 2002)

Closed Corporation

A corporation whose stock is owned by relatively few people and is not sold to the general public. (Business, 2002)

Corporate Bond

A corporation's written pledge that it will repay a specified amount of money, with interest. (Business, 2002)

Engineering Estimate

A cost estimate prepared by the engineering department or an outside engineering firm, to enable the purchasing official to determine a potential estimated cost of a project and establish a budget range.

Final Cost Objective

A cost objective whose costs are not assigned to any other cost objective, and is therefore one of the final points for accumulating costs in the accounting system.

Cost Plus Award Fee Contract (CPAF)

A cost reimbursement contract that provides for a base fee amount fixed at inception of a contract, and an additional fee to be determined at time of fee award that is based on an evaluation by the purchaser as to the quality of the contract performance, and the evaluator's assessment as to the fee amount necessary to motivate the contractor toward excellence.

Reasonable Cost

A cost that by its nature or amount does not exceed what would normally be incurred by an ordinarily prudent person in the conduct of competitive business. Often used in the context of "fair and reasonable" cost/price.

Cost Contract

A cost-reimbursement contract in which the contractor receives no fee. See Cost-Reimbursement Contract.

Purchasing Policy

A course of action adopted by the public agency that provides guidance relative to procurement actions.

Appellate Court

A court that hears cases appealed from lower courts. (Garner, 2004)

Material Credit

A credit issued by the warehouse upon the return of requisitioned supplies found to be in excess of requirements.

Contract Administration Team

A cross-functional team comprised of such members as the procurement contracting officer, subject matter expert, IT, engineering, legal advisers, price and cost analysts, quality assurance specialists, contracting officer's representative who all offer their expertise to the contract. Such a team is generally used on complex projects. This team may also assist in resolving conflict that arises during the contract performance.

Federal Register

A daily publication available from the Government Printing Office, that lists and discusses the regulations of federal agencies, makes the regulations available for public comment before they are made final, and publishes all final rules and regulations.

Commerce Business Daily (CBD)

A daily publication of the United States Department of Commerce listing U.S. Government solicitations, contract awards, subcontracting leads, sales of surplus property and foreign business opportunities. (U.S. Department of Commerce)

Lease or Buy Decision

A decision based on the results of a cost/benefit analysis of the costs to own, costs to lease, and the advantages and disadvantages of any relevant qualitative factors. (ISM, 2000)

Long Term Contract

A decision to contract with a specified vendor over an extended period of time.

Decision Tree

A decision-making tool that maps alternative courses of action and their related consequences. Many components may be included such as decision forks, outcome forks, outcome probabilities, outcome rewards, and expected values. (Business, 2002)

Recession

A decline in total output for two or more consecutive quarters. An economic downturn that may impact price, terms and conditions of purchasing transactions and usually reflective of a buyers market. (Bishop, 2004)

Deflation

A decrease in the average level of prices of goods and services. Also see Inflation. (Schiller, 2000)

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. (Nash, Schooner, OíBrien, 1998)

Partial Shipment/Delivery

A delivery made against a purchase order or contract which is less than the quantity ordered. May be indicative of a back-order situation, or a temporary material shortage. Also see Backorder. (Miller, 2006)

Design-Build

A delivery method for construction projects that combines the architectural, engineering, and construction services required for a project into a single contractual agreement. (ISM, 2000)

Refused Shipment

A delivery of freight or goods and materials that the consignee refuses to accept. Any delivery from a carrier that is not accepted.

Delivery Schedule

A delivery plan indicating the time of beginning and completion of each delivery.

Performance Specifications

A description of a product or service that provides a general functional recital of performance characteristics required to achieve an end result or outcome desired. It does not require the bidder/offeror to comply with specific design requirements. Also see Design Specifications.

Foreign Trade Zone (FTZ)

A designated area for holding goods pending customs clearance; legally duty free storage space. Property set aside at or near a port or airport, under the control of the U.S. Customs Service. (Schiller, 2000)

Inventory

A detailed list of articles of property or goods held for sale or lease or furnished under service contracts, or raw materials or work in process or materials used or consumed. (Blackís Law Dictionary, 824, 1990) A stockpile of goods which are physically recorded by item, value, quantity, volume, and description.

Cost Containment

A detailed plan to hold costs and purchase prices within certain target limits over a period of time. (ISM, 2000)

Audit

A detailed review and examination of records, documents and the business processes with the confirmation by outside experts of a situation or condition concluding with a detailed report of findings. A formal examination or verification of financial accounts or other business operations. Examples include financial, compliance and management audits.

Continuity of Operations Plan (COOP)

A detailed strategy developed to ensure the continuation of essential functions during an emergency that result in the inability of the organization to provide essential services to its constituents. The COOP must be a fluid and dynamic plan capable of being immediately adjusted and modified depending on the situation. A well-developed COOP addresses the people, processes, systems, and infrastructure elements that will be needed to continue to perform essential functions during a disaster or emergency situation. Also referred to as Business Continuity Plan.

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.

Cost Element

A direct or indirect cost of providing a good, service, or construction, such as labor, materials, fringe benefits, or travel.

Cross-Docking

A distribution system in which freight moves in and out of a distribution center or point without ever being stored there. (ISM, 2000)

Occupational Safety and Health Administration (OSHA)

A division within the U.S. Department of Labor that was created by the OSHA Act of 1970. OSHA's mission is to assure the safety and health of America's workers by setting and enforcing standards; providing training, outreach, and improvement in workplace safety and health. (www.osha.gov)

Purchase Requisition (PR)

A document created by a requestor authorizing the commencement of a purchasing transaction. Typically will include a description of the need and other information that is relative to the transaction. May be submitted in hard copy or via eProcurement software.

Crowdsourcing (otherwise known as Cyberspace Outsourcing)

A form of institutional outsourcing which solicits a large group of people who are not directly employed by, or who lack a contract with the originating institution. Solicitations are typically put out in the form of a wide call on the Internet, and the chosen work-product may or may not yield compensation. Crowdsourcing is an innovative way to leverage distributed knowledge on the Internet so that highly intractable problems can be solved in a low-cost manner, typically by shifting time costs to the experts who are interested in helping to the solve the quandary. This frees up institutional employees to focus on core competencies.

Piggyback (Piggyback Cooperatives)

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. Generally a larger entity will competitively award a contract that will include language allowing for other entities to utilize the contract which may be to their advantage in terms of pricing, thereby gaining economies of scale that they normally would not receive if they competed on their own. Example: A smaller government agency has the ability to use its state issued contract to obtain goods and services which is also known as Riding a Contract.

Joint Bid Method

A form of intergovernmental cooperative purchasing in which two or more public procurement agencies agree on specifications and contract terms and conditions for a given item of common usage and combine their requirements for these items in a single request for competitive sealed bids. Once bids have been received and discussed by the participants, each public procurement agency issues and administers its own purchase order or contract.

Conciliation

A form of negotiation used in alternative dispute resolution (ADR). It involves building a positive relationship between the parties to a dispute by using a third party or conciliator. Conciliation may assist in the settling of disputes that have reached an impasse.

Inventory (Vendor Managed)

A form of outsourcing whereby a contract is initiated with a private business to manage and control the inventory of the public entity. The contractor is responsible for all inventory functions which may include re-ordering. Also called Vendor Managed Inventory. (Miller, 2006)

Narrative Evaluations

A form of performance measurement and feedback that can be used as an alternative or supplement to other evaluation criteria. Narrative evaluations generally consist of several paragraphs of written text about the individual's performance. This type of evaluation can be very subjective based on the use of words, phrases, and tone of writing style.

Bid Protest

A formal complaint made against the methods employed or decisions made by a procurement authority in the process leading to the award of a contract. Also see Award Protest, Protest and Dispute.

Award Protest

A formal complaint made against the methods employed or decisions made by a procurement authority in the process leading to the award of a contract. Also see Bid Protest and Protest.

Quality Standard

A framework for achieving a recognized level of quality within an organization. Achievement of a quality standard demonstrates that an organization has met the requirements laid out by a certifying body. Quality standards recognized on an international basis include ISO 9000 and ISO 14000. (Business, 2002)

Cost Objective

A function, organizational unit, or contract for which costs are to be determined and cost data accumulated.

Economic Interregnum

A gap in economic continuity, the outcome of which cannot be predicted. A discontinuity in the global economy, thereby making future predictions uncertain. (Business Week, 12.20.04)

Notice of Proposed Procurement

A general opportunity available to suppliers to provide specified products or services. Also referred to as a Notice of Bidding Request.

Offeror

A generic term that refers to a person or entity who submits an Offer in response to a Solicitation. Also see Bidder, Proposer, Responder.

Policy

A governing principle or plan which establishes the general parameters for the organization to follow in carrying out its responsibilities.

Equal Employment Opportunity Commission

A government agency with the power to investigate complaints of employment discrimination and power to sue firms that practice it.

Office of Management and Budget (OMB)

A government agency, in the Executive Office of the President of the United States, that serves as the President's principal arm for exercising the managerial functions of the Presidency. OMB strives to improve government organization, information, and management systems and devises programs for career executive talent throughout the government. OMB assists the President in preparing the annual budget and in overseeing its execution. (Nash, Schooner, OíBrien, 1998)

Organization Chart (Org chart)

A graphic illustration of an organization's structure, showing hierarchical authority and relationships between departments and functions. (Business, 2002)

Gantt Chart

A graphic scheduling device that displays the tasks to be performed on the vertical axis and the time required for each task on the horizontal axis. Gantt charts are the simplest of the various charting techniques for planning and controlling major projects and the materials deliveries that flow from them. (Burt, Dobler, Starling, 2003)

Marketing Channel

A group of organizations that moves products from their producer to customers; also called channel distribution.

Negotiation Team

A group of people, typically including a procurement official, project manager, technical staff, financial analyst, and legal expert who have the essential skills or knowledge necessary to reach a sound agreement. This team can determine: the most appropriate type of contract; terms of the contract; special warranty or delivery provisions; technical and engineering specifications; subcontractors needed, as well as other negotiable goals. The complexity of the negotiation will determine the size of the team. A negotiation team is usually selected for a major acquisition and may include some or all members of the Evaluation Committee. Also see Evaluation Committee/Team.

Code of Ethics

A guide to acceptable and ethical behavior as defined by an organization or public body. A standard of behavior adopted by an organization. Written policies or guidelines which apply to the ethical behavior of members of an organization, business or public entity.

Bill of Lading

A hauler or carrier's contract which may also act as the receipt of goods transported and delivered to the consignee. Examples of various bills of lading: Clean/Clear; Ocean; Order; Short-Form; Straight; and Through.

Customs Broker

A highly trained import professional, licensed by the U.S. Customs Service. (ISM, 2000)

Performance Assessment Plan (PAP)

A key element of successful contract administration. It provides specific information on how the Contract Administration Team will observe and evaluate performance according to the standard required in the contract. The PAP includes information on how the "evaluators" will observe, survey, sample, test, evaluate and document supplier performance.

Process Knowledge

A knowledge sharing trend in organizations that proactively fosters collaboration, sharing of knowledge and organizes around customer-centric processes by encouraging workers to form collaborative teams responsible for the completion of an entire process from end to end. This system organizes work flow to support cross-functional business processes that emphasize the importance of sharing product-related and process-related knowledge across functional boundaries.

Lease-Purchase Agreement

A lease in which the lease payments are applied, in whole or in part, as installment payments for equity or ownership upon completion of the agreement.

Financial Lease

A lease used to obtain financial leverage and related long-term benefits. Generally long-term, for a fixed period of time just short of the approximate life of the equipment being leased. Usually of two types: full payout (the lessee pays the full purchase price plus interest charges plus maintenance, insurance and administration costs) and partial payout (gives the lessee credit for the residual value of the leased item after the lease period is complete). Also see Operating Lease.

Promissory Estoppel

A legal doctrine binding a person to a promise when another party has relied on the promise to its detriment and the person making the promise could have reasonably foreseen the reliance. (Nash, Schooner, OíBrien, 1998)

Exhaustion of Administrative Remedies

A legal doctrine which requires a complaining party to seek administrative remedy from designated administrative bodies before looking at the courts for relief.

Novation Agreement

A legal document executed by the original parties to a contract and a successor to whom interest in the contract has been transferred by one of the parties, which transfers all obligations and rights under the contract to the successor.

Determination and Findings

A legal document prepared by a purchasing official to justify a decision to take a certain action; includes conclusion, or determination, and the reason or findings of fact.

License

A legal instrument granting permission to do a particular thing, to exercise a certain privilege, to carry on a particular business, or to pursue a certain occupation. When granted by an appropriate government body, licenses are permits allowing a person, firm, or corporation to pursue some occupation or business, subject to regulation. (Black's Law Dictionary, 919-20, 1990)

Estoppel

A legal principal that prevents a person from asserting a position that is inconsistent with his or her prior conduct, if injustice would thereby result to a person who has changed position in justifiable reliance upon that conduct. For example a landlord might inform a tenant that rent has been reduced, for example, if there is construction or a lapse in utility services. If the tenant relies on this advice, the landlord could be estopped from collecting rent retroactively.

Bankruptcy

A legal procedure designed both to protect an individual or business that cannot meet its financial obligations and to protect the creditors involved. Also see Voluntary bankruptcy. (Schiller, 2000)

Obligation

A legal requirement for the disbursement of funds as a result of orders placed, contracts awarded, supplies, services, or construction received, or other contractual activity.

Replevin

A legal term meaning the action for the recovery of property. A writ of replevin allows for the repossession of property. (Garner, 2002)

Creditor

A lender, whether by making a loan, buying a bond or allowing money owed now to be paid. (Schiller, 2000)

Franchise

A license to operate an individually owned business as though it were part of a chain of outlets or stores. A franchisor is an individual or organization granting a franchise and a franchisee is a person or organization purchasing a franchise. (Business, 2002)

Mechanic's Lien

A lien in favor of those who have performed work or furnished materials for the construction of a building; is attached to the land as well as the building in order to secure payment.

Quota

A limit on the quantity of a good that may be imported in a given time period. Example: Steel import quota. (Ferrell, 2002)

National Motor Freight Classification (NMFC) Guide

A list of all items, in theory, that could possibly be transported by a common carrier. The list of items then has a class associated with each item. The class is determined by storability, density, handling characteristics and value of the item being shipped. Class (along with distance and weight) is used by the common carrier of the goods to determine the rate of the shipment. Also see Class Rate.

Freight Classification

A list of articles, their assigned classification, the applicable freight rate, and freight rules and regulations.

Lagging Indicator

A measure of economic activity that tends to change after the state of the general economy has changed. Also see leading indicators. (ISM, 2000)

Pallet

A portable platform upon which goods are placed in unit loads to facilitate stacking and handling by mechanical equipment such as a forklift truck or pallet jack. (ISM, 2002)

Risk Register

A list of risks associated with a specific procurement and the responses to those risks. Responsibility for acting on the risk is assigned to a specific person to manage. The list is applicable only to the particular procurement and the principle is to identify risk and allocate this to the party best suited to manage, mitigate or eliminate it. The register is a live document throughout the project and should be reviewed on an ongoing basis. Also referred to as Risk Matrix. (Carmarthenshire County Council - Wales, n.d.).

Material Variance/Material Deviation

A major variance, change, deviation or substitution taken to specifications by a bidder/offeror that gives the responder a substantial advantage or benefit not enjoyed by all other responders or that gives the purchaser something significantly different from what was specified. (Nash, Schooner, OíBrien, 1998)

Lock-out

A management's version of a strike, wherein a work site is closed so that employees cannot go to work. Any form of work stoppage that will impede a contractor's ability to perform the contracted work. (Business, 2002)

End Item

A manufactured product that can be sold, distributed, or used, without any additional work being done on it.

Planned Obsolescence

A manufacturing or assembly policy whereby products are deliberately designed to have a limited or premature life cycle which will require customers to purchase replacements. (Business, 2002)

Bear Market

A market in which average stock prices are declining. Market indicators for a bear market trend downward. Also see Bull Market. (Schiller, 2000)

Bull Market

A market in which average stock prices are increasing or advancing. Market indicators for a bull market trend upward. Also see Bear Market. (Business, 2002)

Oligopoly

A market in which few firms produce all or most of the market supply of a particular good or service. For example: oil cartel, steel, computers, de-regulated electric. Also see Imperfect Competition. (Schiller, 2000)

Perfect (Pure) Competition

A market in which no buyer or seller has market power. The market contains a large number of buyers and sellers of approximately equal importance.

Oligarchy

A market situation in which a few companies control or dominate the market for a product or service.

Monopoly

A market situation where there is one seller and many buyers of a product or service that has no close substitution and where the seller has considerable control over price because of the lack of competition. (NIGP, 2004)

Repositioning

A marketing strategy that changes aspects of a product or brand in order to change market position and alter consumer perceptions. A strategy used to increase product sales in certain markets. (Business, 2002)

Postconsumer Material

A material or finished product that has served its intended use and has been diverted or recovered from waste destined for disposal, having completed its life as a consumer item. Postconsumer materials are part of the broader category of recovered materials.

Fixed Period Average

A mathematical calculation used to divide the total usage for a fixed period (generally 12 months), usually using the last fiscal calendar, by the number of months involved (generally 12). The resulting average is the forecast for the entire comparable future period. This is a straight mathematical calculation which ignores current trends.

Consumer Price Index (CPI)

A measure of changes in the average price of consumer goods and services. A price index constructed monthly by the U.S. Bureau of Labor Statistics that provides a statistical measure of the average change in prices in a fixed market basket of goods and services. It is frequently called a cost-of-living index. For more information:

Coincident Indicator

A measure of economic activity that changes concurrently with changes in the business cycle. (ISM, 2000)

Parts-Per-Million (PPM)

A measure of quantity that may be used as a quality reference, whereby defective parts must not exceed a specified number of parts per million parts supplied; a ratio of number of failures to number of parts supplied. (ISM, 2000)

Gross National Product (GNP)

A measure of the country's economic performance. It is calculated by adding to the GDP the income earned by residents from investments abroad, less the corresponding income sent home by foreigners who are living in the country. (Bishop, 2004)

Effectiveness

A measure of the quality of the output. It helps to determine the degree of customer satisfaction. (Business, 2002)

Outcome

A measure of the results that occur because a service is provided. Used in performance contracting to measure contractor compliance.

Quantitative Measurements

A measurement capable of being expressed as a quantity or a number of things. Example: The terms and conditions of this contract require the awardees to deliver three complete compressor units per day.

Producers Price Index (PPI)

A measurement tool compiled by the U.S. Bureau of Labor Statistics reflecting the average change in prices charged by producers during a given time period, compared to those charged in a base year. The PPI measures inflation at earlier stages of the production and marketing process than does the Consumer Price Index. (ISM, 2000)

Barter

A medium of exchange which does not use currency. Trading or exchanging goods and services by means of exchange other than money. A form of counter-trade used in international business.

Pre-Bid/ Pre-Proposal Conference(Meeting)

A meeting held by the buyer with potential bidders/offerors, prior to the opening of the solicitation for the purpose of answering questions, clarifying any ambiguities and responding to general issues in order to establish a common basis for understanding all of the requirements of the solicitation. May result in the issuance of an addendum to all potential providers. In certain situations, a mandatory conference may be advisable. Also see Bidders Conference and Pre-solicitation Conference.

Post-Award Start-Up Conference

A meeting held with the contractor awarded the contract prior to the beginning of contract performance. It ensures that the contractor fully understands the expectations, performs accordingly and can provide the foundation for an effective contract effort. Objectives of the post-award are to: ensure the contractor understands the technical requirements of the contract; to clarify the rights and responsibilities of both parties; and to determine the need for follow-up meetings.

Bidders' Conference

A meeting to discuss with potential bidders, technical, operational and performance specifications, and/or the full extent of financial, security and other contractual obligations related to a bid solicitation before the bid closes. Also see Pre-Bid/Pre-Proposal Conference and Pre-Solicitation Conference.

Purchasing Power Parity (PPP)

A method for calculating the correct value of a currency, which may differ from its current market value. PPP is helpful when comparing living standards in different countries, as it indicates the appropriate exchange rate to use when expressing incomes and prices in different countries in a common currency. As public purchasing moves to global procurement, it is essential to understand the basics of international currency standards. (Bishop, 2004)

Cost-Based Pricing

A method in which a fixed sum or percentage of the total cost is added as an income or profit to the cost of the product to arrive at its selling price.

Construction Management

A method of acquiring construction in which the public agency contracts with a construction manager to assist in project design and construction. The construction manager may act as the agent for the government in assisting in the award of contracts for elements of the project. (Nash, Schooner, OíBrien, 1998)

Intersector Efficiency

A method of analysis that determines whether or not the cost of government activity yields more benefits to society than if it remained in the private sector. A typical example is daycare. Should it be provided by the agency as a government service, or should it be left to the private sector?.

Fast Track Construction

A method of construction contracting under which the contractor begins building as soon as the foundation plans are ready and a foundation permit has been issued, despite the fact that the architect-engineer has not finished designing the project. Throughout performance, the architect-engineer must keep ahead of the contractor's progress in order to supply the necessary plans and drawings before each stage of the construction is reached. (Nash, Schooner, OíBrien, 1998)

Credit Memo

A method of correcting an overcharge, paying a trade rebate, or crediting the value of goods returned.

Roll On/Roll Off (RO/RO)

A method of ocean cargo service using vessels with ramps which allow wheeled vehicles to be loaded and discharged without the use of cranes. (ISM, 2000)

Consignment Buying

A method of procurement in which a supplier maintains inventory on the premises of the purchaser. The purchaser's obligation to pay for the goods begins when goods are drawn from the stock. (ISM, 2000)

Inter-Program Efficiency

A method to determine the most efficient program, when competing programs exist, that are designed to meet the same objective. This analysis is conducted by using the measures of cost and anticipated benefits of the competing programs to determine which program produces the greatest net benefits. Then funds (budget) may be allocated appropriately to that most beneficial program. Example: If the goal is reducing juvenile crime activities, should the Police Department budget for youth activities be increased, decreased or eliminated when compared to youth programs in Recreation Departments or vice versa?

