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Procurement jargon buster

The Procurement industry has many unique terms. Some are easy to understand, some less so. You can use our Jargon Buster below to find out what these terms mean, so you never feel lost in a meeting again.

 

Procurement term Explanation
Accessory An extra part that is not essential but desirable that contributes to an effect or result.
Acquisition Ordering, processing, receiving and paying for goods or services to complete a purchase from a supplier.
Activity-based costing (ABC) A costing model used to determine the cost of producing a product or providing a service based on the resources they use.
Added value In procurement terms, a product or service that has extra features, better availability or a more convenient location that adds value without significantly increasing its cost. In accounting terms, the difference between the cost of producing a product and its sale price.
Advance payment Paying or part-paying a supplier before goods or services are delivered. Advance payments may be used to negotiate a reduced price or to cover initial supply costs.
Agency Any one of the  government departments and ministries
Aggregation A group of buyers that combine its’ spend to leverage discounts or achieve better quality, efficiencies or outcomes. Syndicated contracts and all-of-government contracts are examples of aggregation.
Agreement When all parties agree on certain terms and conditions to form a contract eg a purchase and supply agreement. Agreements are sometimes called contracts.
Agreement on Government Procurement (GPA) Commonly referred to as the Government Procurement Agreement. A World Trade Organization agreement that is a legally-binding treaty between participating countries. It is based on the principles of openness, transparency and non-discrimination. It sets out detailed rules for good procurement process.
Alternative dispute resolution (ADR) Alternative dispute resolution (ADR) encourages parties to use mediation and other processes to resolve disputes instead of using the courts.
Annual procurement plan (APP) An agency’s list of planned contract opportunities that meet or exceed the value thresholds. It’s a rolling list covering at least the next 12 months. APPs give suppliers a ‘heads up’ on anticipated government contract opportunities.
Application to qualify An application by a supplier to be included in an agency’s pre-qualified suppliers list. A supplier must prove it has the capability and capacity to deliver specific types of goods, services or works to be included in the list.
Approach to market The formal process of notifying potential suppliers of a contract opportunity and inviting them to respond. An example of an approach to the market is a request for tender published on the e-tenders website
Approach to market strategy A strategy for how to approach suppliers who may have the capability to supply goods or services. The approach to market will depend on the value and complexity of the procurement. A strategy could include asking for requests for tender on the e-tenders website or contacting known suppliers for quotes.
Approved personnel Person(s) who a supplier must use to deliver services to a buyer. The person(s) are usually named in a contract. The supplier may not use any other person unless the buyer agrees to it in writing before delivery.
Arbitration A formal, confidential, and binding process where two or more parties agree to let an impartial third party decide how to resolve a dispute between them.
Attachment An extra part that can be connected to something else, for a particular function.
Balanced scorecard A tool that measures performance from a financial, customer, internal business process, and learning and growth perspective to give a ‘balanced’ view of an organisation. It’s used to:
BATNA An acronym for the best alternative to a negotiated agreement. You can compare competitor offers to a BATNA to negotiate a better contract or agreement.
Benchmarking Measuring performance and comparing it to the best industry standards to work out how:
Benefit realisation The process of making sure that a planned change or process results in the forecasted benefits.
Bespoke procurement A made-to-measure procurement
Best and final offer (BAFO) The most favourable terms that the supplier is willing to offer the buyer.
Bid rigging Suppliers coordinate their bids to fix a price for procurement. Also called collusive bidding. The two most common forms of bid rigging are where suppliers agree to submit:
BOOT An acronym for build own operate transfer. An organisation or consortium (the BOOT provider) designs, builds, funds, owns and operates an infrastructure project for a defined period of time, after which the ownership is transferred. A third party can lease the facilities in the operating phase. BOOT is a popular way to finance large-scale infrastructure developments like roads, bridges, and hydro dams. They are often part of a public private-partnership arrangement.
Break clause A clause that allows the buyer to end a contract without any penalties.
Business activities Any activity that is performed with the goal of running a business. In the private sector, these activities are associated with making a profit eg operations, marketing, production or administration.
Business case A management tool that supports decision-making for an investment. It sets out the reasons for a specific project, considers alternative solutions and identifies assumptions, constraints, benefits, costs and risks
Business continuity planning (BCP) The plans an organisation puts in place to make sure that critical functions can continue during and after a disaster.
Business needs analysis An assessment of the specific goods or services that will fulfil a business need, including:
Buy Paying for something with money or by exchange.
Buyer A person, business, company or organisation that buys or intends to buy goods or services from a supplier.
Buying Ordering, processing, receiving and paying for goods or services to complete a purchase from a supplier.
Capital expenditure (CAPEX) Funds used to buy a new asset or upgrade an existing one eg buildings, plant, machinery, equipment or vehicles.
Caveat emptor This means “let the buyer beware”. The buyer accepts the goods ‘as is’ and the risk that they may be defective or unsuitable.
Change control A formal process to make sure that changes to a product or system or delivery of goods or services are introduced in a controlled way. Change control involves:
Charges In contracts, charges are the total amount the buyer must pay the supplier.
Chartered Institute of Purchasing & Supply (CIPS) CIPS is a UK-based international organisation dedicated to promoting best practice in procurement.
Clear business day One full business day from 9am to 5pm.
Closed competitive process A tender process where an agency asks a limited number of known suppliers to tender for a contract opportunity. The contract opportunity is not openly advertised.
Closed tender A tender process where the buyer invites suppliers that it knows can meet or are close to meeting the contract requirements, to tender for work.
Cluster or Buying Group A group of organisations that aggregate their procurement requirements before approaching the market. The cluster usually appoints a lead agency to formally approach the market. A cluster is a syndicated procurement.
Code of Conduct An ethical framework that includes the principles of integrity, respect and accountability and applies to all employees in an organisation, industry or profession.