Lockbox

A postal address, usually a commercial bank, at which a company receives payments in order to speed collections from customers. (Ferrell, 2002)

Intra-Program Efficiency

A method to determine the most efficient service delivery alternative, when several service delivery alternatives exist, to support a successful program. This analysis is done by using the measures of cost and anticipated benefits for competing service delivery alternatives used to support the program which service delivery alternative (or combination thereof) will provide the maximum net benefits. Then funds (budget) may be allocated appropriately to the alternative(s) that best support the success of the program. Example: If the program is supporting elder well-being through home delivery of nutritious meals should the meals be cooked by volunteers or a catering service? Should employees or taxi drivers deliver the meals?

Requirements Determination

A method used to determine what is needed, when it is needed and how much is needed. Such methods may include reviewing past usage of an item, future need, program objectives, trends, performance of a demand analysis, market analysis, the use of software or other forecasting tools, with the objective of satisfying the need.

Clerical Mistake

A mistake of a contractor in a bid or proposal that results from a clerical error; often referred to as a "minor irregularity." Such mistakes usually may be corrected within a specified period. Examples may include the misplacement of a decimal point or the reversal of prices.

Purchasing Procedure

A mode of conducting purchasing activities.

Command Economy

A mode of economic organization in which key economic functions (what, how, and for whom) are principally determined by government directive. Sometimes called a centrally planned economy. (Schiller, 2000)

Damages

A monetary settlement awarded to a party that is injured through a breach of contract. Compensation, usually monetary, for injury to goods, persons or property. Also see Liquidated Damages and Penalty Charge. (Harney, 1992)

Brand Name

A name that serves to identify a manufacturer's product and may be protected by a trade name or trademark. Also see Brand.

Brand

A name, term, symbol, design, or any combination of these that identifies a seller's products and distinguishes them from competitive products. Also see Brand Name (or Equivalent). (Business, 2002)

National Institute of Governmental Purchasing (NIGP)

A national, membership-based, non-profit organization providing support to professionals in the public sector purchasing profession. NIGP provides its members with education, professional networking, research, and technical assistance. Their mission is to develop, support and promote the public procurement profession through premier educational and research programs, professional support, and advocacy initiatives that benefit members and constituents.

Order Bill of Lading

A negotiable bill of lading between carrier and consignor by which legal possession of the shipment may be ordered by endorsement from person to person. It enables a shipper to collect for a shipment before it reaches its destination. Sometimes used by shippers to consign shipments to themselves so that delivery is made only upon the shipper's order.

Request for Information (RFI)

A non-binding method whereby a jurisdiction publishes via newspaper, internet, or direct mail its need for input from interested parties for an upcoming solicitation. A procurement practice used to obtain comments, feedback or reactions from potential suppliers (contractors) prior to the issuing of a solicitation. Generally price or cost is not required. Feedback may include best practices, industry standards, technology issues, etc. Also see Pre-Solicitation Conference and Request for Comments (RFC).

International Air Transport Association (IATA)

A non-political international organization, with headquarters in Geneva. Membership is open to all scheduled airlines registered in countries that hold membership in the International Civil Aviation Organization. IATA promotes the standardization of air transportation rates and promotes safety and efficiency among commercial air carriers. (www.iata.org)

National Association of State Procurement Officials (NASPO)

A non-profit association dedicated to strengthening the procurement community through education, research, and communication. It is made up of the directors of the central purchasing offices in each of the 50 states, the District of Columbia and the territories of the United States. NASPO is an organization through which the member purchasing officials provide leadership in professional public purchasing, improve the quality of purchasing and procurement, exchange information and cooperate to attain greater efficiency and economy. (www.naspo.com, 12.29.06)

Green Seal

A non-profit environmental organization that offers expertise in green purchasing, operations and plant improvement. This organization has helped prepare environmentally responsible criteria including specifications for many products including paint, adhesives, degreasers, paper towels and napkins just to name a few. (www.greenseal.org)

National Purchasing Institute (NPI)

A non-profit organization designed to establish cooperative relationships among its members and to develop efficient purchasing methods and practices in the areas of governmental, educational, and institutional procurement. The mission of NPI is to facilitate the educational and professional development of its members. NPI is an affiliate of the Institute of Supply Management, (ISM). (www.npiconnection.org/home/index.htm, July 2007)

National Institute of Standards and Technology (NIST)

A non-regulatory federal agency (formerly known as the Bureau of Standards) within the U.S. Commerce Department's Technology Administration. NIST's mission is to promote U.S. innovation and industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic security and improve our quality of life.

Notice to Proceed (NTP)

A notice issued to the successful bidder advising them that it is the government's intent to award a contract. In construction contracting, it is common practice to require completion of performance in a specified number of days after issuance of the notice to proceed. (Harney, 1992)

National Institute of Governmental Purchasing Commodity/Service Code

A numbering system developed by NIGP to identify goods and services purchased by public purchasing entities; serves as the cornerstone of an automated purchasing function, helps vendors identify the goods and services to bid, and enables different jurisdictions to share purchasing information.

Fixed Weights

A numerical system used to evaluate proposals. Weights are assigned to each evaluation criteria by percentage distribution.

Competitive Market

A particular market in which no buyer or seller has an advantage or possesses market power over a product or service. (Schiller, 2000)

Firm

A partnership or business unit of two or more persons not recognized as a corporation.

Bar Code

A pattern of parallel bars and spaces which may represent numbers and other characters that are read by a hand held device or other computer hardware. May be used to track inventory and other items in transit. Also known as a UPC (Universal Product Code) label to identify specific products.

Procurement Card (pCard)

A payment method whereby internal customers (requisitioners) are empowered to deal directly with suppliers for purchases using a credit card issued by a bank or major credit card provider. Generally a pre-established credit limit is established for each card issued. The cards enable eProcurement and facilitate on-line ordering, frequently from pre-approved suppliers under blanket contracts. (Miller, 2006)

Energy Efficiency Standards

A performance standard for products that consume energy prescribing a minimum level of energy efficiency, or low rate of energy consumption for a given output.

Export License

A permit from a host country government, enabling organizations to take goods out of a country. (ISM, 2000)

Manufacturer

A person or business entity that creates, makes, processes, or fabricates a product or something of value, which changes a raw material or commodity from one form to another or creates a new product or commodity. (Business, 2002)

Contract Carrier

A person or company that is under contract to transport people or goods for individual contract customers only. Also see Common Carrier and Private Carrier.

Freight Forwarder

A person or company whose business is to act as an agent on behalf of the shipper. (Business, 2002)

Bidder

A person or entity who submits a Bid in response to an Invitation for Bid (IFB), Invitation to Bid (ITB), Invitation to Tender (ITT), or other formal Solicitation type where price is the primary factor in the evaluation process for award determination. Also see Offeror, Proposer, Responder

Proposer

A person or entity who submits a Proposal in response to a Request for Proposals (RFP). Also see Bidder, Offeror, Responder

Responder

A person or entity who submits a Response to a Request for Qualifications (RFQ), Expression of Interest (EOI), Request for Information (RFI), Qualifications Based Selection (QBS), or other solicitation types, methods, or processes where price is not a factor in the evaluation process for award determination. Also see Bidder, Offeror, Proposer

Contracting Officer

A person with the authority to enter into, administer, and/or terminate contracts, and make related determinations and findings.

Consignee

A person, company, or government agency, usually the buyer, to whom goods are to be delivered by the consignor.

Imprest Fund

A petty cash fund. A cash reserve for expenditures made in accordance with established policies and controls.

Collaborative Relationships

A phase in the continuum of Buyer-Seller Relationships whereby the interdependence and necessity of cooperation is the difference between a collaborative and transactional relationship. Lower total costs are the common result of this type of relationship. (Burt, Dobler, Starling, 2003)

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. (Business, 2002)

Cycle Counting

A physical stock checking system in which the inventory is divided into groups which are physically counted at predetermined intervals, depending on their ABC classification. Thus, the physical inventory counting goes on continuously without interrupting operations or storeroom activities. (ISM, 2000)

Planned Order Release (POR)

A planned authorization for a supplier to ship material against an existing contract. An essential element of a material requirements planning (MRP) system. (ISM, 2002)

Contract Administration Plan (CAP)

A planning tool that 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. Also referred to as Contract Acquisition Plan.

Benchmark

A point of reference used in measuring an organization or a business unit's performance. (Business, 2002)

Password

A series of characters that enable a user to access a private file, website, computer or software application. (Business, 2002)

Debriefing

A practice used primarily during the Request for Proposal process, whereby the contracting authority will meet with those parties whose proposals were not deemed appropriate for award. It is viewed as a learning process for proposers who may gain a better understanding regarding perceived deficiencies contained within their submitted proposal.

Judgmental Forecasting Method

A prediction tool that incorporates intuitive judgments, opinions and probability estimates. These forecasts are very subjective and are considered qualitative issues with no absolute resolutions. Generally this situation occurs when either the organization infrequently procures the product or service or if the product or service is relatively new or in a dynamic environment. An example is the rapid increase in demand for hybrid automobiles.

Manufacturer's Price List

A price list published in some form by the manufacturer and available to and recognized by the trade. The term does not include a price list prepared especially for a given bid.

Free Alongside Ship (FAS)

A price that includes the cost of transportation and delivery to the side of the vessel, within reach of its loading tackle, at the specified port of shipment, with the purchaser's liability beginning at that point.

Fair and Reasonable Price

A price that is fair to both contracting parties, considering the agreed upon conditions, promised quality, and timeliness of contract performance. Purchasing officials may use a variety of techniques to assure a fair and reasonable price, such as, sealed competitive bidding, competitive proposals, price and cost analysis, and benchmarking to other contracts.

Discriminatory Price

A pricing scenario in which a supplier offers similar or identical items for sale, in identical quantities, at different prices to different buyers. (Business, 2002)

Price Differentiation

A pricing strategy in which a company sells the same product at different prices in different markets. (Business, 2002)

Market-Based Pricing

A pricing strategy that sets the value of a product from the market prospective and is based on supply and demand.

Intranet

A private network of computers within a company or organization, that serves shared applications intended for internal use. (Jansen, 2002)

Management

A process designed to achieve an organization's objectives by using its resources effectively and efficiently in a changing environment. The management process consists of five functions: planning, organizing, directing, controlling and staffing. (Ferrell, 2002)

Continuous Improvement

A process for improving an organization's performance along several criteria, particularly quality, over a period of time. An outcome generally included in a total quality management program. Also see Total Quality Management (TQM). (Burt, Dobler, Starling, 2003)

Liquidation

A process in which a company ceases to be a legal entity, usually because it is insolvent. The company's assets are then sold by a liquidator to discharge debts. (Business, 2002)

Conflict Resolution

A process leading to resolve a contractual conflict or opposition such as the public agency's policy to try to resolve by mutual agreement all contractual issues in controversy. These procedures may include such actions as fact-finding, negotiation, facilitation, mini-trials, mediation or arbitration.

Research and Development (R&D)

A process of scientific discovery and application of knowledge in which new products are created and uses are found for them.

Multi-Year Contract

A procurement contract that extends for longer than one year.

Make or Buy

A procurement decision that examines the cost/benefit of producing an item in-house or from an outside source. Two factors that stand out at the tactical level are: total cost of ownership and the availability of production capacity.

Competitive Negotiations

A procurement method for obtaining goods, services and construction for public use in which discussion and negotiations may be conducted with responsible offerors who submit responsive proposals. Also see Competitive Sealed Proposal.

Plant-Matter Based or Bio Based Product

A product derived from renewable resources, including fiber crops, such as kenaf; chemical extracts from oilseeds, nuts, fruits and vegetables such as corn and soybeans; agricultural residues, such as wheat straw and corn stover; and wood wastes generated from processing and manufacturing operation. These products stand in contrast to those made from fossil fuels and other less renewable resources such as virgin timber. An important component of Green Purchasing. (Miller, 2006)

Hold Back

A public sector regulatory requirement primarily appearing in construction solicitation projects; it is designed to retain a predetermined monetary amount of the full payment or a stated length of time after the project is completed before agency payment is made to the prime contractor in order to ensure that sub-suppliers have been paid for their work and materials. Also see Retainage.

Consumer Grade Product

A product designed and sold by the manufacturer intended to be used for personal use; products intended for intermittent use by the consumer. Example: Conair makes a consumer grade product hair dryer that is intended to be used occasionally by the consumer for up to 20 minutes per day and it also makes a commercial grade product hair dryer that is used professionally by hair cutting salons for frequent and continuous use throughout the 12 hour business day. Manufacturers may indicate "household use only" on the product's label to inform the user of the product's intended use and performance expectancy. Also see Commercial Grade Product.

Product Life Cycle

A product generally has the following life cycle stages: introduction, growth, maturity and decline. (Ferrell, 2002)

Private Label

A product or range of products offered by a retailer under their own name or under a brand that they own. They compete with branded goods.

Environmentally Preferable Product (EPP)

A product or service that has a lesser or reduced impact on human health and the environment when compared to competing products or services that serve the same purpose. Such products or services may include, but are not limited to, those which contain recycled content, minimize waste, conserve energy or water, and reduce the amount of toxics either disposed or consumed. Also see Sustainability.

Public Good

A product or service that is provided to an individual or a group of individuals for the benefit of many For example, a public-health measure that eradicates a disease protects the general public, not just those paying for the vaccinations. (Schiller, 2000 - modified)

Commercial Grade Product

A product that has been designed and sold by the manufacturer to be more durable, or more powerful or more longer lasting or having a larger capacity in comparison to its consumer grade product counterpart; designed to meet a more demanding application or operating need or requirements and generally costs more versus the consumer grade product. Generally the internal product's component parts are of a higher quality or more durable materials such as motors, bearings, metal versus plastic which are generally not visible to the end user but result in longer product life expectancy and performance. Example: Maytag Corporation makes a line of consumer grade washing machines for use in the home and it also makes a line of commercial grade product washing machines for use in Laundromats, nursing homes and hospitals. Also see Consumer Grade Product.

Optimized Production Technology

A production planning and control system, based on finite loading procedures, that concentrates on reducing bottlenecks in a production system in order to improve efficiency. Its key task is to increase total system throughput by realizing existing capacity in other parts of the system. (Business, 2002)

Errors and Omissions Insurance

A professional liability insurance that protects companies and individuals against claims made by clients for inadequate work or negligent actions. Errors and omissions insurance often covers both court costs and any settlements up to the amount specified on the insurance contract. (Investopedia).

Embargo

A prohibition on exports or imports. May create supply shortages of certain commodities that are available from global sources. (Schiller, 2000)

Implied Warranty of Merchantability

A promise, arising by operation of law, that something that is sold will be merchantable and fit for the purpose for which it is sold. Implied warranties come in two general types: merchantability and fitness.

Proposal

A proposal is a document submitted by a vendor in response to some type of bid solicitation to be used as the basis for negotiations or for entering into a contract.

Interlocking Directorates

A provision of Section 8 of the Clayton Antitrust Act that prohibits corporations from reducing competition by having the same directors or officers. Sometimes called Interlocking Agreements. Also see Clayton Act (The Clayton Anti-Trust Act).

Charette Process

A public forum where the agency seeks the public's input and to inform them of ideas and plans generally in upcoming construction projects. The public, as well as directly affected stakeholders, have the opportunity to voice their opinions and concerns during the development of the project scope of work and specifications in an effort to arrive at an optimum plan.

Legal Notice

A public notice required by law, ordinance or executive order. Generally placed in a newspaper of general circulation or may be posted on a web-site, magazine or other media, depending on the specific legal requirements.

Notary Public

A public officer authorized to attest and certify, by signature and official seal, certain types of documents, to give them credit and authenticity so they may be used as evidence and qualified for recording and to take affidavits and deposition.

Auction

A public sale in which property or items of merchandise are sold to the highest bidder. Many governments will auction off government property and may contract with a private auctioneering firm to handle the complete transaction including advertising, the sale and collection of funds, etc. (Miller, 2006)

Classification

A publication containing a list of items and the classes to which they are assigned for the purpose of applying class freight rates, along with governing rules and regulations.

Commodity Rate

A published tariff applicable to the shipment of a specific commodity in large quantities between selected geographical points. Also see Class Rate.

Open Account Purchase

A purchase by a buyer who has established credit with the vendor, payment for which is to be made at some future date, in accordance with terms agreed to when the account was established.

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. Usually formal competitive bidding procedures are waived.

Confirming Purchase Order

A purchase order issued after the fact restating the same terms originally placed orally, or by some other informal means. Also see Confirmation Order.

Open Market Purchase

A purchase, usually of a limited monetary amount, from any available source.

Buyer

A purchaser or procurer of products and services. This title may also refer to an individual who is responsible for the procurement activities of an entity. A job title within a procurement organization also commonly referred to as a Purchasing or Procurement Agent. Also see Agent, Principal and Law of Agency.

Purchase Order

A purchaser's written document to a vendor formalizing all the terms and conditions of a proposed transaction, such as a description of the requested items, delivery schedule, terms of payment, and transportation.

Just-in-Time (JIT)

A quality concept first perfected by the Japanese. Its basic tenet is the elimination of waste: the waste of overproduction, unneeded motion, transportation, excessive inventory and production and labor time. The term has been adapted to mean that previously held MRO inventory items are outsourced to JIT suppliers who may provide next day delivery. JIT generates best value through supplier partnerships which generate savings through labor, inventory, production and processing costs.(Business, 2002)

Less-Than-Carload (LTC)

A quantity of freight less than the amount necessary to constitute a full carload. A transportation/freight term that refers to a freight rate that is usually higher than for a full carload. (ISM, 2000)

Less-Than-Truckload (LTL)

A quantity of freight less than the amount necessary to constitute a full truckload.

Memorandum of Understanding (MOU)

A quasi-contract generally entered into between government agencies and private sector contractors who may be providing services to the government. It may also be entered into between inter/intra government agencies and details the essence of the agreement between the parties but lacks the enforceability of a contract.

Quasi-Judicial

A quasi-judicial body is an individual or organization which has powers resembling those of a court of law or judge and is able to remedy a situation or impose legal penalties on a person or organization. Such bodies usually have powers of adjudication in such matters as: breach of discipline; conduct rules; trust in the matters of money or otherwise. Their powers are usually limited to a particular area of expertise, such as financial markets, employment, public standards, immigration, or regulation. (Wikipedia, 1.22.07)

Cost and Freight (C & F)

A quoted price that includes both the cost of an item and transportation charges to the destination; commonly used when shipping via ocean freight.

Cost, Insurance, Freight (c.i.f.)

A quoted price that includes marine insurance in addition to the cost of the item and transportation charges to destination; commonly used when shipping via ocean freight.

Price Index

A ratio expressing the relationship between the price of a commodity at a given point in time to its price during a specified base period. (ISM, 2002)

Cost Savings

A realized and measurable reduction in material, resource, or labor expense(s) associated with the production and delivery of an item or service. Primarily associated in the manufacturing of an item; interchangeably used to indicate a lower price paid by the buyer from what was previously paid. Also see Price Reduction, Cost Reduction.

Price Rebate

A reduction in price, usually given after the completion of the contract and based on the quantity or value of goods purchased.

Civil Law

A reference to that body of law affecting the relationship among individuals. Contract law is an example of civil law.

Drawback

A refund of money paid. For example, a refund of customs duties paid on imported material if the material is later exported.

Common Market

A regional market with common external tariffs and free flow of labor and capital, without internal tariffs. (ISM, 2000)

Purchase Log

A register of all requisitions received and all purchase orders issued, containing information such as requisition number, purchase order number, bid number, the vendor, commodity code or description of the material or service, and the value of the order. Generally contained in a legacy data base.

Client/Server

A relationship in which one computer program requests information from another computer program. The design model for applications running on a network. (Jansen, 2002)

Convenience Product

A relatively inexpensive, frequently purchased item for which buyers want to exert only minimum effort to obtain. (Schiller, 2000)

Progress Report

A report prepared by a contractor during the performance of a contract. A useful means of assessing the routine progress of the contractor in selected areas of the contract.

Contract Record

A report providing detailed information regarding the orders or releases placed for delivery of goods against a contract so the volume of contract purchases can be determined.

Cradle-to-Grave

A representation of the life cycle of a given system, from concept through development, acquisition, operations phases and final disposition. This term is also used when speaking about the generation and disposal of hazardous waste. Also called womb-to-tomb and referred to as the purchasing cycle. (Nash, Schooner, OíBrien, 1998)

Cancellation Request

A request, by either party to a purchase agreement, to cancel the contract, often at no cost. Also see Discharge by Mutual Assent, Termination for Convenience and Termination for Default.

Merchantable Quality

A requirement of the Sale of Goods Act that goods must be fit for at least one ordinary purpose; adequate for ordinary use.

Knocked Down (KD)

A requirement that goods be shipped disassembled to reduce space required for transportation and storage or to achieve economies by having the product or goods assembled on-site. (ISM, 2000)

Non-Responsible (Bid)

A response to a bid or offer from a contractor, business entity or individual that does not have the ability or capability to fully perform the requirements of the bid or offer. A business entity or individual who does not possess the integrity and reliability to assure contractual performance.

Non-Responsive (Bid)

A response to a bid or offer that does not conform to the mandatory or essential requirements contained in the Invitation for Bids (IFB).

No Bid

A response to an IFB (Invitation for Bid) stating that the respondent does not wish to submit a bid; functions to prevent suspensions from the bidders list for failure to show active interest or submit bids.

Performance Based Contract

A results-oriented contracting method that focuses on the outputs, quality, or outcomes that may tie at least a portion of a contractor's payment, contract extensions, or contract renewals to the achievement of specific, measurable performance standards and requirements. These contracts may include monetary and non-monetary incentives as well as specific remedies.

Job Analysis

A review and determination, through observation and study, of pertinent information about a job - including specific tasks and necessary abilities, knowledge and skills. (Business, The Ultimate Resource, 2002)

Freight Bill Audit

A review of freight bills to determine if the assessed charges were correct. It checks the classification, rating, or extension either by a third party or an inside auditor.

Final Inspection

A review or examination of a product, service or construction by the purchaser to assure that the seller/contractor has conformed to all applicable specifications and requirements before making final payment.

Evaluation

A review process used to make a determination. In service contracting, a methodology used to determine the successful proposer/offeror which may include subjective criteria and scoring.

Competition

A rivalry among businesses for sales to potential customers. The "invisible hand" (refer to the writings of Adam Smith). The effort of two or more parties acting independently to secure the business of a third party by offering the most favorable terms (including price). (Ferrell, Hirt, 2003)

Gatekeeper

A role that contributes to the positive functioning of a group. A relations-oriented team role that encourages communication and participation from all team members; invites and clarifies ideas; and focuses on the assigned task.

Decisional Role

A role that involves various aspects of management decision making. (Business, 2002)

Conditional Sale

A sale made with the understanding that title will not pass from the vendor to the purchaser until some prerequisite condition has been met, although possession may be surrendered to the buyer.

Click-and-Ship

A sales operation where customers order products online and the product is shipped directly to the customer. On-line ordering of products used to facilitate Just-in-Time procurement. May be referred to as "Point-Click-Buy-Ship". (Jansen, 2002)

Bid Sample

A sample to be furnished by a bidder to show the characteristics of a product offered in a bid. Bid samples are used only to determine the responsiveness of the bid. (Nash, Schooner, OíBrien, 1998)

Customs Tariff

A schedule of charges assessed by a government on goods moving in or out of a country. (ISM, 2000)

Collusive Bidding

A secret agreement among bidders/offerors to circumvent laws and regulation when submitting bids and offers in an attempt to win contracts by illegal means or methods.

Channel of Distribution (or Marketing Channel)

A sequence of marketing organizations that directs a product from the producer/manufacturer to the ultimate user/consumer. (Business, 2002)

Prepaid

A term denoting that transportation charges have been or are to be paid at the point of shipment.

Hawthorne Experiments

A series of studies undertaken at the Hawthorne plant of Western Electric in the United States from which Elton Mayo concluded that an approach emphasizing employee participation can improve productivity. They began in 1924 as a study conducted by the National Research Council into the relationship between workplace lighting and employee efficiency, and was then extended to include wage incentives and rest periods. (Business the Ultimate Resource, Bloomsbury Publishing, 2002)

Market Testing

A service contracting technique which refers to the use of public-private competitions to compare or benchmark in-house service delivery approaches and costs against the private sector. (Ferrell, 2002)

Operating Lease

A service lease, usually short-term, including both financing and servicing of the item leased; payments made under the lease are generally not sufficient to recover the full cost of the equipment. Also see Financial Lease.

Commercial Paper

A short-term promissory note issued by a large corporation. (Ferrell, Hirt, 2003)

Federal Deficit

A shortfall created when the Federal Government spends more in a fiscal year than it receives. (Schiller, 2000)

Blanket Purchase Agreement (BPA)

A simplified procurement method of filling the anticipated repetitive needs for supplies or services through the award of competitive line item contracts or discounts off of a suppliers catalog usually through competition. Used to reduce administrative expense resulting from small, repetitive requirements.

Minimum-Maximum Inventory Levels

A simplistic inventory system in which a minimum quantity and maximum quantity are set for an item and when the quantity drops below the minimum you order up to the maximum. This will guard against stock outs as well as prevent the buildup of stock, either of which can be costly to the organization.

Database

A single collection of data stored in one place that can be used by personnel throughout the entire organization to make decisions and assist in analysis. (Jansen, 2002)

Request for Quotation (RFQ)

A small order amount purchasing method. Generally used for small orders under a certain dollar threshold, such as $1000.00. A request is sent to suppliers along with a description of the commodity or services needed and the supplier is asked to respond with price and other information by a pre-determined date. Evaluation and recommendation for award should be based on the quotation that best meets price, quality, delivery, service, past performance and reliability.

McGregor, Douglas

A social scientist who authored "The Human Side of Enterprise" published in 1960 which examines management theories on behavior of individuals at work. He formulated two models which he called Theory X and Theory Y. Also see Theory X and Theory Y.

Legislative Law

A source of public procurement law that may include written constitutions, statutes, ordinances, and charters.

Junk Bonds

A special type of high-interest-rate bonds that carry higher inherent risks.

Preferred Stock

A special type of stock whose owners, though not generally having a say in the running of the company, have a claim to profits before other stockholders do. (Ferrell, 2002)

Firewall

A specially programmed computer system that stands between an organization's LAN and the Internet. A security measure used to prevent hackers and other unauthorized users from accessing internal networks. May also be created to protect the security of servers.

Bargaining Unit

A specific group of employees represented by a union. A group of employees who collectively negotiate with management for wage and benefit enhancements. (Business, 2002)

Objective

A specific, measurable and observable result of an organization's activity which advances the organization towards its goal.

Functional Specification

A specification setting forth the results required from the supply or service.

Design Specification

A specification that establishes the characteristics an item must possess, including detail indicating how it is to be manufactured. May include engineering plans or drawings and blueprints. It tells the contractor in very prescriptive terms, what they are to provide the buyer. Also see Performance Specifications.

Best in Class

A standard of excellence given to an organization or business unit that demonstrates verifiable performance in a particular category or business area. Benchmarking may be one method of measuring and determining best in class designation.

Regulation

A statement 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.

Hypothesis Testing

A statistical process of testing sample data from a statistical study to determine whether it is consistent with what is known about the sample population. (Business, 2002)

New York Mercantile Exchange (NYMEX)

A stock exchange resident in New York City, that is self-regulated but must comply with the regulations of the U.S. Securities and Exchange Commission. (Ferrell, 2002)

Operational Audit

A structured review of the systems and procedures of an organization in order to evaluate whether they are being carried out efficiently and effectively. The audit involves establishing performance objectives, agreeing to the standards and criteria for assessment, and evaluating actual performance against targeted performance. (Business, 2002)

Contract Goals

A term generally used in construction projects in seeking a good faith effort on the part of the prime contractor to have a certain level of minority subcontracting participation in the agency's project. Also see Goals and Set-Asides.

Informalities/Irregularities

A submission of a bid or offer which contains minor defects or variations from the exact requirements of the solicitation that do not affect price or other mandatory requirements. Generally a matter of form rather than substance. Following legal review may sometimes be corrected within a certain time period. Also see Irregularities and Informalities. (Harney, 1992)

Pareto Charts

A subset of the 80/20 Pareto Law. The charts are used to distinguish between the critical and trivial problems. A commonly used quality control tool. (Business, 2002)

Defense Acquisition Regulations (DAR)

A subset of the Federal Acquisition Regulations (FAR) that directly apply to the U.S. Department of Defense (DOD).

Rebate

A sum of money returned by the vendor to the buyer in consideration for the purchase of an agreed upon amount, quantity or value of goods and services, generally within a limited period of time.

Bid Deposit

A sum of money, a check, or other acceptable cash alternative such as an irrevocable letter of credit or the contractor's pledge against owned property or against personal assets deposited with the buyer by a bidder as a guarantee that the bidder will enter into a contract if awarded. May also be in the form of a bond issued by a surety and deposited with a procurement activity guaranteeing the bidder will not withdraw the bid for a specified period of time, will furnish bonds as required, and will accept a contract if awarded, or forfeit the deposit.

Escrow

A sum of money, bond, piece of property, or deed delivered into the keeping of a third party by one party to a contract, to be returned only when an obligation is fulfilled, or conditions of a contract are met.

Balance of Payments

A summary record of a country's international economic transactions in a given period of time. The difference between the flow of money into and out of a country. (Schiller, 2000)

Certificate of Damage

A supply management document prepared by the receiver of goods, establishing that the material delivered and received was damaged and includes a detailed description of the damage and the number of items damaged. May be used to file a damage claim with the carrier.

Original Equipment Manufacturer (OEM)

A supply management term for the purchase of parts and material directly from the manufacturer of the equipment or from an authorized reseller. For example, Ford automotive replacement parts would be purchased from an authorized Ford reseller. (ISM, 2000)

Furniture, Fixtures and Equipment (FFE)

A supply management term that refers to commodity designations often procured by a buying team that specializes in this area. Relates to new construction and the commodities needed to furnish the structure. (ISM, 2000)

Maintenance, Repair, Operating (MRO)

A supply management term that refers to various commodities that are generally of low value, purchased frequently and available from multiple sources. These items are often assigned to a buying team who specializes in these commodity areas. Typical examples include oil, rags, grease, tools, and hardware fasteners.

Maintenance Bond

A surety guarantee which protects the purchaser against defects or inferior materials or workmanship for a specified period of time following the expiration of the initial warranty or guarantee period. An extended warranty guaranteed by a surety. (Business, 2002)

Flextime

A system in which employees set their own hours within employer determined limits. May also include a four-day workweek schedule. (Business, 2002)

Commodity Code

A system of words and numbers designed to identify and list commodities or services by classes and subclasses. See the NIGP Commodity/Service Code.

Business Process Improvement (BPI)

A systematic approach to help organizations make significant change in the way they do business. (Business, 2002)

Bin Tag

A tag attached to a storage bin on which a perpetual inventory is recorded.

Immaterial Defects

A tangential flaw having no material body or form that may be corrected without prejudice to other bidders. Example: Submission of two copies of a catalog when three copies were requested.

Progressive Tax System

A tax system in which taxes get higher for wealthier residents; it's the opposite of a regressive tax system. Sometimes referred to as a "graduated" tax system. (Business, 2002)

Gain Sharing

A team building and quality effort to achieve improvements by empowering employees to find creative ways to save dollars, improve profit, increase productivity and efficiency. Employees come together as a group or team and are rewarded if their efforts prove successful. Rewards may be monetary or non-monetary. (Business, 2002)

Root Cause Analysis (RCA)

A technique that enables the manager to determine what happened, why and methods of preventing the occurrence in the future by examining all factors that could contribute to a problem, including but not limited to factors such as environmental, human and procedural matters.

Random sampling

A technique that results in a representative subset of the population where each element has the same chance of being selected as every other element in the population; such as to select items from the inspection lot so each item in the lot has an equal chance of being included in the sample. A form of quality assurance often used in modern polling, market research and manufacturing.

Material/Materiel Requirements Planning (MRP) System

A technique used to determine the quantity of dependent demand materials used in a planning period. May be used to schedule and control production, inventory levels, and deliveries from outside suppliers.

Management Reports

A technique used to measure progress or to control procurement activities from collected data. These reports enable both procurement officials and managers to assess progress and readjust activities to accomplish the goals and objectives of the organization.

Remedial Training

A technique utilized to improve or upgrade an individual's knowledge and skills when job performance is not meeting predetermined expectations.

Living Wage

A term used by advocates to refer to the minimum hourly wage necessary for a person to achieve some specific standard of living. In the context of developed countries such as the United Kingdom or Switzerland, this standard generally means that a person working forty hours a week, with no additional income, should be able to afford a specified quality or quantity of housing, food, utilities, transport, health care, and recreation. This concept differs from the minimum wage in that the latter is set by law and may fail to meet the requirements of a living wage. (Wikipedia 1.17.07)

Norming

A term used in group development where 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.

Hard Bargaining

A term used in negotiation strategy. It is the last resort and involves take-it-or-leave-it tactics. Its use is limited to one-time or adversarial situations in which long-term or collaborative relationships are not an objective. (Burt, Dobler,Starling, 2003)

Price At Time of Delivery

A term used in sales contracts when market prices are so volatile that the vendor will not give a firm price or use an escalator clause, but will only agree to charge the same price to all customers for similar purchases on the day of shipment or delivery of goods. Also see Open-End Pricing and Price Prevailing at Date of Shipment.

Cargo

A term used to denote goods or produce being transported generally for commercial gain, usually on a ship, plane, train, van or truck. Nowadays containers are used in all intermodal long-haul cargo transport. (Wikipedia, 2007)

Friction-Free Market

A term used to describe a market in which there is little differentiation between the various products sold to the same target market thus resulting in a high degree of customer choice. Example: Beverages and cereal. (Business, 2002)

Cannibalize

A term used to describe the disassembly, dismantling, stripping or tearing down of buildings or equipment for salvage components or parts which may be used to repair, assemble, or re-build other equipment. A process used to extend the life cycle of equipment.

First-Article Inspection (FAI)

A term usually used in the purchase of custom-made goods (design specification). A qualitative method by which the vendor must provide a final production item for the purchaser's review and approval before the balance of the production run is made and shipped by the vendor. Also known as First-Article Testing.

Best Interest

A term which grants the chief procurement officer the discretion to take the most advantageous action on behalf of the entity they represent usually in the absence of law or regulation. Also see Discretion. (NASPO, 2001)

Maslow's Hierarchy (of Need)

A theory developed by Abraham Maslow, that arranges the five basic needs of people: Physiological, Security, Social, Esteem and Self-Actualization-—into the order in which people strive to satisfy them. Once a need is satisfied, it is no longer a motivator. (Ferrell, 2002)

Periodic Inventory Control System

A time-based inventory control system involving scheduled reviews of the stock level of each inventory item.

Progress Payments

A timed sequence of payments made during the performance of a contract; periodic payments made over the life of a contract; allow the contractor to submit invoices for payment as progress is made in performing the contract. Progress payments shift risk to the public agency since payment for progress made does not guarantee that the work will be completed. Also see Advance Payment and Partial Payment.

Honorarium

A token of appreciation in recognition of acts or professional services.

Forecasting

A tool used to determine future needs. An ongoing assessment to examine opportunities and is an essential element of strategic planning. It requires procurement professionals to keep abreast of the market and surveys and understand various indicators, business cycles, indexes, lead times, and price histories of commodities and services.

General Agreement on Tariffs and Trade (GATT)

A trade agreement originally signed by 23 nations in 1947, that provided a forum for tariff negotiations and a place where international trade problems could be discussed and resolved. (Schiller, 2000)

Private Carrier

A transportation line not engaged in business with the general public. Also see Common Carrier and Contract Carrier.

Prepay and Add

A transportation term indicating that the seller pays the carrier and adds the freight charges onto the invoice for goods purchased. Also see Free on Board (F.O.B.) terms. (ISM, 2000)

Door-To-Door

A transportation term used to indicate through transportation of a container and its contents from the consignor to consignee. (ISM, 2000)

Container

A truck trailer body that can be detached from the chassis for loading onto a vessel, a railcar, or stacked in a container depot. They come in various lengths between 20' and 53'. (Business, 2002)

Blanket Bond

A type of bond used to insure a bidder's performance on two or more contracts instead of issuing separate bonds for each contract. The amount and form of the blanket bond shall be established by the contracting entities.

Indefinite Delivery (ID) Contract

A type of contract in which the time of delivery is unspecified in the original contract but established by the procurement officer during contract performance.

Firm Fixed Price (FFP) Contract

A type of contract providing for a price that is not subject to adjustment on the basis of the contractor's cost experience in performing the contract. FFP contracts place maximum risk and full responsibility on the contractor for all costs and resulting profit or loss. They provide maximum incentive for the contractor to control costs and perform effectively and impose a minimum administrative burden upon the contracting parties unless changes are issued or unforeseen events occur during performance. (Nash, Schooner, OíBrien, 1998)

Public Private Partnership (P3)

An arrangement for service delivery, whereby government and private enterprise pool their skills and resources to meet a particular objective. Also see Concession Model.

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 may be used in research and development areas, as well as public/private partnerships.

Indefinite Quantity (IQ) Contract

A type of contract that provides for the delivery of indefinite quantities, within stated limits, of supplies or services to be furnished during a fixed period, with deliveries or performance to be scheduled by placing orders with the contractor.

Dutch Auction

A type of online auction where a seller offers multiple copies of the same item, and the winning bidders pay the amount of the lowest winning bid. (Jansen, 2002)

Enterprise Funds

A type of proprietary fund used to account for fees charged in exchange for goods and services. A criteria to determine enterprise funds is 1) generates revenue, 2) provides goods or services or 3) operates as a stand-alone or is self-supporting. Funds which control various utilities such as water, water reclamation, storm water, electric and other entities providing service financed through user charges. Also see Internal Service Fund and Proprietary Fund.

Internal Service fund

A type of proprietary fund which accounts for the financing of goods or services provided by one department or agency to other departments or agencies of the governmental unit, or to other governmental units, on a cost-reimbursable basis. Some examples of internal service funds could include: self-insurance funds, central warehousing and purchasing, central data processing and central printing and duplicating. Also see Enterprise Fund and Proprietary Fund.

Field Purchase Order (FPO)

A type of purchase order with a pre-approved maximum value used to expedite the acquisition of non-recurring goods and services necessary for business operations. An FPO is used for occasional, unexpected business expenditures i.e., the breakdown of a company vehicle in the middle of a delivery trip.

NATO Codification System

A uniform system used as a common method to classify, identify and designate all items of supply by means of a stock number.

Option

A unilateral right in a contract which the jurisdiction may choose to exercise to purchase additional supplies or services called for in the contract, or to extend the period of performance. Also see Buyer's Option.

European Union (EU)

A union of European nations established in 1992 with the Maastricht Treaty, to promote trade among its members; one of the largest free trade markets in the world. (Business, 2002)

Minor Irregularity

A variation from the solicitation that does not affect the price of the contract or does not give a respondent an advantage or benefit not enjoyed by other respondents, or does not adversely impact the interests of the contracting party.

Labor-Hour Contract

A variation of the time-and-materials contract differing only in that materials are not supplied by the contractor. Provides for the acquisition of services on the basis of direct labor hours at specified fixed hourly rates; is generally used when it is not possible to estimate the extent or duration of required work.

Barriers To Entry

A variety of obstacles that make it difficult or impossible for would-be producers to enter a particular market, such as patents or copyrights. (Schiller, 2000)

Niche Market

A very specific market segment within a larger market. It may involve very specialized goods or services with very few if any competitors. The niche market may be characterized by exclusiveness or a particular differentiating feature that makes it unusual or unique. (Business, 2002)

Last In-First Out (LIFO)

A warehousing inventory term used to indicate that the latest acquired materials are assumed to be physically used first and the remaining materials acquired earlier in date time are assumed to be still on hand in inventory. The LIFO methodology does not rotate inventory therefore it tends to result in aged and outdated materials remaining in inventory; An accounting technique where the highest price is selected from a range of prices that have been paid for the item over a period of time, thus lowering the average cost per unit remaining in inventory while simultaneously increasing the cost of goods sold. The LIFO accounting technique tends to be more popular during inflationary periods, especially in private sector organizations, because of tax considerations. Also see First in-First Out (FIFO).

Full Warranty

A warranty as to full performance covering both labor and material; the warrantor must remedy the product within a reasonable time and without charge after notice of a defect or malfunction.

Implied Warranty

A warranty not specifically written into a contract but implied to be valid through law. Also see Express Warranty.

Limited Warranty

A written warranty which fails to meet one or more of the minimum standards for a full warranty.

Remanufactured Product

Any product diverted from the supply of discarded materials by refurbishing and marketing said product without substantial change to its original form. (Burt Dobler, Starling, 2002)

Gross Negligence

Actions that display a complete disregard for life or safety. A deliberate indifference to the rights of others. A failure to act in a prudent manner or to take reasonable precaution. (Harney, 1992)

Post-Award Activities

Activities that ensue after the contract has been awarded which ensures that the buyer receives what was ordered on time and at the price and quality specified. These activities may include supplier development, technical assistance, trouble shooting, and the management of the contract and the resulting relationship.

Government Performance and Results Act (GPRA) (Public Law 103-62)

Adopted in 1993, requires that all programs in all federal departments and agencies report annually to the U.S. Congress on their performance. Requires federal agencies to "establish performance indicators to be used in measuring or assessing the relevant outputs, service levels and outcomes of each program activity."

Apparent Low Bidder

After conducting a price analysis from quotes/bids received, the buyer initially identifies the low bidder strictly based on the lowest price received before determining whether the bid is from a responsive and responsible bidder.

Resources

All natural, human, and man-made aids to production of goods and services.

Labor Force

All persons over the age of 16 who are either working for pay or actively seeking paid employment. (Schiller, 2000)

Government Property

All property owned by or leased to a government entity or acquired by the government under the terms of a contract, including property made available for the use of the contractor during the term of the contract.

Empowerment

Allowing employees to participate in the decision-making process. The outcome of an employee participation process. (Business, 2002)

Escalator (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.

Distance Learning

Also known as eLearning or online training. Taking a class or obtaining training via the Internet. Classes may be sponsored by a university, college or other educational venue. ISM and NIGP provide distance learning classes for professional development. (Miller, 2006)

Cause and Effect Diagrams

Also known as fish-bone diagrams, they are quality control tools which show the possible cause of a problem. It is an aid to brainstorming and hypothesis generation. (Business, 2002)

Hurdle Rate

Also referred to as "minimum cost differential", it is a predetermined amount of cost savings that must be achieved before a change in service delivery (e.g. moving from government service delivery to outsourcing) is considered warranted.

Extranet

Also referred to as an "external network". The connection of two or more intranets for sharing information between a business and its clients and suppliers. (Jansen, 2002)

Robinson Patman Price Discrimination Act (U.S. Law)

Amended the Clayton Antitrust Act in 1936. It is intended to eliminate discriminatory and predatory pricing practices. Private individuals as well as government prosecutors may initiate lawsuits under this Act. Also see Clayton Antitrust Act, Sherman Antitrust Act and Federal Trade Commission Act.

Dividend

Amount of corporate profits paid out for each share of stock. A distribution of earnings to the stockholders of a corporation. (Business, 2002)

Mediated Arbitration

An ADR process frequently referred to as "med-arb". It begins as mediation until an impasse is reached. When an impasse is reached, the neutral party is authorized by the parties to issue a binding opinion on the cause of the impasse or the remaining issues in dispute.

Facilitation

An ADR process which involves the use of techniques to improve the flow of information between parties to a dispute. The technique may also be applied to decision-making meetings where a specific outcome is desired. Is generally successful when the parties or issues are not extremely polarized.

Fact-Finding

An ADR technique that uses an impartial expert (or group) selected by the parties with the authority to appoint a fact-finder in order to determine what the "facts" are in a dispute.

Design-Build-Finance-Operate

An Alternate Project Delivery Method (ADPM) demonstrating a design-build concept where the owner and designer/contractor work as a team to ensure that the owner's requirements are met during design and construction. A complex and innovative approach developed through "private public partnerships" where there is much greater involvement of private financing and often combines construction and management or operations contracts. (Examples: Building and operating a county amusement park, ice skating rink, golf course).

North Atlantic Treaty Organization (NATO)

An International organization made up of 26 countries that each retains their full sovereignty. NATO provides a forum in which the United States, Canada and European countries can consult together on security issues of common concern and take joint action in addressing them. (www.nato.itn, July 2007)

Devaluation

An abrupt depreciation of a currency whose value was fixed or managed by a government. An indicator of a troubled economy.

Metric Conversion Act of 1975

An act designating the metric system as the preferred system of weights and measures for United States trade and commerce requiring all agencies to use the metric system in their acquisitions, unless it is impracticable to do so or is likely to cause significant inefficiencies or loss of market to United States firms. (FAR 11.002).

Constructive Suspension

An action in which an agency is responsible for a work stoppage without a contract suspension. Examples include agency convenience, funding delays, and delays that include issuance of the notice to proceed or change orders, site availability, inspection or approvals. A contractor may be entitled to compensation for increased costs after consideration and documentation of a constructive suspension.

Ordered Suspension

An action in which an agency orders work to be suspended in accordance with a contract suspension of work clause. The contractor may be compensated only if the delay is unreasonable. Contractors are not entitled to compensation if the Suspension of Work is the contractor's fault. Suspension of work due to faulty performance is an example. Also see Suspension of Work Clause.

Contract Extension

An action to change and extend a contract termination date pursuant to a provision in the scope of work and upon written mutual agreement by both parties. Reasons for a contract extension include: an excusable delay, a contractor's acceptable performance record, unused allocated funding, or agency need for continued service until a new contract is in place. Extension should be based on sound legal advice so as to avoid challenges by other interested vendors. A contract extension is not the same as a contract renewal. Also called Extension of Contract.

Preference

An advantage given to bidders/offerors in a competition for contract award which may be granted based on pre-established criteria such as ethnicity, residence, business location, origination of the product or service, business classification (e.g., small business) or other reasons. A governmental bias. Also see Buy Local, Disadvantaged Business Preference, and Local Preference.

Apparent Agency (a.k.a. "estoppel agency")

An agency relationship whereby the principal's conduct implies that an agent has authority to act on the principal's behalf and thereby the Principal becomes bound to and responsible for what the agent signed or did. (Garner, 2004)

Commission Merchant

An agent or broker who buys or sells goods for others in return for a commission.

General Agent

An agent who has much broader powers and more latitude in using their own judgments to carry out duties assigned to them by their principals; they act on behalf of the principal on a continuous basis. Example: Purchasing Agents for a governmental agency have broad powers to contract for goods and services within the scope of their procurement authority and responsibilities.

Lump Sum

An aggregate or lot price which may represent the total price for a group of items in place of or in addition to unit prices for each individual item. The total price of a group of items which is priced as a whole for bidding purposes.

Intergovernmental Contract

An agreement in which one government contracts with another for the delivery of goods and services. Also see Shared Services.

Cost Plus Percentage of Cost Contracts

An agreement on a construction project in which the contractor is provided a specified percentage profit over and above the actual costs of construction. These contracts are considered poor business practice because the contractor has little incentive to hold down costs. This type of costing method is prohibited in Federal purchasing. A cost-plus-fixed-fee contract is a better approach.

Covenant

An agreement or promise of two or more parties, in writing, stipulating that something is done, or shall be done, or as to the truth of certain facts.

Information Technology (IT)

An all encompassing term that refers to the devices used for creating, storing, using, or exchanging information, and to the design and practical application of the devices themselves. May refer to a group within the organization that is responsible for managing, evaluating and upgrading the various forms of technology the organization is using. (Jansen, 2002)

Demand Analysis

An all-inclusive method conducted to quantify, with reasonable accuracy, the anticipated agency material requirements that will be needed to support the agency's operations. Also see Market Analysis and Supplier Analysis.

Discount

An allowance, reduction or deduction from a selling price or list price extended by a seller to a buyer in order for the net price to become more competitive. More common forms of discounts include trade discounts, quantity discounts, seasonal discounts and cash discounts. Also see Cash Discount, Payment Terms and Prompt Payment Discount.

Mini-trial

An alternate dispute resolution technique, that is flexible, voluntary and nonjudicial. Principals (top management) hear a short presentation of the factual and legal positions of the parties in dispute and engage in nonbinding negotiations to resolve a claim. The procedure permits either party to withdraw at any time without prejudicing the litigation process.

Cooperative Problem-Solving

An alternative dispute resolution (ADR) technique which is one of the most basic methods of dispute resolution. This informal process usually does not use the services of a third party and typically takes place when the concerned parties agree to resolve a question or issue of mutual concern. It is a positive effort by the parties to collaborate rather than compete to resolve a dispute.

Construction Manager at Risk (CMR)

An alternative procurement method that allows the client to choose the Construction Manager based on qualifications. The entire operation is centralized under a single contract before the design stage is complete. The CM gives the client a guaranteed maximum price, and coordinates all subcontract work. Speed of the project and strengthened coordination is achieved between the Architect/Engineer and the CM resulting in cost savings. There is also a strong allegiance between the CM and the client since the client hired the CM. Finally, transparency is enhanced, because all costs and fees are in the open, diminishing adversarial relationships between components working on the project, while at the same time eliminating bid shopping. The CM is an alternative procurement method that still retains enough of the design-bid-build process that is assuages some client's fears concerning design-build.

Overrun

An amount by which the actual cost of performance exceeds the amount budgeted for the work or the amount contracted for.

Demand Deposit

An amount on deposit in a checking account. (Schiller, 2000)

Public Notice

An announcement made by a public agency concerning a solicitation or other information of general public interest. Usually placed in a newspaper of general circulation, a web-site, circular, magazine or other vehicle of general publication. Must comply with legal requirements of the jurisdiction.

Industrial Engineering

An applied science discipline concerned with the prediction, planning, evaluation, and improvement of company effectiveness. The purpose of industrial engineering is to maximize efficiency, quality, and production through the best use of personnel, materials, facilities, and equipment.

Kaizen

An approach to total quality management (TQM) originating in Japan. It is the Japanese word for "improvement". It can be described as continuously improving by making small improvements, mainly in process type improvements. If effectively practiced, it eliminates waste and generates dramatic improvement and cost savings. During the TQM revolution, many organizations practiced Kaizen in their manufacturing operations. (Business, The Ultimate Resource, 2002)

Labor Surplus Area

An area designated by the Secretary of Labor as having concentrated unemployment or underemployment in comparison with other areas. Used as one of the criteria for designating economically disadvantaged vendors/suppliers.

Line of Credit

An arrangement by which a bank or lending institution agrees to lend a specified amount of money to an organization upon authorized request. Assures that cash will be available to meet day-to-day business expenses. (Ferrell, 2002)

Item Description

Canadian The minimum data necessary to establish the identity of an item of supply for material management purposes.

Organization

An arrangement of people and resources working in a planned manner toward specified strategic goals. May include any structured body such as a business, company, or firm in the public or private sector, or not-for-profit association. (Business, 2002)

Joint Administrative Purchasing

An arrangement under which part or all of the purchases of two or more governmental units are made by a joint purchasing office. Also referred to as consolidated purchasing.

Intangible Asset

An asset such as intellectual property or goodwill that is not physical. (Business, the Ultimate Resource, 2002)

Capital Asset

An asset with a life cycle of more than one year with a value of more than a certain prescribed limit set by accounting standards or by governmental policy.

Push Strategy

An attempt by manufacturers, wholesalers and other distribution channels to motivate intermediaries to push the product down to their customers. (Business, 2002)

Environmentally Preferable Purchasing

An attempt to address environmental challenges by taking advantage of government's vast purchasing power to create strong markets for environmentally friendly products and services. Purchasing goods and services in a way that does not harm the environment. Also known as Green Purchasing. (Miller, 2006). Also see Sustainable Procurement.

Market Survey

An attempt to determine whether there are qualified sources capable of satisfying the specific requirements for supplies, services or construction: may range from written or telephone contacts with knowledgeable experts regarding similar requirements, to consultation of technical or scientific journals, to solicitations for information or planning purposes only.

Compliance Audit

An audit conducted to determine the degree of compliance with established procedures and policies relative to accounting, financial and business processes.

Financial Audit

An audit conducted to determine whether all financial transactions are recorded and shown accurately in accounts, to verify the accuracy of financial statements, and the fairness of the facts they represent.

Procurement System Review

An audit of the procedures of the procurement system of the governmental entity. For federal agencies, OMB Circular A-102 provides guidance.

Pre-Award Contract Review

An audit or survey performed before a contract is awarded to determine the vendor's or contractor's technical, managerial and financial ability to perform under the proposed contract, as well as the establishment of and compliance with appropriate procurement system procedures.

Assignment of Payment

An authorization from a supplier that allows for their accounts receivable to be paid to a third party. Payments made to a supplier's creditor.

LISTSERV

An automatic mailing list server targeting a specified group. When email is addressed to a LISTSERV mailing list, it automatically broadcasts to everyone on the list. (Jansen, 2002)

Pareto Award

An award issued by the National Institute of Governmental Purchasing Inc. (NIGP) to recognize outstanding achievement by public purchasing entities based on a rigorous self-assessment and SWOT analysis. It is the pinnacle award of excellence in public procurement.

FAQ (Frequently Asked Questions)

An eCommerce initiative which is widely used in various marketing and sales promotion applications. They are designed to help customers understand and feel comfortable with the product or service. (Schiller, 2000)

Buyer's Market

An economic condition within a competitive marketplace that occurs when the supply of a product or service exceeds the demand. Generally results in lower prices more favorable to the buyer. (Harney, 1992)

Leading Indicators

An economic term also referred to as cyclical indicators, these are groups of statistics that point to the future direction of the economy and the business cycle. May be helpful when performing price or supply forecasts. (ISM, 2000) Also see Lagging Indicator.

Legacy Costs

An economic term applied to those costs incurred by a business that apply to on-going contractual obligations resulting from agreements with collective bargaining units. Examples include pension and retiree benefits. (Schiller, 2000)

Income Redistribution

An economic term that refers to a government policy to redirect income to a targeted sector of a country's population, for example, by lowering the rate of tax paid by low income earners. (Schiller, 2002)

Demand Elasticity

An economic term used to describe the sensitivity of demand to price changes. An example is the price escalation in petroleum products beginning in 2003.

Market Economy

An economy that relies on markets for basic decisions about WHAT to produce, HOW to produce it, and FOR WHOM to produce. Contrast to socialism or communism where political decisions determine market direction. (Schiller, 2000)

Mixed Economy

An economy that uses both market signals and government directives to allocate goods and resources. (Schiller, 2000)

Internal Rate of Return

An efficiency measure of return promised by an investment project over its useful life. It is some time referred to simply as yield on a given project. The internal rate of return is computed by finding the discount rate that equates the present value of a project's cash outflow with the present value of its cash inflow. In other words, the internal rate of return is that discount rate that will cause the net present value of a project to be equal to zero.

Net Cash

Payment for goods sold, to be made within a rather short period with no deduction allowed from the invoice price.

Radio Frequency Identification (RFID)

An emerging technology, which consists of identification tags composed of silicon chips and an antenna that can transmit data to a wireless receiver. RFID tags are used to track assets, manage inventory, authorize payments as well as other supply management applications. There are three types of RFID: high frequency (850-950 MHz and 2.4-5 GHz), intermediate frequency (10-15 MHz) and low frequency (100-500kHz). (Jansen, 2002)

Morale

An employee's attitude toward their job, employer, and colleagues. (Ferrell, 2002)

Common Carrier

An entity that, without right of refusal, provides transportation services to the general public as required by law. Also see Contract Carrier and Private Carrier. (Blacks Law Dictionary 275, 1990)

Grantor

An entity which makes a grant of monetary funds to the grantee; generally a federal or state government is the grantor.

Mistake of Law

An error, not in the actual facts but in their legal significance, relevance or consequence, for which there is no relief from the Courts.

Consequentialism

An ethical decision-making model which calls attention to all stakeholders and requires the decision maker to predict the likely results of an act and weigh the good it will produce against the harm it will cause.

Point Rating

An evaluation procedure in which a list of criteria, to which values have been assigned, is used to ascertain the individual merits of proposals that have met the mandatory factors specified in a Request for Proposal (RFP).

Go, No-Go

An evaluation technique that may be used to score proposals. It can be applied to major areas and elements of management, operational suitability and other criteria, when identified for evaluation. Generally applied to technical and management areas.

Process Mapping

An examination of the steps, activities, and interrelationships associated with performing a specific task. This tool is used in business process reengineering to determine where processes can be enhanced or minimized in order to improve efficiencies. (ISM, 2002)

Material Substitutions

An example of "second level cost savings" achieved by identifying and qualifying acceptable material alternatives that meet specification requirements but cost less than existing materials. (Crimi, Kauffman, Inside Supply Management Magazine, March 2003)

Attorney Work Product Privilege

An exemption under the Freedom of Information Act, which protects documents prepared by an agency's attorney which reveal the theory of a case or proposed litigation from release. (Nash &

Part Number

An identification number assigned to an individual part by the manufacturer or distributor of that part; usually includes a combination of alpha and/or numeric characters.

Model Number

An identification number assigned to describe a style or class of item, such as a particular design, composition or function, by the manufacturer or distributor of that item.

Prompt Payment Discount

An incentive for early payment on a "Net Days" basis. For example, if company policy is to pay contractors on a "Net 90" basis, the company will pay within 30 days in return for a percentage discount, such as 2% of the total amount due. Also see Cash Discount, Discount and Payment Terms. (Juricidical Dictionary, 2007)

Economic Growth

An increase in output (real GDP); an expansion of production possibilities. (Schiller, 2000)

Funds (Budgetary/Governmental)

An independent legal fiscal entity with assets, liabilities, reserves, a residual balance, or equity, and revenues and expenditures for undertaking activities. Funds may be expendable, meaning the authorization for spending expires at the end of the fiscal period; or non-expendable or revolving, meaning that spending beyond the fiscal year is allowed without reauthorization. Governmental funds generally finance the activities most citizens associate with general-purpose governments, e.g. police, fire, public works and procurement. Governmental funds may be subdivided into four categories: General Fund; Special Revenue Funds; Capital Project Funds; Debt Service Funds - each described separately in this dictionary.

Blind Trust

An independently managed trust in which the beneficiary has no management rights and is not given notice of alterations in, or other dispositions of, the property subject to trust.

General and Administrative (G & A) Expense

An indirect cost including any management, financial or other expense which is for the management and administration of the business unit as a whole, and which cannot be identified with a smaller business unit.

Ineligible Bidder/Offeror

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. (Harney, 1992)

Distributor

An individual or business that buys and sells products from a manufacturer. Generally a wholesaler who may represent various manufacturers and maintains an inventory of material.

Employee Stock Ownership Plan (ESOP)

An individual stock bonus plan designed specifically to invest in the stock of the employer company. (Business, 2002)

Neutral Advisor

An individual who functions specifically to aid parties in resolving controversies through Alternative Dispute Resolution procedures.

Fiduciary Duty

An individual's obligation to serve the best interests of selected stakeholders, especially those of their employer. (www.american-purchasing.com/glossary)

Contract Modification

Any written alteration in specifications, delivery point, frequency of delivery, period of performance, price, quantity, or other provisions of the contract, accomplished by mutual agreement of the parties to the contract. Also see Amendment, Authorized Deviation, Change Order and Contract Amendment.

Architect

An individual, partnership, or corporation that performs professional architectural services for the agency as an independent contractor. A registered architect is an individual that is trained in the planning, design and oversight of the construction of buildings. To practice architecture means to offer or render services in connection with the design and construction of a building, or group of buildings and the space within the site surrounding the buildings that have as their principal purpose human occupancy or use. Architects are required to have Errors and Omissions Insurance.

Engineer

An individual, partnership, or corporation that performs professional engineering services for the agency as an independent contractor. A registered, Professional Engineer is an individual who works to develop economical and safe solutions to practical problems by applying mathematical and scientific knowledge while considering technical constraints. Engineers design materials, structures, machines and systems while considering the limitations imposed by practicality, safety and cost while adhering to local and national building codes. Engineers are required to have Errors and Omissions Insurance. (Miller, 2006)

Grapevine

An informal channel of communications, separate from management's formal, official communication channels. (Business, 2002)

Quote

An informal purchasing process which solicits pricing information from several sources.

Pre-solicitation Conference

An informal, typically non-mandatory, meeting inviting comments and suggestions from a representative group of vendors on the draft of a proposed solicitation; This conference provides useful market analysis information to the Buyer; Usually used for solicitations involving high technology or complex services. Also see Bidders Conference, Pre-bid/Pre-Proposal conference, Request for Comments (RFC) and Request for Information (RFI).

Prototype

An initial version or working model of a new product or invention. Usually constructed and tested in order to evaluate the feasibility of a design and to identify problems that need to be corrected. Purchasing may request a prototype to evaluate prior to purchase. (Miller, 2006)

Motivation

An inner drive that directs a person's behavior toward goals and the accomplishment of those goals. (Ferrell, 2002)

Order

An instruction issued to a vendor for goods to be delivered to a given place at a given price.

Performance Bond

An instrument executed, subsequent to award, by a successful bidder that protects the public entity from loss due to the bidder's inability to complete the contract as agreed. A risk mechanism that secures the fulfillment of all contract requirements. May be referred to as a Completion Bond.

Earned Value Management

An integrated management tool that examines cost, progress and the original project schedule to determine variances from planned profiles. Its purpose is to allow for the prediction, with some degree of certainty, actual cost and schedule at completion of a project, given cost and progress at certain intervals of contract performance.

Fraud

An intentional perversion of truth for the purpose of inducing someone to rely upon it and part with something of value or surrender a legal right. The three necessary elements of a cause of action for fraud are (1) false representation of a present or past fact on the part of the defendant, (2) a plaintiff's action in reliance upon that misrepresentation, and (3) damage resulting to the plaintiff from the action that was based on the misrepresentation. (Blackís Law Dictionary, 660, 1990)

Broker

An intermediary entity that specializes in a particular commodity, represents either a buyer or a seller, and is likely to be hired on a temporary basis.

Requisition

An internal document by which a using agency sends details of supplies, services, or materials required to the purchasing department.

Countertrade

An international barter transaction in which payment is made partially or fully with goods instead of money. A quid pro quo absent monetary exchange. For example, trading military hardware for oil or trading wheat for beef. (Ferrell, Hirt, 2003)

Economic Order Quantity (EOQ)

An inventory calculation used to determine stock-level reorder point. The calculation is based on costs of acquisition, storage, handling and inventory investment to determine the most cost-effective time and quantity to reorder.

Replenishment Inventory Control System

An inventory control system that relies on accurate estimates of usage rates and delivery lead times to allow orders to be completed and to ensure stock does not run out. (Business, 2002)

First In-First Out (FIFO)

An inventory costing method in which stock acquired earliest is assumed to be sold (issued) first, leaving stock acquired more recently in inventory. Under FIFO, inventory is valued near current replacement costs. Provides for a physical rotation of the stock so that the oldest stock is used first. Also see Last In-First Out (LIFO). (Nash, Schooner, OíBrien, 1998)

Consular Invoice

An invoice certified by the consulate of the destination country to assure collection of import duties in that country.

Pro-Forma Invoice

An invoice received before the purchase informing the buyer of the terms of sale. Often applicable to foreign purchases as the buyer's proof of a future purchase to support the buyer's request to governmental authorities for import permits and foreign exchange.

Line Item

An item of supply or service, specified in an invitation for bid or request for proposal, for which the bidder must bid a separate price.

Manifest

An itemization usually provided by the carrier which details the items included in a particular shipment. A bill of lading or an itemized listing of cargo. (ISM, 2000)

Money

Anything generally accepted as a medium of exchange. See Functions of Money.

Goods

Anything purchased other than services or real property. Objects that can satisfy people's wants.

Appeal

An objection to a process, procedure or an award. An appeal may be taken to the proper authority responsible for receiving appeals by filing a Notice of Appeal within the required time period. This notice must be in writing, signed by a person of authority, (the contractor, an officer, if the contractor is a corporation, or its attorney) and should identify the contract by number, the final decision which is being appealed, and the agency issuing that final decision. Although express mail services are sufficient if you are certain that the Notice will be delivered within the specified timeframe, it is safer to send the Notice by registered mail which provides irrefutable proof of mailing within the specified time. Also see Appeal Process and Appeal Rights.

Price Leadership

An oligopolistic pricing pattern that allows one firm to establish the market price for all firms in the industry. (Business, 2002)

Perpetual Inventory Control System

An on-going record of all stock items, showing stock levels, withdrawals, replenishment, placement of purchase orders, receipt, issues, balances, quantities available and stock adjustments.

Pay-Per-Click (PPC)

An online advertising payment model in which payment is based only on the number of click-throughs that are generated. The model is also adaptable to eProcurement methods. (Jansen, 2002)

Reverse Auction

An online auction in which sellers bid against each other to win a buyers business. Typically used to purchase commodities from multiple pre-qualified providers. Also referred to as eAuction.

Chartered Institute of Purchasing and Supply (CIPS)

An organization based in the United Kingdom serving the purchasing and supply profession. (ISM, 2000)

National Contract Management Association (NCMA)

An organization composed of individuals who are engaged in public and commercial contracting through government agencies and companies or are in related fields of endeavor.

Group Purchasing Organization (GPO)

An organization created by groups of purchasers in related areas of endeavor who come together and form a purchasing consortium in order to achieve aggregated volume thus achieving economies of scale. Hospitals, universities, school districts and airports are examples of GPO groups.

International Monetary Fund (IMF)

An organization established in 1947 to promote trade among member nations by eliminating trade barriers and fostering financial cooperation. There are 184 member countries working together to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, while reducing poverty. For more information: www.imf.org.

Correction (Prison) Industries

An organization established to sell/market products manufactured, fabricated or assembled by incarcerated persons in penal systems operated by a public entity.

Economic Community

An organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies. Example: European Union. (Schiller, 2000)

Decentralized Purchasing

An organizational structure in which designated personnel/operating departments from within the organization have the delegated authority to decide on sources of supply and contract directly with vendors without consulting or receiving the approval from the Chief Procurement Officer (CPO). It should be noted that the scope and degree, if any, of decentralized purchasing varies from agency to agency. Example: In one agency, all of the IT (Information Technology) software and hardware decisions and purchases are unilaterally made by the Chief Information Technology Officer and in other agencies all of those IT purchases are directly made by the Purchasing Department. Also see Centralized Purchasing.

Cartel

An organized group (e.g. firms, countries) with an explicit agreement to fix/set prices and output shares in a particular market. Example: OPEC (Oil Producing Exporting Countries).

Form, Fit, and Function

An overall quality related term common in purchase agreements that encompass the physical attributes of something (form), its desired output or performance (function), and fitness (appropriate for the application or use to which it is to be put). (ISM, 2000)

Promissory Note

An unconditional written promise to pay a certain sum in money, on demand or at a fixed or determinable future date, either to the bearer or to the order of a designated person.

Auctioning

An unethical practice that can occur during negotiations on competitive sealed proposals if the negotiating team discloses information from one offeror's proposal to other proposers, who then change their offer so that it matches or is better than the first proposal evaluated. (Harney, 1992)

Gratuitous Offer

An uninvited condition or provision submitted by a bidder or offeror; an unnecessary or unwarranted submission.

Improper Influence

Any influences that induce or tend to induce a government employee or officer to give consideration to or act regarding a government contract on any basis other than the merits of the matter. (FAR 3.401)

Combustible Liquid

Any liquid having a flash point above 100 and below 200 degrees Fahrenheit as defined by the U.S. Department of Transportation (DOT). May create inventory and supply management issues. (Miller, 2006)

Hazardous Material (HAZMAT)

Any material that, under the conditions of transportation or storage, is capable of posing an unreasonable risk to health, safety, or property. Includes material classified as explosive, flammable, corrosive, combustible, poisonous, toxic, biological or radiological and compressed gases. May be referred to as HAZMAT. Also see Waste.

Hard Currency

Any national currency widely accepted in payment in international markets. Examples: Dollar, Euro, Yen. (Schiller, 2000)

Procurement Officer

Any person duly authorized to enter into and administer a contract and make written determinations and findings thereto. Also includes an authorized representative of the procurement officer acting within the limits of his or her authority.

Dangerous Goods

Articles or substances which are capable of posing a significant risk to health, safety or property, and which when transported, are subject to special regulations.

Prohibited Articles

Articles which will not be handled, as listed in transportation carrier's tariffs.

Notice of Intent to Award

As a result of a competitive process, a public notice is issued and in some instances, where local laws allow, a Notice of Intent to Award is issued and award will occur only upon receipt of the specified items. For example: performance securities.

Rate

As applied to the transportation or movement of goods and material, the cost of, or charge that applies to the service rendered by the carrier.

Hygiene Factors

Aspects of Herzberg's theory of motivation that focus on the work setting and not the content of the work; these aspects include adequate wages, comfortable and safe working conditions, fair company policies and job security. Also see Herzberg, Frederick. (Business, 2002)

Capital Equipment

Assets listed on an organization's accounting records that have value, usually can be depreciated, and are durable. (Schiller, 2000)

Current Assets

Assets that can be quickly converted into cash or that will be used in one year or less. (Ferrell, Hirt, 2003)

Near Money

Assets that can be quickly turned into cash but that cannot be used directly as a medium of exchange like paper money or checks. (Business, 2002)

Inherent Authority

Authority based on a government's sovereignty, to enter into contracts, although not explicitly authorized. Also see Implied Authority and Express Authority.

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. Also see Express Authority and Inherent Authority.

Delegated Purchase

Authorized or appointed individuals, outside the purchasing department, are delegated authority under the entity's rules and procedures that allow them to make small dollar purchases on behalf of the agency.

Final Payment

Payment made for completed services after all offsets are calculated and claims are completed.

Performance Based Budgeting

Budgeting that attempts to link resource allocation decisions to performance criteria that include both output and outcome measures. Also referred to as Results oriented budgeting, these forms of budgeting add performance measures that look at outcomes of activities rather than at individual process steps. In order to be effective, these budget methods must be linked to the overall strategic plan of the organization, and each decision unit must support a particular goal and objective (similar to decision units in Zero Based Budgeting). Also see Results Oriented Budgeting.

Results Oriented Budgeting

Budgeting that attempts to link resource allocation decisions to performance criteria that include both output and outcome measures. Also referred to as performance based budgeting, these forms of budgeting add performance measures that look at outcomes of activities rather than at individual process steps. In order to be effective, these budget methods must be linked to the overall strategic plan of the organization, and each decision unit must support a particular goal and objective (similar to decision units in ZBB). Also see Performance based budgeting.

Approved Source List

Canadian A list of suppliers that can supply specific goods and services and are approved on the basis of the suitability of their facilities and capabilities.

Fixed Unit Price

Canadian A method of pricing in which the total payable is calculated by multiplying the number of identical units of work or items delivered by a fixed price per unit or item.

Negotiated Fee

Canadian The monetary fee negotiated by Supply and Services Canada with customer departments for cost recovery revenue on services provided.

Privilege Clause

Canadian A clause traditionally used in Canadian tenders which says "the lowest or any tender will not necessarily be accepted". A "privilege clause" provides the tendering authority with broad discretion in relation to the acceptance or rejection of tenders. It usually reserves to the owner the discretion to accept or reject the lowest, or any, tender. It does not displace the overarching duty of procedural good faith that the Courts have found is an implied term of the bid contract (contract A).

Ordering Office

Canadian A client or customer location from which goods or services are ordered.

Directed Contract (marché prescrit)

Canadian A contract awarded to a pre-selected contractor in circumstances where the contracting authority has justifiably set aside the requirement to solicit bids under the provision of one or more of the exceptions to competitive solicitation in Section 6 of the Government Contracts Regulations. Contracting authorities are strongly encouraged to provide public notification of these contracts through an Advance Contract Award Notice (ACAN) using the electronic bidding methodology. If this is done and if there are no valid challenges received to the ACAN within 15 days, the directed contract is deemed to be competitive and may be awarded using the higher electronic bidding contracting authority levels. (www.tbs-sct.gc.ca/pubs_pol/dcgpubs/Contracting/contractingpol_a_e.asp)

Line Object

Canadian A departmental classification of expenditure at the source. It is either coincident with the economic object or represents a subdivision of it.

Receiving Voucher

Canadian A document used to record the receipt of material.

Customer Code

Canadian A five digit code utilized by the Supply and Services Canada Customer Address Directory to identify the using agency that issued the requisition; also indicates shipping and invoicing addresses.

Invitation to Tender (ITT)

Canadian A formal bid solicitation document when the estimated value of the requirement exceeds the threshold for formal bidding; two or more sources are considered capable of supplying the requirement; the requirement is adequately defined in all respects to permit the evaluation of tenders against clearly stated criteria; tenders can be submitted on a common pricing basis; and it is intended to accept the lowest-priced responsive tender without negotiations.

Milestone Code

Canadian A generic code which indicates where the goods and/or services are in the materiel life cycle process.

Capital Lease

Canadian A lease that transfers substantially all the benefits and risks incident to ownership of the property to the lessee.

Contract A - Bid Contract

Canadian A legally binding obligation formed between an "owner" (purchaser) and a bidder based on the submission of a responsive bid in a competitive process. Also known as submission of price.

Date of input (forecast last amended)

Canadian Date of last amendment entered. Date input entered into the system.

Request for Standing Offer (RFSO)

Canadian A method of supply used by Public Works and Government Services Canada (PWGSC) to satisfy the requirements of departments and agencies by arranging with suppliers to submit a standing offer to provide goods, services or both during a specified period. An RFSO is an invitation to suppliers to provide PWGSC with a standing offer. The quantity of goods, level of services and estimated expenditure specified in the RFSO are only an approximation of requirements given in good faith. Standing offers are not contracts. If and when the government issues a call-up against a standing offer, a contract is created. (http://sacc.pwgsc.gc, 1.19.07)

Manufacturer Code

Canadian A numeric code assigned by respective government agencies to organizations which are sources of supply for items produced. The code numbers are also assigned to government manufacturing equipment or to certain special non-manufacturing organizations.

Purchase Requisition

Canadian A request to obtain materiel or services and authority to commit funds to cover the purchase.

Call-Up

Canadian A requisition or a request for delivery which is forwarded directly to a supplier to obtain delivery of materiel from a previously negotiated contract, or a standing offer, in accordance with their terms. Also called Draw-down. Also see Period of Assignment.

Participant Code

Canadian A two character international standard organization code which represents the name of the participant as to whether it is a federal or provincial government.

Contract Amendment

Canadian An agreed addition to, deletion from, correction or modification of a contract. Also see Contract Modification.

Contractual Arrangement

Canadian An agreement between a contracting authority and entity of the Crown (e.g. Crown corporations, provincial governments or municipalities) to provide a good, perform a service, construct a work or to lease real property, for appropriate consideration. These types of agreements are not contracts in the true sense but are still subject to certain limits or constraints imposed by the Treasury Board.

Benefits Driven Procurement (BDP)

Canadian An approach to procurement that stresses a focus on results and on the benefits that government and suppliers gain from the procurement. The supplier is asked to deliver certain agreed upon results rather than follow specific specifications. (Summit Magazine, On-Line)

Environmental Choice Program (ECP)

Canadian An eco-labeling program of Environment Canada that promotes the use of environmentally responsible goods and services, encouraging consumers, organizations and government to buy environmentally preferable items. (Summit Magazine, On-Line)

Purchasing Management Association of Canada (PMAC)

Canadian An educational and technical organization of purchasing and materiel management personnel and buying organizations, both public and private sector. (Summit Magazine, On-Line)

Payment Method

Canadian An identifier of the means of payment whether it be advanced, normal or progress payments to vendors as applicable to the contract.

Product Identification

Canadian An identifier which is unique for a given product. It may be any combination of the following: A NATO stock number, a supplier's part number, a supplier's catalog number and GSIN code.

Contracts Canada

Canadian An inter-departmental initiative to improve supplier and buyer awareness and simplify access to Federal Government purchasing information. (Summit Magazine, On-Line)

Non-Stocked Item

Canadian An item which is not held in a supply system inventory for issue to customers when ordered, but which may be obtained on demand.

Open Bidding Service (OBS)

Canadian An on-line electronic bulletin board and bid document request system that gives suppliers flexible and open access to government procurement opportunities.

Planning

Canadian Analysis and evaluation of the ways in which material requirements can be met using a life cycle management approach.

Appropriation

Canadian Any authority of Parliament to pay money out of the Consolidated Revenue Fund.

Project Approval-Preliminary

Canadian Approval based on Class C Estimates which provides authority to initiate a project as the preferred option for fulfilling a justified need, and spends only those funds necessary to cover such activities as concept and preliminary design and to develop at least a Class B Estimate.

Project Approval Effective

Canadian Approval based on reliable and up-to-date cost estimates which provides authority to proceed with a project or complete it in those instances where there is already a preliminary approval, and spend all project funds, based on a specific budget in constant and current (budget-year) dollars.

Auditor General of Canada (AG)

Canadian Audits government operations and provides the information that helps Parliament to hold the government accountable for its stewardship of public funds. (Summit Magazine, On-Line)

Incompatible Items

Canadian Certain materiel or substances which cannot be stored or shipped together or in close proximity to one another because they are likely to react to each other owing to their chemical composition.

Fair and Reasonable Price Block

Canadian Certification as to method of solicitation and price acceptability.

Economic Object

Canadian Code which classifies expenditures according to type of goods and services acquired or transfer payments made to measure the impact of government transactions on the economy.

Financial Coding

Canadian Coding which identifies a financial account and is used as part of a system of accounts.

Inventory Reconciling

Canadian Comparing the physical inventory figures with the perpetual inventory record and making any necessary corrections.

Object Classification

Canadian Financial classification used on expenditure, revenue and other transactions which classify the type of goods and services acquired (for expenditures), transfer payments, source of receipts (for revenues), or the method of acquiring/disposing of a financial claim or obligation.

Contract B - Traditional Contract

Canadian Formed between the government or agency (Owner) and the successful bidder when the agency formally accepts a Bid.

Product-Resource-Operating-Contingent (PROC)

Canadian Identifies four types of costs (product, resource, operating and contingent) used to identify all costs associated with a requirement over its useful life to determine the best value.

Cost Ordering

Canadian In calculating economic order quantity, the costs which increase with the number of orders placed; includes costs related to the clerical work of preparing, issuing, following and receiving orders, physical handling of goods, inspection, and machine set-up costs, if the order is being manufactured.

Government-Wide Information

Canadian Information to be provided by all departments and agencies to meet either the statutory requirements of Parliament or the corporate information requirements of central agencies.

Probity

Canadian Integrity and uprightness. Uncompromising adherence to the laws, regulations and policy imperatives concerning government contracting. An ethical course of action. (Summit Magazine, On-Line)

Controlled Items

Canadian Items of supply that are both accountable items or non-accountable items, which for administrative purposes, require special controls beyond those normally employed.

ECOTS

Canadian See Electronic Catalogue and Order Taking System.

Equipment Condition Codes

Canadian Specific categories or grades assigned to materiel based upon its further usefulness, as to whether it is serviceable, repairable, or condemned.

Order Point

Canadian That point in time or level of the net stock at which an order is placed.

Net Proceeds

Canadian The amount received for the disposal of a material asset after subtracting the costs associated with completing the disposal action.

Performance Rating

Canadian The assignment of a rating to a supplier based on effective performance.

Commitment Authority

Canadian The authority delegated to appropriate officers to confirm before a commitment is entered into, as required under financial authority, that there is a sufficient unencumbered balance to discharge such

Contract Signing Authority

Canadian The authority delegated to occupy a position, that is, the incumbent of a position, to sign on his/her behalf contract, contract amendment or Standing Offer documents after ascertaining that the approval authority has been duly granted and ensuring that the terms and conditions written in the documents reflect those approved by the contract approval authority. (Summit Magazine, On-Line)

Contracting Authority

Canadian The authority delegated to persons for entering into and approving contracts and arrangements.

Payment Authority

Canadian The authority granted to an individual to requisition payments and authorize the charge to appropriations, after reviewing the legality of payments and the exercise of all appropriate financial controls.

Loan

Canadian The authorized issue of materiel on condition that it be returned, normally after a specified period of time and subject to agreed upon conditions.

Custodian

Canadian The authorized officer who is accountable for the use and condition of a materiel item.

Quality Assurance Code

Canadian The code specifying DND (Canadian Department of National Defence) quality assurance requirements.

Lease to Own/Purchase

Canadian The conveyance, by a lessor to a lessee, of the right to use a tangible asset usually for a specified period of time in return for rent. At a specified period of time the lessee may purchase the equipment outright by paying an additional specified sum.

Net Stock Position

Canadian The current on-hand balance of inventory.

Contracted Delivery Date

Canadian The date agreed to under the terms and conditions of a contract.

Approval Date

Canadian The date on which a procurement document was approved by the appropriate authority.

Contract Completion Date

Canadian The date that the contract was closed in the financial accounts.

Inventory Valuation

Canadian The determination of the acquisition cost, or market value portion of this cost, or market value assignable to on-hand raw materials, goods in process, finished stock, merchandise held for resale and supplies.

Contract Adjusted Amount

Canadian The dollar value for a contract reflecting adjustments made for changes such as foreign currency fluctuations or inflation.

Cost Adjusted

Canadian The dollar value of materiel items adjusted for upgrades, deterioration in condition, or other changes.

Estimated Contract Date

Canadian The estimated date of the acknowledgement of the offer.

Level of Contractor

Canadian The identification of an individual contractor in the contracting organization's hierarchy as the prime contractor, subcontractor or other. The individual contractor's designation in the hierarchy determines the legal responsibility of that contractor and reporting structure relative to the customer (Owner).

Class Code Number

Canadian The number that identifies a property class which covers a relatively homogeneous grouping of commodities, grouped together with respect to their similarity of physical or performance characteristics, or grouped together since they are usually requisitioned, stored, and issued together.

Basis of Payment

Canadian The payment terms in a contract which specify the conditions under which payment will be made for receipt of goods or performance of services.

Purchase Price

Canadian The price quoted by a supplier for a materiel item; may include delivery and installation costs.

Market Value

Canadian The price which a product, service or property might be expected to bring if offered for sale in a fair market, i.e.

Market Value

Canadian The price which a product, service or property might be expected to bring if offered for sale in a fair market, i.e. a market that is not prone to fluctuations.

Provisioning and Supply

Canadian The process of determining requirements, initiating procurement and providing a stock of supplies for future needs.

Overage

Canadian The quantity disclosed by count as being in excess of the quantity indicated on associated records; surplus.

On Order

Canadian The quantity of stock represented by the total of all outstanding replenishment orders that have been requested from stock but not yet delivered or received.

Issue

Canadian The release of materiel pursuant to a properly authorized requisition or instruction.

Departmental Individual Standing Offer (DISO) Number

Canadian The serial number of a departmental individual standing offer arranged with one or more vendors, against which DSS (Department of Supply & Services) only may issue call-ups, upon receipt of funded customer requisition.

Period of Assignment

Canadian The starting and finishing dates for the services being called up. Also see Call Up.

Goods and Services Tax (GST)

Canadian The tax charged by the Canadian Government on the purchase of goods and services in Canada. A Canadian tax levied at the manufacturer's level. GST is levied on all goods manufactured or produced in Canada, as well as those imported into Canada unless an exemption applies.

Cataloguing

Canadian The various work processes that have to be performed in identifying, classifying, describing, and stock numbering an item of supply.

Governments Incorporating Procurement Policies to Eliminate Refuse (G.I.P.P.E.R)

Canadian This guide serves as a tool to assist purchasers to incorporate environmental considerations into the procurement process.

Generally Accepted Accounting Principals (GAAP)

Canadian Those accounting principles which have been given formal recognition or authoritative support in any particular Canadian jurisdiction. (Summit Magazine, On-Line)

Contract Amount/Value

Canadian Total dollar amount negotiated between buyer and seller and identified in the contract for purchase of services.

Document Identifier

Canadian Unique code showing requisition status.

Biodegradable

Capable of undergoing biodegradation whereby most paper products are converted by microorganisms into basic elements, such as water and carbon dioxide. (ISM, 2000)

Request for Equitable Adjustment (REA)

Changes to a contract may require additional work and expense on the contractor. Change work, either directed by formal contract modification or through constructive change, entitles the contractor to seek an equitable adjustment. The contractor must prove that they are entitled to an equitable adjustment. The contract must contain language specifying the conditions under which an REA will be considered.

Price Skimming

Charging the highest possible price that buyers who want the product will pay. (Ferrell, 2002)

Crowson Decision

City of Richmond v. J.A. Crowson Co. was a legal case in 1989 in which the United States Supreme Court held that the City of Richmond Virginia's minority set-aside program, giving preference to minority business enterprises (MBE) in the awarding of municipal contracts, was unconstitutional under the Equal Protection Clause. This court case prompted public sector agencies to move toward using the term, "contract goals" in its construction projects in seeking a good faith effort on the part of the prime contractor to have a certain level of minority subcontracting participation in the project.

COB

Close of business. Refers to the end of business day; sometimes used to specify time by which an event must occur.

Market Research

Collecting and analyzing information about capabilities within the market to satisfy agency needs. The results of market research are used to arrive at the most suitable approach to acquiring, distributing and supporting supplies and services.

Off-the-Shelf

Common use items that are readily available in the marketplace and do not have to be specially ordered. Generally they are not affected by supply and demand issues and are price stable. May also refer to systems or services readily available to commercial users that are not produced in accordance with rigid specifications. Typical examples include basic electrical and basic plumbing items. (Schiller, 2000)

Indirect Costs

Costs incurred that are not directly related to service delivery such as insurance and employee benefits. Costs that do not relate directly to performance such as overhead costs incurred in the normal course of business. (Harney, 1992)

Compensable Delays

Compensation received by a contractor for increased cost as a result of a delay when the agency orders work to be suspended. Example: The agency hires a construction company to begin work on a new highway bridge. During the excavation portion of the project, the contractor found the remains of Indian artifacts and the project was put on hold until archeologists could assess the situation and collect the artifacts. As a result of this delay, which was ordered by the agency, this was a compensable delay to the contractor.

Global Positioning System (GPS)

Composed of a series of geosynchronous earth-orbiting satellites that continuously transmit signals that help determine actual geographic location. (Jansen, 2002)

Optical Character Recognition (OCR) (Optical Scanning)

Computer systems designed to translate images of text (usually captured by a scanner) into machine-editable text - to translate pictures of characters into a standard encoding scheme representing them. First used by the U.S. Postal Service in 1965 to sort mail. Also used in the Warehousing and Inventory Control arena of public procurement. (Jansen, 2002)

Delivery Terms

Conditions in a contract regarding freight charges, place and time of delivery, or method of transportation. Also see Free on Board (F.O.B.) definitions.

eProcurement (Electronic Procurement)

Conducting all or some of the procurement function over the Internet. Implies that point, click, buy and ship Internet technology is replacing paper-based procurement and supply management business processes. Also called ePro. (Miller, 2006)

Negotiation

Conferring, discussing, or bargaining to reach agreement in business transactions. A bargaining process between two or more parties, each with its own agenda and objectives, seeking to reach a mutually satisfactory agreement on, or settlement of, a matter of common concern. A process of planning, reviewing, and analyzing used by a buyer and a seller to reach acceptable agreements or compromises.

Non-Durables

Consumer goods only expected to last less than three years. (Schiller, 2000)

Clawback

Contingent monies or considerations previously disbursed that are returned due to unrealized fulfillment of terms upon which the considerations were distributed.

Hierarchy of Interpretation

Contract rendition and supplementation classified according to rank, capacity or authority; order is conventionally conceived of as a multi-stage process, in which various sources, including express terms, course of performance, course of dealing, trade usages, default rules, and general standards of reasonableness, are sequentially resorted to. The decision maker should not turn to any particular source before exhausting the previous ones, and in case of inconsistency, each source trumps the following ones.

Evergreen Contracts

Contracts with automatic renewal clauses or provisions for renewals for a specified number of years. This has the benefit of allowing suppliers and agencies to establish longer-term working relationships. (Harney, 1992)

Quasi-Public Corporation

Corporations owned and operated by federal, state, or local governments. A revenue authority or water authority are examples. (Business, 2002)

Fixed Costs

Costs of productions that don't change when the rate of output is altered, e.g., the cost of basic plant and equipment. (Business, 2002)

Externalities

Costs or benefits of a market activity borne by a third party; the difference between the social and private costs and benefits of a market activity. (Schiller, 2000)

Nonrecurring Costs

Costs that are incurred by a contractor/vendor at the beginning of the contract and are not expected to recur on future work. Certain nonrecurring costs may be recoverable upon cancellation of a multi-year contract provided they have been addressed in the contract documents. Examples of nonrecurring costs include special tooling, plant relocation and workforce training. (Nash, Schooner, OíBrien, 1998)

Conversion Costs (One-Time Conversion Costs)

Costs that are incurred due to change in service delivery from in-house to a privatized contract. They may be either personnel related or material related. Personnel related costs can include accrued annual and sick leave benefits owed public employees and any other severance type costs. Material related costs can include costs associated with the preparation and transfer of facilities or equipment to the contractor or other costs such as: penalties for terminating leases and the costs of maintaining underutilized facilities or equipment until they are sold or leased.

Interstate Commerce Commission (ICC)

Created by the Government in 1887. Until 1996 it was the dominant regulatory agency that controlled the movement of goods between the states, regulated rates and granted operating authority to carriers. It ceased to exist upon enactment of the ICC Termination Act of 1995. (Miller, 2006)

Partnering

Creating a mutually beneficial relationship with a supplier or contractor for the specific performance of work where the relationship is trusting and supportive rather than adversarial.

Duties

Customs charges imposed on taking articles out of, or into, a country.

Irregularities and Informalities

Defects or minor non-compliance contained within a response to a bid. A defect which is easily correctable. Deviations from the exact requirements of the solicitation that do not affect the price, terms or conditions of the bid document. A minor informality or irregularity is one, which is merely a matter of form and not of substance or pertains to some immaterial or inconsequential defect or variation of a bid from the exact requirement of the IFB, the correction or waiver of which would not be prejudicial to other bidders. Example: Failure to execute a required certificate. Also see Informalities/Irregularities.

Expendable Items or Supplies

Denotes supplies or equipment that are normally consumed during use and have a very short life cycle.

Dependent Demand

Derived from or contingent upon the demand for another component or a finished product. An example is the demand for automotive tires is dependent on the demand for automobiles by the consumer. (Schiller, 2000)

Disputes Resolution Officer (DRO)

Designated individual within the agency to resolve business disputes between the agency and its bidders and vendors.

Milestones

Designated steps of the planned acquisition which usually signify a completion of a requirement or delivery of materials. Payments may be targeted to the completion of milestones. Also see deliverable. (Harney, 1992)

Business Valuation

Determines the price that a hypothetical buyer would pay for a business under a given set of circumstances. A business valuation is completed by an appraiser or a Certified Public Accountant using a combination of judgment, experience, and an understanding of generally accepted valuation principles. The two primary types of business valuations that are widely used are income valuations and asset valuations. Income statements and other financial and accounting records provide the basis for most business valuations.

Differential Exchange Rates

Different exchange rates imposed by a country's government depending upon the nature of the goods imported. (ISM, 2000)

NATO Supply Classification

Digits 1 through 4 in the NATO Stock Number, includes the group and the class within the group, the whole being known as the supply class.

National Item Identification Number

Digits 7 to 13 of a NATO stock number that are non-significant but sequentially assigned by each National Codification Bureau to a unique item of supply.

Collective Bargaining

Direct negotiations between employers and unions to determine labor market outcomes. May include wages, benefits, security and safety issues. Usually results in a contract of a specified duration. For more information: www.bls.gov (US Bureau of Labor Statistics)

Material Safety Data Sheets (MSDS)

Documentation concerning a hazardous chemical that identifies the chemical, the common names of the ingredients, the physical and chemical characteristics, the hazards of the chemicals and the emergency and first aid procedures to be considered when working with the chemical.

As To Form

Documents and agreements that are approved by an attorney for legal sufficiency prior to their execution while not commenting on the business merits of their contents. Also see Agreement.

Federal Standard 1037

Entitled, Telecommunications: Glossary of Telecommunication Terms, it is a Federal Standard issued by the General Services Administration pursuant to the Federal Property and Administrative Services Act of 1949. The document provides federal departments and agencies a comprehensive source of terms used in telecommunication by international and U.S. Government telecommunication specialists. (Jansen, 2002)

International City/County Management Association (ICMA)

Established in 1914, ICMA is the professional and educational organization for chief appointed managers, administrators, and assistants in cities, towns, counties, and regional entities throughout the world. (www.icma.org)

Consumption

Expenditures by consumers on final goods and services. The using up of goods and services by consumer purchasing. Consumer spending on goods and services produced by the economy in a given period. In macroeconomics, the total spending, by individual or a nation, or consumer goods during a given period. (Schiller, 2000)

Holding Cost (Inventory)

Expenses related to the risk of keeping inventories. May include overhead expenses, labor, equipment, administration, shrinkage and other costs such as repair of equipment, workers compensation, etc. (Schiller, 2000)

Breach of Contract

Failure by either contracting party to fulfill a contract, wholly or in part, without legal excuse. An action by one party to a contract that violates the terms of the contract thereby permitting the other party to declare the contract in default. The failure of one party to fulfill the terms of a contract when there is no legal reason for that failure. (Harney, 1992)

Automatic Stabilizer

Federal expenditure or revenue item that automatically responds counter cyclically to changes in national income, like unemployment benefits or income taxes.

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. Action steps that assure that the contractor is in full compliance with the entire contract. Contract administration activities include payment, monitoring of progress, inspection and acceptance, quality assurance, monitoring and surveillance, modifications, negotiations, contract closeout, and other activities. Also see Contract Management and Surveillance.

Discussions

Formal or informal communication involving an oral or written exchange of information for the primary purpose of obtaining information essential for determining the acceptability of a proposal. To provide the offeror an opportunity to revise its proposal. Usually includes negotiation used in competitive negotiation, emergency and sole source procurement.

Electronic Commerce Code Management Association (ECCMA)

Formed in 1999, ECCMA has brought together thousands of experts from around the world and provides them a means of working together to build and maintain the global, open standard dictionaries that are used to unambiguously label information. (Jansen, 2002)

European Community (EC)

Formerly the European Economic Community, this is the part of the European Union under which public procurement legislation is enacted, and is referred to as EC Directives. (Business, 2002)

Freeware

Free software available on the Internet for downloading. Used and redistributed at no cost to the user. Also see shareware. (Jansen, 2002)

Hand-To-Mouth Buying

Frequent purchases in small quantities to meet only immediate, short-term requirements. (ISM, 2000)

Proprietary Funds

Funds used to account for a government's business-type activities. There are two types of proprietary funds - enterprise funds and internal service funds. Both enterprise and internal service funds recover the full cost of providing services (including capital costs) through fees and charges on those who use their services. Also see Enterprise Fund and Internal Service Fund. (Taken from: http://cityofnorthlasvegas.com/Departments/Finance/PDFs/Budgets/2004_2005/4-OtherFunds/113-126-ProprietaryFunds.pdf )

Cost Reduction

Generally realized when a manufacturer is able to lower the 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. Also see Price Reduction, Cost Savings.

Ordinances

Generally refers to laws that county and municipal legislative bodies, such as boards of supervisors and city councils, pass applicable to those jurisdictions. May include requirements specific to the procurement of supplies and services. Also see By-Law. (Harney, 1992)

Evaluation Criteria

Generally used in the Request For Proposal (RFP) method. Qualitative factors that an evaluation committee will use to evaluate/score a proposal and select the most qualified proposer/offeror. May include such factors as past performance, references, management and technical capability, price, quality and performance requirements. (Harney, 1992)

Imports

Goods and services purchased from international sources that flow into a country. (Schiller, 2000)

Exports

Goods and services sold to foreign buyers. (Schiller, 2000)

Intermediate Goods

Goods or services purchased for use as input in the production of final goods or services. (Schiller, 2000)

Industrial Goods

Goods produced for industry, which include processed or raw materials, goods used to produce other goods, machinery, components and equipment. (Schiller, 2000)

Non-Branded Goods

Goods that are not linked to a particular brand name, manufacturer, or producer, and may be perceived to be of low quality. (Business, 2002)

Finished Goods

Goods that have completed the manufacturing or assembly process and are ready for sale to external customers. (ISM, 2000)

Net Investment

Gross investment less depreciation. (Schiller, 2000)

Reference Groups

Groups with whom buyers identify and whose values or attitudes they adopt. May be applicable to purchasing cooperatives. (Business, 2002)

Hedging (Currency)

Hedging protects the buyer against major swings in the value of the dollar against foreign currency. The buyer can achieve this via forward or futures contracts or via currency options. The buyer would enter into contracts to sell dollars for foreign currency at the time the supplier is paid. There is a profit or loss on a currency hedge contract that takes place behind the scenes. An important issue for those involved in global selling. (Burt, Dobler, Starling, 2003)

Designation of Special Purpose

Identifies items created by modification of standard commercial products to meet special needs, such as equipment modified to meet the needs of the physically challenged.

Client Agency

Identifies the name and address of the organization on whose behalf the bid request has been submitted. (Summit Magazine, On-Line)

Piracy

Illegal copying of a product such as software or music. (Jansen, 2002)

Evaluation Factors

In competitive negotiations, those factors specified in the RFP that will be considered in determining to whom a contract will be awarded.

Raw Materials

Items bought for use in the manufacturing process of a business. May include components, subassemblies, and complete products. Generally includes virgin materials such as wood, steel, petroleum products, etc. (Business, 2002)

Mutual Assent

In contracts, the agreement of each party to all the terms and conditions in the same context and with the same meaning.

Ex Point of Origin

In foreign trade, quotation or bid that does not include cost of exportation, such as transportation costs, export permit fees or export duties.

Rebilling

In freight handling, issuing a new waybill at a junction point to which shipment has been billed by a connecting line.

Bona Fide

In good faith.

Federal Employer Identification Number (FEIN)

In government entities the 9-digit number assigned for purposes of withholding tax; used by many purchasing organizations as a vendor identification number. Also see Employer Identification Number (EIN).

Credit

In monetary theory, the use of someone else's assets in exchange for a promise to pay (usually with interest) at a later date. The major examples are short-term loans from a bank, credit extended by a supplier, and commercial paper. In balance of payment accounting, an item such as exports that earns a country foreign currency. (Schiller, 2002)

Oral Presentations

In most solicitations, there will be a requirement for oral presentations from the top-ranked offerors. Oral presentations are conducted to allow the offerors to bring to the attention of the Evaluation Committee any aspects of their offer that may contribute to the selection of their response. It is an opportunity for the offerors to sell the merits of their sub-mission, often using slide shows and illustrative presentations.

Misrepresentations

In the context of conditions that may lead to a voidable contract, misrepresentation is when one of the parties to the contract made a wrong statement about some material element of the contract and, in reliance on this statement, the other party entered into the contract.

Public-Private Competition

In-house governmental departments and private companies who compete to provide government services; occurs when a government agency targets a service for possible outsourcing and allows the in-house operation currently providing the service to compete against the private sector and submit a proposal to provide the government service. May be referred to as Managed Competition.

Intellectual Property

Includes inventions, patents, copyrights, trade secrets, trademarks, technical data, industrial designs that are generally protected and proprietary. (Business, 2002)

Life Cycle Management

Includes the four phases of procurement and associated costs of owning assets, namely the acquisition planning phase, the procurement phase, the in-life-use phase and the disposal phase of the asset.

Cash Transfers

Income transfers that entail direct cash payments to recipients, e.g. Social Security payments, welfare, unemployment benefits. (Schiller, 2000)

Consumer Product Safety Commission (CPSC)

Independent federal agency created in 1972 to develop and enforce product standards, conduct research, and inform consumers to ensure their safety in the use of consumer products. For recall notices see www.cpcs.gov (ISM, 2000)

Intrapreneurs

Individuals in large firms who take responsibility for the development of innovations within the organization. (Business, 2002)

Hyperinflation

Inflation rate in excess of 200 percent and lasting for at least one year. (Schiller, 2000)

Norm

Informal, unstated rules that govern and regulate group behavior. Also see Ethics.

Data Deliverables

Information organized for analysis. This Information can refer to technical data, cost data and administrative reports as determined by the contract. The request for data deliverables must be included as part of the contract. The contract administrator or designee and supplier must be aware of data requirements stated in the contract so compliance provides effective management of the contract.

Inside Information

Information that is of advantage to investors that gives them unfair advantage over other investors and the general public. (Business, 2002)

Descriptive Literature

Information, such as charts, illustrations, brochures, and technical data, furnished by a bidder, on request as part of a bid, to describe the items offered; shows the characteristics or construction of a product, or explains its operation to determine the acceptability of the item.

In-Process Inspection

Inspection performed at the seller's site usually during the manufacturing or repair process to ensure work to date complies with specifications and contractual agreements; has the potential to identify defects which could not be seen during final inspection.

Marine Insurance

Insurance covering loss or damage of goods at sea. (Ferrell, 2002)

Retailer

Intermediaries who buy products from manufacturers (or other intermediaries) and sell them to buyers rather than for resale or for use in producing other products. Also see Wholesaler. (Business, 2002)

Current Account

International cash flows in payment for exports; part of a nation's balance of payments. (Schiller, 2000)

Defense Data Network (DDN)

Internet linkages to U.S. military bases and defense contractors around the world. (Jansen, 2002)

Intermodal

More than one mode of transportation is involved, i.e. air, rail, truck. (ISM, 2000)

Obsolete Supplies/Equipment

Items that are out of date, no longer in use or are effectively unusable; examples: 8 track audio tapes, 5-1/4 floppy computer disks. Obsolete supplies/equipment become outdated because of new technology, new regulations or new procedures instituted by the agency. For example: In accordance with the new ANSI guidelines, the agency decides to change the color of their highway worker's safety vests from orange to lime green for greater worker visibility. Therefore, the orange safety vests are now considered "obsolete" in favor of the lime green safety vests. Also see Surplus.

Equivalent Items

Items that without actually being identical have sufficient in common to be capable of being used for the same purpose. Also see Brand Name (or Equivalent) Specification.

Equity

Justice according to natural law or right; freedom from bias or favoritism.

Buying In

Knowingly submitting an offer or bid below the vendor's anticipated cost with the expectation of increasing the contract amount after award through unnecessary or overpriced change orders. Commonly referred to as "low balling" a price. Also see Lowball.

Enabling Legislation

Legislation which provides purchasing authority to an official or department. The primary sources of enabling legislation in any governmental jurisdiction are: Written Law; Administrative Law; and Common Law. (Garner, 2004)

Public Finance Law

Legislative laws governing the financial activities of government or public sector organizations. (Business, 2002 - modified)

Public Procurement Unit (PPU)

Local public procurement unit; External procurement activity (any buying organization not located in the state, which, if located in this state, would qualify as a public procurement unit); state public procurement unit; Federal Government; and any not-for-profit entity comprised of more than one of the above. (ABA Model Procurement Code)

Reactive Maintenance

Maintenance for equipment and facilities provided only in response to a breakdown which results in a loss of production. It may create emergency requests to the purchasing organization. (Business, 2002)

Equipment

Major items that are not expendable except through depreciation or wear and tear and which, although they may be fixed or positioned in prescribed places, do not lose their identity or become integral parts of other items or installations.

Recycled Materials

Materials, goods, or products that contain recyclable items that are used in manufacturing a new product.

Procurement Methods

Methods by which goods, services, or material may be acquired by public purchasers. The methods may include blanket orders, emergency purchases, standing offers, purchase orders, transfers, competitive bidding, competitive negotiation, intergovernmental cooperative agreements, small purchase contracts, purchases via a credit card, etc.

Minimum Order Quantity

Minimum quantity that may be ordered on any one purchase order/contract.

Mistake (in Bids)

Minor errors made in the form of bidding; for example, failure to insert a decimal point. Clerical mistakes, apparent on the face of the bid, may be corrected. Once a mistake is suspected, the purchasing official is required to request verification of the bid.

MWBE

Minority and Women's Business Enterprises. Also see Economically Disadvantaged Individuals, Small Disadvantaged Business, Historically Underutilized Business (HUB), Minority-Owned and Women-Owned Business Enterprises (MBE and WBE).

Job Rotation

Movement of employees from one job to another in an effort to relieve the boredom often associated with job specialization as well as exposing the employee to other jobs in order to achieve cross-training and upward mobility opportunities. (Business, 2002)

Insourcing (in-house)

Moving an outsourced business operation in-house. Also see Outsourcing and Contracting Out.

Baldrige National Quality Award

Named after former Commerce Secretary, Malcolm Baldrige, it honors those companies that have achieved national excellence in quality improvement. It is similar to the Deming Prize, awarded in Japan. The mission of the program is to enhance the competitiveness, quality, and productivity of U.S. organizations for the benefit of all residents. For more information: www.baldrige.nist.gov.

Point of Shipment (POS)

One of many designated F.O.B. terms which means that title passes from seller to buyer at seller's loading dock. Same as F.O.B. Factory, F.O.B. Point of Origin.

Mutuality of Obligation

One of the elements of a contract. Both parties to an agreement are obligated, or none of the parties is obligated. Both parties must supply consideration to the other party. It is a sub-element of consideration. There may be more than two parties obligated in an agreement.

Basis Point

One one-hundredth of a percentage point. Small movements in the interest rate or the exchange rate is often described in terms of basis points. If a bond yield moves from 5.25% to 5.45%, it has risen by 20 basis points. (Bishop, 2004)

Litigation

One party to a contract bringing suit against the other party in a court of law. Also see alternative dispute resolution.

Principal

One who employs an agent. A person who has authorized another to act for him/her. Also see Agent, Buyer and Law of Agency.

Internet

Originally designed by the U.S. Department of Defense so that a communication signal could withstand nuclear war and serve military installations worldwide. A network of computer networks that is international in scope. It facilitates data transfer and communication services. The Internet is a valuable resource for public procurement personnel which facilitates research, benchmarking, networking, eProcurement and a host of other applications. (Jansen, 2002)

Buy American Act (U.S. Law)

Originally enacted in 1933, generally requires that the Federal Government buy for public use only raw materials mined or produced in the United States, and only manufactured items which are made in the United States, "substantially all from" materials or items mined, produced or manufactured in the United States. The act has several important exceptions. The general requirements are inapplicable if the items to be purchased are not available domestically, in commercial quantities of good quality, or if the cost of the domestic items is "unreasonable", or if the head of the department otherwise determines it to be in the public interest to waive the requirement.

Productivity

Output per unit of input, e.g. output per labor hour. (Business, 2002)

Class-Item Code

Part 1 of the NIGP Commodity/Service Code consisting of five digits and containing more than 6000 item descriptions; used to facilitate the open market aspects of the purchasing function.

Detailed-Item Description Code

Part II of the NIGP Commodity/Service Code which expands the class-item code into 11 digits with more than 140,000 item descriptions; used in the areas of inventory, warehousing, and cooperative purchasing operations.

Joint Solutions Procurement (JSP)

Partnering the supply community with the procurement agency where the supply community provides input to establish appropriate specifications, project designs, and deliverables prior to posting a solicitation for formal bids or proposals. These acquisitions normally involve high dollar value/high risk procurements.

North American Free Trade Agreement (NAFTA)

Passed by Congress in 1993, it is an agreement between Canada, Mexico and the United States, designed to create a Free Trade Area (FTA) consistent with World Trade Organization's (WTO) rules, whereby all tariffs will be eliminated within the FTA over a transition period.

Partial Payment

Payments that permit the contractor to invoice at intervals to coincide with the delivery and acceptance of incremental supplies and/or services. Also see Advance Payments and Progress Payments.

Competent Parties

Persons legally capable of entering into a contract. Must be of legal age, not be insane, etc. For a contract to be valid, both parties must be in a position to enter into a contract and be capable of doing so. (ISM, 2000)

Qualitative Measurement

Pertaining to or concerning quality aspects; tends to be more subjective in nature; decides suitability or effectiveness. Example: The navy blue color of this week's shipment of motors is slightly lighter in color, however, it will not affect its performance and therefore this shipment is still acceptable from a qualitative point of view.

Fit, Form and Function

Physical, functional, and performance characteristics or specifications that uniquely identify a component or device and determine its interchangeability in a system or piece of equipment. Used especially when considering the suitability of a suggested alternate or "equal."

Foreign-Exchange Markets

Places where foreign currencies are traded. (Business, 2002)

Preventive Maintenance (PM)

Planned activities undertaken to retain equipment or material in a serviceable condition; includes scheduled inspection, testing, servicing, classification as to serviceability, repairs, rebuilding and reclamation.

Equal (Employment) Opportunity (EEO)

Policies and procedures of the jurisdiction to ensure non-discrimination and equal opportunity to all employees, especially women, minorities, and persons with disabilities. (Business, 2002)

Competitive Sealed Bidding

Preferred method for acquiring goods, services, and construction for public use in which award is made to the lowest responsive and responsible bidder, based solely on the response to the criteria set forth in the IFB; does not include discussions or negotiations with bidders. Also see Formal Bid.

Established Catalog Price

Price included in a catalog, printed price list, schedule, or other form which is regularly maintained by a manufacturer or contractor, either published or otherwise available for inspection by all customers, which states prices currently in effect for the general buying public for the given supplies or services.

Bid Preference

Procurement laws mandating that bid prices for a preferred class of bidders be given special consideration when comparing their bid prices with those of other bidders not in the preferred class, i.e., local vendors may be given a bid preference over out-of-state vendors. Also see Buy Local and Local Preference.

Capital Intensive

Production processes that reflect a high ratio of capital to labor inputs. (Schiller, 2000)

Architectural and Engineering (A & E) Services

Professional services within the scope of the practice of architecture and professional engineering, as defined by the jurisdiction, usually involving research, design, development, construction, alteration, or repair of real property.

Federation of Canadian Municipalities (FCM)

Promotes a strong, effective and accountable municipal government. (www.fcm.ca)

False Claims Act

Provides for the recovery of damages and remedies upon proof of loss to the government, sustained through fraud in the award or performance of government contracts.

Herzberg, Frederick

Psychologist who found that job satisfaction and job dissatisfaction acted independently of each other. Two Factor Theory states that there are certain factors in the workplace that cause job satisfaction, while a separate set of factors cause dissatisfaction. Herzberg divided these into two factor groups: Hygiene factors (dissatisfiers) i.e., working conditions, salary, polices and procedures, etc. and Motivator factors (satisfiers) i.e., recognition, achievement, advancement, job challenge, etc. Herzberg's factors represent the things people want from their workplace (motivators). He coined the term "job enrichment" to describe the process of redesigning work in order to build in the motivators needed to keep people interested in their jobs. Also see Hygiene Factors.

Restrictive Specifications

Specifications that unnecessarily exclude a potential bidder from competing for a procurement. Precludes full and open competition. Specifications that are written around a specific product or service.

Notice of Intent (NOI)

Public notice issued to announce the intended award of an agreement to a certain supplier or service provider without formal competitive sourcing. Any bidder that wishes to participate in this work may object to the award. These types of solicitations are often used if a satisfactory relationship exists with a supplier or service provider and it is not in the organization's best interest to change providers. Organizations should consider the value attached to an alternate firm, stage in the project life cycle, proprietary product, parts or components compatibility, etc. before ending a supplier relationship.

Purchasing Manager

Public purchasing employee with responsibility and authority to act for the public agency in certain areas.

Procurement Code Exceptions

Public sector procurement codes (legislation) provide for the direct purchase of specific products or services without following the competitive requirements. Example: Authorized or mandated preferred source (prisoners, blind, and disabled), emergency procurements as well as others provided by local laws and regulations.

Juran, Joseph

Published the Quality Control Handbook in 1951. Developed the quality trilogy, which consisted of quality planning, quality control, and quality improvement. (Business, 2002)

Penalty Clause

Punitive language inserted in a competitive solicitation which details what action will be taken if the contractor does not perform in a satisfactory manner. Also see Liquidated Damages. (ISM, 2002)

Procurement

Purchasing, renting, leasing, or otherwise acquiring any supplies, services, or construction; includes all functions that pertain to the acquisition, including description of requirements, selection and solicitation of sources, preparation and award of contract, and all phases of contract administration. The combined functions of purchasing, inventory control, traffic and transportation, receiving, inspection, storekeeping, salvage and disposal operations.

Qualified Products List (QPL) Specifications

QPL Specifications are based on a list of products identified by manufacturers' names and model numbers, which are the only items which will be acceptable. These are used when quality is such a critical factor and testing so lengthy or expensive that the agency wants to stay with proven products. The list is prepared by testing products, either in the lab or in daily use. Items may be added to the list by the supplier demonstrating their quality by meeting specifications that have been defined by the using entity.

Bilateral Modification (of a contract)

Requires the written approval of both parties to a contract in signatory form. Bilateral modification is often related to some alteration of one or more substantive terms of the contract. Also see Unilateral Modification.

Factors of Production

Resource inputs used to produce goods and services, e.g. land, labor, capital, entrepreneurship. (Schiller, 2000)

Price Protection

Sales agreement granting purchaser any reduction in price the vendor may establish prior to shipment of the goods; sometimes extended for a period beyond the date of shipment.

Receivables Turnover

Sales divided by accounts receivable. May be used to determine the financial health of a company and to determine if they are a responsible bidder/offeror. (Business, 2002)

Certificates of Deposits (CDs)

Savings accounts that guarantee a depositor a set interest rate over a specified interval as long as the funds are not withdrawn before the end of the period—generally six months or one to five years. (Business, 2002)

EDI

See Electronic Data Interchange.

EEO

See Equal Employment Opportunity.

NAPM (National Association of Purchasing Management)

See Institute for Supply Management (ISM).

National Association of Purchasing Management (NAPM)

See Institute for Supply Management (ISM).

NAEP

See National Association of Educational Procurement. Previously known as NAEB.

NASPO

See National Association of State Procurement Officials

NAFTA

See North American Free Trade Agreement.

OMB

See Office of Management and Budget.

OBS

See Open Bidding Service Canadian.

OEM

See Original Equipment Manufacturer.

Diversion

The act of changing the route or destination of goods in transit from the original destination to a new destination.

Program Evaluation and Review Technique (PERT)

Similar to the critical path method of project scheduling, PERT was developed in 1955 by the Du Pont and Remington Rand companies for use in coping with complex plant maintenance problems. Now available in software applications that show time and dependency relationships between the activities that make up the total project. (Ferrell, 2002)

Economically Disadvantaged Individuals

Socially disadvantaged individuals whose ability to compete in the free enterprise system is impaired due to diminished opportunities to obtain capital and credit as compared with others in the same line of business that are not socially disadvantaged. Also see Small Disadvantaged Business, Historically Underutilized Business (HUB), Minority-Owned Business (MBE) and Women-Owned Business Enterprises (WBE).

Change Order Authority

Some public agency contracts include the authority to unilaterally modify the current contract without express consent of the contractor. For example, certain supply contracts allow the agency to exceed purchase quantities within an agreed upon percentage range. Also see Amendment, Authorized Deviation, Change Order, Contract Modification and Modification.

Gratuity

Something given voluntarily or beyond obligation usually for some service (i.e. Tip).

Gift

Something of economic value given to a public official or the public official's relative without valuable consideration of equivalent value.

Earnest Money

Something of value paid as a pledge to bind an agreement or contract, typically money paid by a seller to a buyer.

Interrogatory

Specific to legal matters; a written question or questions submitted to the other party involved in litigation usually under oath. Interrogatories are usually performed by attorneys representing the parties. (Garner, 2004)

Combination Design and Performance Specification

Specifications that incorporate, to the degree necessary, the attributes of both design and performance specifications.

Anti-trust Laws

State and federal laws enacted to ensure free, fair and open competition by prohibiting monopolies or conspiracies in restraint of trade in interstate and foreign commerce. The Sherman and Clayton Acts are examples of Federal Antitrust Laws. (Miller, 2006)

Anticipatory Repudiation

Statements or acts of a contractor before an actual Breach of Contract that indicate that the contractor does not intend or is unable to complete, or continue to perform under the contract. (Black's Law Dictionary, 93)

Common Stock

Stock owned by individuals or firms who may vote on corporate matters, but whose claims on profit and assets are subordinate to the claims of others. (Ferrell, Hirt, 2003)

Inventory Control

Supervision and management of the supply, storage and accessibility of items held in inventory to insure an adequate supply of available material without excessive oversupply, back orders or stock outages.

Non-Expendable (Items or Supplies)

Supplies that are not consumed during use or that do not loose their identity during use.

Investment Recovery Initiatives (IRI)

Systematic efforts to manage materials and equipment surplus in order to recover as much of the original cost and investment as possible. May involve life cycle cost analysis. (ISM, 2000)

Fiscal Stimulus

Tax cuts or spending hikes intended to increase aggregate demand.

Fiscal Restraint

Tax hikes or spending cuts intended to reduce aggregate demand. (Schiller, 2000)

Excise Taxes

Taxes levied on a specific good or service, such as cigarettes, alcohol or fuel, and are set by unit (for example, a gallon of gas) rather than by purchase price. They are sometimes referred to as "selective sales taxes." (Schiller, 2002)

International Commercial Terms (Incoterms)

Terms published by the International Chamber of Commerce (ICC) which are globally recognized terms for moving goods internationally. These terms define the responsibilities and risks of both the buyer and seller including while the merchandise is in transit. Incoterms apply to goods that cross national borders.

Delivery/Indefinite

Terms suitable for commodity purchases because the products purchased are standard throughout the industry, with numerous vendors. All of the indefinite delivery types of clauses should be used only with fixed firm price or fixed price with escalation pricing contracts. The following are three variations of indefinite delivery contracts:

Delivery/Definite

Terms utilized when a specific requirement quantity and delivery date have been established. This is the most common type of delivery requirement. Common examples include one-time purchase orders and capital outlays.

Express Authority

That authority that is explicitly given in direct language, rather than inferred from conduct. Also see Implied Authority and Inherent Authority.

Competitive Range

That group of proposals, as determined during the evaluation process for competitive negotiation, which includes only those offerors considered to have a reasonable chance of being selected for award and who are therefore chosen for additional discussions and negotiations. Proposals not in the competitive range are given no further consideration.

Private Sector

That part of an economy in which goods and services are produced by individuals and companies as opposed to the government and the non-profit sector. The ultimate aim of the private sector is to secure a profit as opposed to government and the non-profit sector which aims to achieve other objectives.

General Provisions

That part of the contract (bid, proposal) that contains all of the standard clauses and requirements. Also see Boilerplate.

Cyclical Deficit

That portion of the budget deficit attributable to unemployment or inflation. (Schiller, 2000)

Public Sector

That section of the economy that is financed and controlled by a central government, local authorities, and publicly funded corporations. (Business, 2002)

Euro

The European Monetary Unit (EMU) launched on January 4,1999 initially with eleven EU member countries. (Business, 2002)

Federal Supply Service

The U.S. General Services Administration Federal Supply Service 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.

Circular A-76 (OMB)

The U.S. Office of Management & Budget (OMB) issued Circular A-76 which sets forth a methodology for conducting a make-or-buy decision including how to compute costs and how to make a cost comparison.

Comparative Advantage

The ability of a country or firm to produce a specific good or service at a lower cost than its rivals or competitors. The ability to produce a specific product or service more efficiently than any other producer. Also see Absolute Advantage. (Ferrell, Hirt, 2003)

Conceptual Skills

The ability to think in abstract terms. (Ferrell, Hirt, 2003)

Digital Signature

The ability to transpose a signature via the Internet. A piece of code that can be attached to an email message on an online transaction to provide authentication. An important component of ePurchasing/eCommerce. (Jansen, 2002)

Price Stability

The absence of significant changes in the average price level - officially defined as a rate of inflation of less than 3%. (Schiller, 2000)

Defect

The absence of something that is necessary for completeness or perfection, or a deficiency in something essential to a thing's intended or proper use. A product is defective if it is not fit for the ordinary purposes for which it is sold and used. Defects are generally of two types, latent (not apparent to the buyer by reasonable observation) and patent (a defect that is apparent on normal inspection). Also see Latent Defect. (Black's Law Dictionary, 1126, 1990)

National Debt

The accumulated debt of the Federal Government. (Schiller, 2000)

Benchmarking

The act of measuring a process, service, or product against the characteristics of the recognized leaders in the given area of review. A study, review, or process whereby a procurement organization identifies world-class organizations with which to compare its practices, policies and performance outcomes. An organization's performance is judged against selected criteria from other organizations deemed "best in class".

Cost

The actual expenses incurred in delivering a product, service, or construction; includes both direct and indirect costs, but does not include fee or profit for the vendor.

Competitive Advantage

The advantage one competitor may have over another due to various factors such as better use of technology, geographic location (resulting in lower transportation costs), more productive employees, etc. While competitive advantage is healthy for the market place, supply managers must be aware of unfair competitive advantage and its various manifestations. (Ferrell, Hirt, 2003)

Bid Rigging

The agreement among potential competitors to manipulate the competitive bidding process, for example, by agreeing not to bid, to bid a specific price, to rotate bidding, or to give kickbacks to purchasers.

Indemnification

The agreement of a contracting party to hold the other party harmless, to secure the other party against loss or damage, or to give security for the reimbursement of the other party in case of an anticipated loss. (Blackís Law Dictionary, 769,1990)

Hourly Rate

The amount charged for an hour of labor; includes wages, all indirect costs, and profit. Canadian The hourly rate of pay for the classification as established in the standing offer.

Retained Profits

The amount of profit remaining after tax and distribution to shareholders that is retained in a business and used as a reserve or to finance expansion and investment.

Open-End Pricing

The amount paid will be based on price in effect at the time of delivery. Also see Price at Time of Delivery and Price Prevailing at Date of Shipment.

Net Worth

The amount stated on a company's balance sheet when liabilities are subtracted from assets. This amount provides a rough appraisal of the amount of money a company has retained in its business and thus gives an indication of the financial capability of the company. It is used in making the determination of whether the company is a responsible contractor. (Nash, Schooner, OíBrien, 1998)

Draw Off Order

The amount to be delivered by the contractor to the users under a blanket order as authorized or arranged for by the purchasing office. May also be referred to as a sub-order release.

Appeal Process

The appeal process varies among different public agencies but the goal of the agency should remain constant - fair and equitable treatment of the parties. Also see Appeal and Appeal Rights.

Operational Research

The application of scientific methods to the solution of managerial and administrative problems, involving complex systems or processes. (Business, 2002)

Atomic Digital Clock Time

The atomic digital clock is located in Fort Collins Colorado and it is the master clock in the United States that provides the precise time as the basis for all other clock systems and for official bid openings. The telephone number to hear your local accurate local time is 1-303-499-7111.

Diversity (in the workplace)

The attempt by organizations to recruit and retain a multicultural, multi-talented workforce. Embracing many dimensions of difference and creating a culture of inclusion in the workplace. Business success requires that managers create a culture of inclusion, trust and mutual respect. (Business, 2002)

Progressive Award

The award of a definite quantity contract under the same solicitation to two or more vendors or contractors to furnish the same or similar supplies or services, where more than one vendor is needed to meet the contract requirements for quantity, delivery, or service.

Full-Time Equivalent Position (FTE)

The baseline is a full-time position. All part-time positions are converted to the decimal equivalent of a full-time position based on 2,080 hours per year. For example, a part-time typist working 20 hours per week would be the equivalent to .5 of a full-time position.

Lowest Responsive and Responsible Bidder

The bidder who fully complied with all of the bid requirements and whose past performance, reputation and financial capability is deemed acceptable and has offered the most advantageous pricing or cost benefit, based on the criteria stipulated in the bid documents.

Federal Reserve System (FED)

The central bank and monetary authority of the United States. Established in 1913 and popularly known as "The Fed", the system divides the United States into 12 Federal Reserve districts, each with its own regional Federal Reserve Bank. (www.federalreserve.gov)

Corporate Officers

The chairman/chairwoman of the board, president, executive vice presidents, corporate secretary, and treasurer, or any other top executives appointed by the board of directors. (Business, 2002)

Joint Venture

The coming together of two or more parties who combine their resources in response to a solicitation for bids or proposals (IFB/RFP). The relationship that is created is for the sole purpose of responding to the solicitation. (Harney, 1992)

Encumbrance

The commitment of appropriated funds to purchase an item or service. To encumber funds means to set aside or commit funds for a specified future expenditure.

Document Management

The computerized administration of electronic and paper-based documents. A document management system generally includes a scanner and an optical character recognition (OCR) program for converting paper documents into electronic form. (Jansen, 2002)

Delegation of Authority

The conferring of authority by someone who has it, to another person, in order to accomplish a task.

Estimated Cost

The cost to be used as the basis of the sourcing decision. It is representative of all known work and expected unscheduled work arising out of the requirements, i.e. the total estimated contract value.

Bribery

The crime of offering, giving, receiving, or soliciting anything of value to influence action of an official or in the discharge of a public duty. (Garner, 2004)

Current Funding

The current sum of money assigned to a contract.

Established Due Date

The date and time specified in the IFBs and RFPs for submission of initial bids or proposals.

Contract Commencement Date

The date on which all parties accept a contract thereto; the date of contract award. Maybe referred to as contract date. (Harney, 1992)

Buying Behavior

The decision processes and actions of people who purchase and use products and services. The underlying motivational rationale for an individual's buying decision. (Business, 2002)

Obsolescence

The decline of products in a market due to the introduction of better competitor products or rapid technology developments. Is a critical part of a product's life cycle, and if a product cannot be turned around, it may lead to product abandonment. (Business, 2002)

Public Procurement

The designated legal authority to advise, plan, obtain, deliver, and evaluate a government's expenditures on goods and services that are used to fulfill stated objectives, obligations, and activities in pursuit of desired policy outcomes.

Cost Breakdown

The detailed analysis of the contractor's pricing that may include overhead and profit. Also see Cost Analysis. (Burt, Dobler, Starling, 2003)

Procedure

The detailed series of related activities that must be completed, and the order in which they must be done, to accomplish a given task.

Electronic Funds Transfer (EFT)

The direct payment to contractors and businesses through electronic transfer of funds between financial institutions. Payment by paper check is eliminated. (Business, 2002)

Logistics Management

The discipline responsible for the movement, routing, distribution, transportation, as well as interrelated activities that apply to goods and commodities. It may include procurement and supply activities in a very broad context.

Privatization

The divestiture of both management and assets of a public function to the private sector in order to change the status of a function formerly performed by the public entity to one that is privately controlled and owned including the transfer of real and personal property.

Request for Proposal (RFP)

The document used to solicit proposals from potential providers for goods and services (Offerors). Price is usually not a primary evaluation factor. Provides for the negotiation of all terms, including price prior to contract award. May include a provision for the negotiation of Best and Final Offers. May be a single step or multi-step process. Introduced in the Armed Services Procurement Act of 1962 as well as by the Competition in Contracting Act of 1984.

Cost of Goods Sold

The dollar amount equal to beginning inventory plus net purchases less ending inventory. (Schiller, 2000)

Protectionism

The economic policy of promoting favored domestic industries through the use of high tariffs and other regulations to discourage imports. Historical variants of this policy have included mercantilism, a trade policy aimed at maximizing currency reserves by running large trade surpluses; and import substitution, a trade policy in which targeted imports are replaced by local manufactures in order to stimulate local production. (Explanation-guide.info/meaning)

Restraint of Trade

The effect of an act, contract, conspiracy, or combination which eliminates or stifles competition, effects a monopoly, artificially maintains prices, or otherwise hampers or obstructs the course of trade and commerce as it would be carried on if left to the control of natural and economic forces.

Evaluation of Bids

The examination of bids after opening to determine the bidder's responsibility, responsiveness to requirements and other aspects of the bid to determine the successful bidder.

Brand Loyalty

The extent to which a customer is favorable toward buying a specific brand to the exclusion of other competitive brands.

Par Value

The face value of a bond; the amount to be repaid when the bond is due. (Ferrell, 2002)

Cost Drivers

The factors and forces that influence the nature and level of cost incurred by an enterprise. (ISM, 2000)

Non-Conformance

The failure of material or services to meet specified requirements for any characteristic or requirement.

Breach of Warranty

The failure to meet an express or implied agreement as to the title, quality, content, or condition of something sold.

Contract Award

The final agreement on the terms and conditions of a contract between a buyer and seller.

Initial Public Offering (IPO)

The first issuance to the general public of stock in a corporation. (Business, 2002)

Price Control

The fixing or restricting of prices, especially by a government agency. (Business, 2002)

Policy of Insurance

The formal document delivered by the insurance company to the insured which evidences the rights and duties between the parties.

Marketing Mix

The four marketing activities—Product, Price, Promotion and Distribution—that the business can control to achieve specific goals within a dynamic marketing environment. (Ferrell, 2002)

Marginal Propensity to Save (MPS)

The fraction of each additional dollar of disposable income not spent on consumption. (Schiller, 2000)

Marginal Propensity to Consume (MPC)

The fraction of each additional dollar of disposable income spent on consumption; the change in consumption divided by the change in disposable income. (Schiller, 2000)

Receiving

The function of accepting from all sources all items of supply used in the organization.

Public Policy

The fundamental policy on which laws rest, especially policy not yet enunciated in specific rules. (www.factmonster.com)

Benefit

The gain received from voluntary exchange. (Schiller, 2000)

Quantitative Research

The gathering and analysis of data that can be expressed in numerical form. Involves data that is measurable and can include statistical results, financial or demographic data. (Business, 2002)

Consignment

The goods or property shipped via a common carrier from one location to another.

Outputs

The goods, services, and ideas that result from the conversion of inputs.

Definiteness

The important or material terms of an agreement that are specifically expressed. Under common law, an offer must include the important, or material, terms of the proposed agreement so that, when a party accepts the offer, a resulting agreement is enforceable. Important terms include: subject matter, price, payment terms, quantity, quality, duration and the scope of work to be done. If the parties purport to agree on a material term but do so in a vague manner, as contrasted from omitting the term altogether, there is no agreement because it is too indefinite.

Insolvency

The inability to pay debts when they become due. Insolvency will apply even if total assets exceed total liabilities, if those assets cannot be readily converted into cash to meet debts as they mature. (Business, 2002)

Front-End Loading

The inclusion in a bid or proposal of inflated prices on items to be delivered early in the performance of the contract and unduly low prices on later items. It is a form of unbalanced bidding that is aimed at enabling the bidder to recover money in advance of the performance of the work. Also see Unbalanced Bid. (Miller, 2006)

Comptroller

The individual within an organization who is responsible for the organization's accounting and financial management functions.

Mobilization

The initial effort to perform a construction contract by hiring necessary personnel and moving the required equipment and facilities on to the site of the work. Contracting agencies frequently include a separate bid line item for this effort on certain construction projects in order to permit the contractor to be paid promptly for this effort. Also see Demobilization. (Nash, Schooner, OíBrien, 1998)

Process Control

The inspection of work-in-progress to provide feedback on, and correct a production process. A quality control technique used in manufacturing. (Business, 2002)

Electronic Commerce (eCommerce)

The integration of electronic data interchange, electronic funds transfer, and similar techniques into a comprehensive electronic-based system of procurement functions; could include the posting of IFB's and RFP's on electronic bulletin boards, the receipt of bids via electronic data interchange, notification of award by email, and payment via electronic funds transfer. Also referred to as Electronic Sourcing (eSourcing).

Discount Rate

The interest rate that the Federal Reserve System charges for loans to member banks. (Schiller, 2002)

Debt Service

The interest required to be paid each year on outstanding debt. (Schiller, 2000)

Product Launch

The introduction of a new product into a market. The beginning stages of the product life cycle. (Ferrell, 2002)

GS1 US BarCodes and eCom

The organization dedicated to supporting the adoption and implementation of the GS1 System (formerly the EAN.UCC [ Uniform Code Council, Inc.] System) in the United States. The BarCodes and eCom Group works with industry to solve supply chain problems through solutions based on the standards of the GS1 System. The GS1 System - the world's most accepted standards system - standardizes identification numbers, Electronic Data Interchange (EDI), Business Message Standards using Extensible Markup Language (XML) and other supply chain solutions for more efficient business. The GS1 System is currently used by more than one million member companies worldwide. For more information: http://barcodes.gs1us.org/About/BarCodesandeComFAQs/tabid/142/Default.aspx. (Jan 2007)

Kickback

The payment of something of value to an individual with the goal of persuading or influencing his or her decision or performance in a certain situation. May be in the form of cash or favors and is usually unethical.

Lot Tolerance Percent Defective (LTPD)

The percent of defective items that a customer is willing to accept.

Lead Time

The period of time from date of ordering to date of delivery, including the time required for the vendor to manufacture or prepare the goods for shipment; may include the time needed by the procurement function to process the purchase request, issue a solicitation, evaluate bids and award a contract. Also see Supplier Lead Time.

Chief Procurement Officer (CPO)

The person holding the position as head of the purchasing office in the agency or jurisdiction.

Offeree

The person/entity to whom an offer is made usually in response to a Request for Proposal (RFP).

Material Life Cycle

The phases through which material assets pass including, assess and plan material requirements; acquisition; operation, use and maintenance; disposal.

Delivery

The physical transfer of possession from one person to another, as from a carrier, vendor, or contractor to the purchaser. Also see various Free on Board (F.O.B.) descriptions.

Destination

The place to which a shipment is consigned. The final delivery point to which a shipment is routed. A delivery point where title passes from seller to buyer.

Minimum Stock Level

The planned lowest level of stock, below which stock is normally flagged for management attention and orders expedited.

Recycled Material Content

The portion of a product made with recycled materials consisting of pre-consumer materials (waste), post-consumer materials (waste), or both.

In-House Bidding

The practice of allowing public agencies to compete against private providers of services. When a decision is made to contract out a service, the public service provider submits an offer/proposal to perform the services just as a private provider would. (Harney, 1992)

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. Also see Bulk Purchasing. (NASPO, 2001)

Industrial Espionage

The practice of spying on a business competitor in order to obtain their trade or commercial secrets. (Business, the Ultimate Resource, 2002)

Council of State Governments (CSG)

The premier multibranch organization forecasting policy trends for the community of states, commonwealths and territories on a national and regional basis. CSG alerts state elected and appointed officials to emerging social economic and political trends; offers innovative state policy responses to rapidly changing conditions; and advocates multistate problem solving to maximize resources and competitiveness. CSG promotes excellence in decision-making and leadership skills and champions state sovereignty. (www.csg.org/about/faqs.aspx)

Extended Price

The price for the total number of items ordered, calculated by multiplying the quantity ordered by the unit price.

Price/Earnings (PE) Ratio

The price of a stock share divided by earnings per share. (Business, 2002)

Exchange Rate

The price of one country's currency expressed in terms of another's; the domestic price of a foreign currency. A major cost factor in the sale of goods and services in the global marketplace. Also called Rate of Exchange. (Schiller, 2002)

Relative Price

The price of one good in comparison with the price of other goods. A key component of benchmarking. (Bishop, 2004)

Interest Rate

The price paid for the use of money. Since most businesses borrow money, the interest rate is factored into their cost of doing business and may be reflected in the selling price of commodities and services. (Schiller, 2000)

Federal Acquisition Regulations (FAR)

The primary document in the Federal Acquisition Regulations System, containing uniform policies and procedures that govern the acquisition activity of all federal agencies. The FAR is prepared, issued and maintained jointly by the Secretary of Defense, the Administrator of General Services and the NASA Administrator. (Nash, Schooner, OîBrien, 1998)

Residual Value

The proceeds, less removal and disposal costs, if any, realized upon disposition of a tangible capital asset (FAR 31.001).

Contract Planning

The process by which the efforts of all personnel responsible for an acquisition are coordinated and integrated through a comprehensive plan for fulfilling the needs of the government in a timely manner and at a reasonable cost. (Federal Acquisition Institute, 1999, p.6-6)

Full and Open Competition

The process by which two or more vendors attempt to secure the business of a third party by offering the most favorable price, quality, delivery terms, or service. The concept of competition presumes the existence of a marketplace in which there is more than one vendor supplying similar goods and/or services.

Market Analysis

The process of analyzing prices and trends in the competitive marketplace to compare product availability and offered prices with market alternatives and establish the reasonableness of offered prices. Also see Demand Analysis, Procurement Profile, Spend Analysis, Supplier Analysis and Supply Positioning. (Business, 2002)

Classification of Defects

The process of arranging defects in classes or groupings in accordance with a specific schema, for example, by severity of defect such as major, critical, or minor.

Non-Competitive Negotiation

The process of arriving at an agreement through discussion and compromise when only one source is available to meet the requirement.

Charge-Back

The process of charging the using agency for materials and supplies withdrawn from inventory or from a central stocking location.

Pricing

The process of establishing a reasonable amount to be paid for goods and services. Generally includes labor, material, ancillary costs and profit.

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. The end result of price analysis is to ensure fair and reasonable pricing of a product or service. Price analysis may include a variety of techniques such as comparing proposed prices with prices of same or similar items obtained through market research. (Nash, Schooner, OíBrien, 1998).

Risk Management

The process of identification and analysis of risk; and the decision to either accept or mitigate the exposure to such risk when compared to the potential impact on the achievement of the organization's objectives.

Competitive Bidding

The process of inviting and obtaining bids from competing sources in response to advertised competitive specifications, by which an award is made to the lowest and best bidder meeting the specifications. The process contemplates giving potential bidders a reasonable opportunity to bid, and requires that all bidders be placed on the same plane of equality. Each bidder must bid on the same advertised specifications, terms, and conditions in all the items and parts of a contract. The purpose of competitive bidding is to stimulate competition, prevent favoritism, and secure the best goods and services at the lowest practicable price, for the benefit of the agency. Competitive bidding cannot occur where contract specifications, terms, or conditions prevent or unduly restrict competition, favor a particular supplier, or increase the cost of goods or services without providing a corresponding benefit to the agency.

Containerization

The process of packing goods in very large, separate containers (sometimes referred to as "cubes") for shipment to a final destination. Container shipment may be via ship, rail or truck.

Logistics

The process of planning, implementing, and controlling the efficient, effective movement and storage of goods, services, and related information from point of origin to point of consumption in order to satisfy customer requirements. (ISM, 2000)

Public Management

The process of planning, organizing, staffing and executing the use of people, time and fiscal resources for the purpose of providing goods, services and protection valued by the citizens of the entity in response to the laws and regulations of the governing body.

Encryption

The process of protecting information as it moves from one computer to another. A way of making data unreadable to everyone except the receiver and it is an increasingly common way of sending credit card numbers over the Internet when conducting eCommerce transactions. (Jansen, 2002)

Picking

The process of pulling or selecting items from inventory and staging them for delivery or distribution; assembling the items required to fill an order, usually performed with the assistance of a "picking list". Also see Order Picking.

Construction

The process of utilizing labor to build, alter, repair, improve, or demolish any structure, building or public improvement; generally does not apply to routine maintenance, repair, or operation (MRO) of existing real property.

Notice of Letting

The public advertising of a sealed bid solicitation to advise the suppliers of a potential business opportunity to do business with the agency.

List Price

The published price of a product or service offered by the seller for sale to potential buyers. Due to competition in the marketplace, the list price may be subject to price discounting. If there is limited competition or strong demand the price may rise. Also see Administered Price. (Business, 2002)

Arbitrage

The purchase of securities in one market for immediate resale in another financial market in order to profit from a price discrepancy. Used frequently in international currency transactions to profit from currency fluctuations. Aberrations in financial markets used to make a profit. (Business, 2002)

Forward Purchasing

The purchasing of supplies and materials in quantities exceeding the immediate needs, often in anticipation of a price increase, strike threat, or future supply disruption.

Merger Clause

The purpose of a merger and integration clause is to prevent the parties to a contract from later claiming that the contract does not reflect their entire understanding. A party entering into a contract which includes this type of language should make sure that all promises and agreements are actually included in the written contract, as otherwise it may be impossible to enforce those unwritten promises. (Taken from: http://www.expertlaw.com/library/business/contract_clauses.html)

Logic Model (Systems approach)

The purpose of the model is to identify logical relationships between inputs, resources, activities, outputs and short-, intermediate-, and long-term outcomes. Logic models illustrate a sequence of cause-and-effect relationships - a systems approach to communicate the path toward a desired strategic result. (W.K. Kellogg Foundation, 2004)

Current Yield

The rate of return on a bond; the annual interest payment divided by the bond's price. (Schiller, 2000)

Prevailing Wage Rate

The rate of wages, including fringe benefits, paid to a majority of the workers in a geographic area for the same type of work on similar projects. (Nash, Schooner,

Inventory Turnover

The ratio of the costs of goods sold or used to the average inventory value to determine the number of times in a year that the entire inventory is issued and replaced.

Currency Devaluation

The reduction of the value of a nation's currency relative to the currency of other countries. (Business, 2002)

Cost Principles

The regulatory principles used to determine the allowability of incurred costs for the purposes of reimbursement under the provisions of the contract.

Procurement Profile

The result produced after conducting a series of various analyses on the procurement expenditures of an organization, the range of commodities and services acquired through purchasing (Spend Analysis), the markets that provide them (Market Analysis), the level of influence of the suppliers and the entity in the marketplace, and the risks inherent in the market that could affect the entity's operations (Supply Positioning). Also see Spend Analysis, Market Analysis and Supply Positioning.

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. A cost analysis should be employed when price analysis is impractical or does not allow a purchaser to reach the conclusion that a price is fair and reasonable. Cost analysis is most useful when purchasing nonstandard items and services. Also see Cost Breakdown.(Burt, Dobler, Starling, 2003)

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. May include cost benefit analysis or total cost of ownership. Should be employed when price analysis is impractical or does not allow a purchaser to reach the conclusion that a price is fair and reasonable. Cost analysis is most useful when purchasing nonstandard items and services. Also see Cost Breakdown.(Burt, Dobler, Starling, 2003)

Buyer's Right of Routing

The right of the buyer to select the carrier to be used for shipment of goods when the buyer pays freight charges; the buyer's right to name the carrier must be made part of the sales contract before shipment of goods if vendor prepays the freight.

Pre-Qualification (of bidder/offeror)

The screening of potential vendors/contractors in which such factors as financial capability, reputation, and management are considered in order to develop a list of qualified businesses who may then be allowed to submit bids/offers.

General Terms and Conditions

The section of a solicitation that contains clauses that deal primarily with the contractual obligations of the parties to a contract; a part of the boilerplate of a bid or contract document. Also see Boilerplate. (Harney, 1992)

Indirect Channel

The selling and distribution of products to customers through intermediaries such as wholesalers, distributors, agents, dealers and retailers. (Business, 2002)

Purchasing Cycle

The sequence of activities carried out by a purchasing department in the acquisition of supplies and services. Also see Cradle-to-Grave.

Critical Path Method (CPM)

The sequence of production activities that takes the longest time from start to finish. This technique is useful for planning, scheduling and monitoring complex projects composed of a large number of interrelated and interdependent activities. It is often used in construction procurement to sequence critical timeline events.

Monetary System

The set of government regulations concerning a country's monetary reserves and its holdings of notes and coins. (Business, 2002)

G7 - G8 Summit

The seven major industrial nations that meet to discuss economic issues. The group includes the United States, Canada, France, Germany, Italy, Japan and the United Kingdom. The eighth country is Russia. (Business, 2002)

Direct Delivery

The shipment of goods directly from the source to a user; frequently used where a third party acts as purchasing agent for the user.

Organizing

The structuring of resources and activities to accomplish objectives in an efficient and effective manner. One of the primary management functions. (Ferrell, 2002)

Macroeconomics

The study of aggregate economic behavior. The study of the economy in a larger context- to view it as a whole. Also see Microeconomics. (Schiller, 2000)

Beta

The very early testing stage of a commercial software or hardware application. Comes after the Alpha phase and is tested "in the field" by potential customers. (Jansen, 2002)

Demand

The willingness and ability to buy specific quantities of goods at alternative prices in a given time period. (Schiller, 2000)

Purchase Description

The words used in a solicitation document to describe the requirements to be purchased; includes specifications that are attached to or made part of the solicitation.

Buyer-Seller Relationships

There are three principal relationships between buyers and suppliers: Transactional: An arm's-length relationship wherein neither party is concerned with the well-being of the other. Price is the focus of the relationship. Collaborative: A strategic relationship is created that results in the reduction of risk and uncertainty. This type of relationship creates interdependency and cooperation. Alliance: Relationship is based on institutional trust. Alliance partners share a vision of the future where ethics take precedence over expediency. (Business, 2002)

Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)

This Act defines hazardous waste as "toxic, ignitable, corrosive, or dangerously reactive substances". Under the CERCLA, a "generator" is an organization that uses or produces hazardous waste. Federal law stipulates that generators are responsible for the safe use and handling from the time the hazardous waste is created until it is completely destroyed. This "cradle to grave" responsibility, which cannot be delegated, includes the packaging used to transport the materials. Under the CERCLA, a "shipper" is a transporter licensed by transportation departments of federal and state environmental protection agencies to dispose of hazardous waste. Example: The proper disposal of old automobile tires, automobile car batteries, fluorescent light tubes, personal computers, televisions, photocopy machines and other hazardous items. This law was originally created to tax the chemical and petroleum industries. The tax is used by a broad federal authority to clean up abandoned or uncontrolled hazardous waste sites. The law provides 1) short term removal and 2) long term remedy that permanently reduces danger. Also referred to as the Superfund.

Express Language Rule

This rule states that when there is only one reasonable interpretation, that interpretation shall prevail. This is a secondary rule of determining the intent of the contracting parties during a dispute. The express language in the contract overrules the behavior of the parties prior to the dispute. Note that the burden of proof rests with the party to show that they actually relied on the interpretation language in the contract.

Consumer

Those individuals that satisfy their wants and desires by consuming a good or a service. (Schiller, 2000)

Free on Board (F.O.B.) Origin

Title changes hands from the supplier to the public entity at the origin of the shipment. In this scenario, the public entity owns the goods in transit, assumes responsibility for carrier selection, and files any claims for damages incurred during this period. It does not address the responsibility for the cost of transportation (freight charges) which must be specified with the inclusion of additional language. See further definitions below which must state who is responsible for freight charges.

Free on Board (F.O.B.) Destination, Freight Collect

Title passes at destination, and buyer pays the freight.

Free on Board (F.O.B.) Desintation, Freight Prepaid and Allowed

Title passes at destination, and seller pays the freight.

Free on Board (F.O.B.) Origin, Freight Prepaid and Added

Title passes at origin, and seller pays the freight and then collects the charges from the purchaser by adding them to the invoice.

Free on Board (F.O.B.) Origin, Freight Collect

Title passes at origin, and the buyer pays the freight.

Free on Board (F.O.B.) Origin, Freight Prepaid and Charged Back

Title passes at origin, seller pays the freight and adds it on to the seller's invoice.

Legality of Purpose

To be valid and enforceable, a contract must be consistent with federal, state or local law and cannot violate legal statutes of public policy. (ISM, 2000)

Lowball

To begin a sales negotiation or sales transaction by quoting low prices and then attempting to raise the prices once the buyer shows interest. Also see Buying In. (Miller, 2006)

Business Process Outsourcing

To carve out an internal business process such as IT (Information Technology) or HR (Human Resources) and outsource it to a private entity in an attempt to reduce costs and improve efficiency. (Miller, 2006)

Rightsizing

To re-structure an organization, with the aim of reducing costs, and improving efficiency and effectiveness.

Retention

To withhold a certain percentage of the payment due to the contractor until the work is completed and accepted. The contractual terms (contained within the IFB/RFP) will stipulate the amount to be retained as well as the time period of the retention.

Performance Measures

Tools used to measure performance and quantitatively evaluate progress toward planned targets.

Average Propensity to Consume (APC)

Total consumption in a given period divided by total disposable income. (Schiller, 2000)

Average Total Cost (ATC)

Total cost divided by the quantity produced in a given time period. (Schiller, 2000)

Average Fixed Cost (AFC)

Total fixed cost divided by the quantity produced in a given time period. (Schiller, 2000)

Disposition

Transferring, trading-in, selling, or destroying goods that are excess property, surplus property, or scrap.

Cents per Hundredweight (Cwt.)

Transportation/carrier rates are quoted in Cwt. which is determined by dividing the actual weight in pounds by 100.

Novation

Under common law, an agreement where a contracting party accepts a new party in place of the prior party (relieving the prior party of any further obligations). (Garner, 2004)

Cyclical Unemployment

Unemployment attributable to a lack of job vacancies, that is, to an inadequate level of aggregate demand. (Schiller, 2000)

Cumulative Average Cost Curve

Used in price and cost analysis, this curve plots cumulative units produced against the average direct labor cost or average labor hours required per unit for all units produced. (Schiller, 2000)

Maverick Spending

Used to describe purchases or expenditures not processed through a procurement organization. Direct spending by operational units outside of procurements control. (Burt, Dobler, Starling, 2003)

General Fund

Used to track revenues and expenditures that support all services not assigned to other funds.

Market Grades

Used when procuring commodities that are traded regularly on the commodity exchange such as lumber, steel, food products, fuel, etc. Grading determines the quality level of the commodities. Trade associations, commodity exchanges and government agencies are sources of market grade information.

Grey Market Goods

Usually refers to the flow of new goods through distribution supply channels other than those authorized or intended by the manufacturer or producer. For example, goods intended to be only sold in Europe but eventually find their way for sale and use in the United States market. Goods being sold outside of normal distribution channels by companies which may have no relationship with the producer of the goods. Typical grey market goods include electronics, cameras, and watches. The original manufacturer may not honor the product warranty on grey market goods.

Antitrust Violations

Violations of federal or state laws that regulate trusts, cartels, or business monopolies by limiting or prohibiting non-competitive business practices. Violations of antitrust laws include such practices as price fixing, bid rigging, identical bidding and market division. (Garner, 2004)

Online Transaction Processing

Web based transaction processing systems operating together as opposed to a strict client-server model where the server could handle the transaction processing. Examples are on-line banking, bill payments and web based ERP systems. (Jansen, 2002)

B2B (Business to Business)

Web/Internet based business relationships and applications. An eCommerce business capability which implies that businesses conduct sales and marketing via the internet to other businesses; similar to B2C (Business to Consumer) eCommerce sales. (Jansen, 2002)

Balanced Budget

When total public sector spending equals total government income during the same period from taxes and charges for public services. (Bishop, 2004)

Collusion

When two or more parties act together secretly to achieve a fraudulent or unlawful act. May manifest itself in the form of bid collusion when bidders secretly agree to unlawful practices regarding competitive bidding. May inhibit free and open competition in violation of antitrust laws. Also see Identical Bid.

Peer/360 Evaluations

With the increased focus on teamwork, employee development, and customer service, the emphasis has shifted to employee feedback from the full circle of sources such as superior, subordinates, peers, internal customers, external customers. This multiple-input approach to performance feedback is sometimes called "360 degree assessment" to connote the full circle of feedback resources. The process provides a full circle view of input.

Receipt

Written acknowledgement that one party has obtained money or something of value from the other, without any affirmative obligation upon either party.