Collusion A secret agreement or cooperation between two or more parties to cheat or deceive others by illegal, fraudulent or deceitful means.
Collusive bidding See bid rigging
Commercial in confidence A classification that identifies information that, if disclosed, may result in damage to a party’s commercial interests, intellectual property or trade secrets. You must not disclose any information marked ‘Commercial in Confidence’ without permission from the party who supplied it.
Commercially sensitive information Information that, if disclosed, could prejudice a supplier’s commercial interests eg trade secrets, profit margins or new ideas.
Commissioning The process used to test equipment to verify that it functions according to its specifications.
Commodity market A legally regulated exchange (market) where raw goods or primary products, such as agricultural produce, metals and electricity, are bought and sold using standardised contracts.
Common Capability (CC) contract A type of collaborative contract that has been approved by the Procurement Functional Leader. CCs establish various supply agreements eg for ICT goods or services purchased across government with approved suppliers. CCs establish various supply agreements eg for ICT goods or services purchased across government with approved suppliers. Common Capability contracts differ from all-of-government and syndicated contracts because:
Common use provision (CUP) A contract clause used in syndicated procurement to allow eligible buying agencies to join a contract during its term, on the same terms and conditions as the original parties. Also called a ‘CUP’ clause.
Competition Rivalry between suppliers for sales, profits and market share. Competitive tension in the market and can produce innovation, better quality goods or services, better value and better pricing.
Competitive advantage A factor, such as the ability to demonstrate quality, that helps an organisation compete successfully with other organisations for business.
Competitive dialogue A technical term for a special type of competitive procurement process that is used for novel or unique and high-value procurements, usually when there isn’t a known solution in the market. The agency openly advertises an invitation to participate in the competitive dialogue process and then shortlists the suppliers who will develop either a single solution or a different solution in individual dialogue sessions with the agency. Once solutions have been developed each shortlisted supplier is invited to respond to a request for proposal or request for tender
Confidential information A classification that identifies sensitive information that, if disclosed, could damage the person or organisation it relates to.
Configuration Setting up for operation, in a particular way for a particular purpose.
Conflict of interest Where someone’s personal interests or obligations conflict or have the potential to conflict with the responsibilities of their job or position or with their commercial interests. It means that their independence, objectivity or impartiality can be called into question. For more information refer to MBIE’s Quick Guide: Conflict of Interest
Consortium A group of businesses, financial institutions or investors who join together to take part in a joint venture.
Construction Any activity for creating, renovating, repairing or extending buildings and engineering land improvements, and structures eg buildings, roads, bridges, dams.
Constructive market engagement Meeting with suppliers to discuss your needs and find out what’s on offer in the marketplace.
Consumables Items that may be ‘used up’, depleted or worn out by use, that customers buy recurrently.
Continuous improvement An ongoing effort to improve products, services, or processes. These improvements may be implemented over time or all at once.
Contract A legally binding agreement between two or more parties.
Contract award notice A notice published on the e-tenders website that advises the details of a contract once it has been awarded.
Contract Manager The process of making sure that the supplier meets the terms of a contract, including delivering the goods or services on time, at the agreed cost and to the required specification and quality standards.
Contract management plan A plan with steps to monitor whether a supplier meets the terms of a contract and to rate their performance.
Contract manager The person responsible for resolving disputes, managing issues and key stakeholder relationships, and day-to-day contract management. A contract manager usually works to a contract management plan
Contract opportunity An opportunity for suppliers to bid for a contract for goods, services or works.
Contract register A list of contracts that include the name of the supplier, the type of goods or services purchased, the contract price, and the length of the contract. The register gives an overview of an organisation’s procurement profile and supports ongoing contract management.
Copyright A set of exclusive rights granted to the author or creator of an original work, including the right to copy, distribute and adapt the work.
Corporate social responsibility Operating a business or organisation in an ethical way that has a positive effect on society, the environment and the economy.
Corrective maintenance Activities that are carried out to identify and repair a fault so that failed equipment, machines or systems can be returned to their usual working state.
Corruption Inducing dishonest or illegal behaviour for private gain eg taking a bribe.
Cost The total  amount spent on the effort, materials, resources and time to produce and deliver a product or service.
Cost benefit analysis Analysing the likely costs and benefits of a plan or project to help decide whether it should go ahead.
Cost of change The cost of managing a changed requirement through the life of a project, either because it was missed or misunderstood. Also known as a dependency cost
Daily allowance An allowance in a contract that covers a supplier’s accommodation, meals and incidentals if they are required to travel overnight away from their normal place of business.
Daily fee rate The fee the buyer pays the supplier for each day spent delivering contracted services. The contract will usually define how many hours make a day eg eight hours of work.
Deadline for responses The closing time and date for responses for a notice of procurement or any other call for tenders. Tenders submitted after the deadline for responses are deemed to be late and may not be accepted by the customer.
Decommissioning The planned shutdown or removal of a building, equipment, plant etc from operation or use.
Deliverable A tangible contract output eg a piece of equipment, a report, training.
Demand The quantity of a particular product or service wanted by purchasers, consumers, clients, employers etc.
Dependency cost The cost of managing a changed requirement through the life of the project, either because it was missed or misunderstood. Also known as cost of change
Direct source A tender process where an agency asks a single supplier to tender for a contract opportunity and the contract opportunity is not openly advertised.
Discrimination Making an unfair and prejudicial judgement for or against a person or product.
Disposal Removing equipment or waste from a business operation by sale, trade-in, donation or destruction.
Disposal account An account that shows the debit and credit side of an asset for disposal. The debit side shows the original cost of the asset. The credit side shows the revenue from the sale of the asset and the accumulated depreciation provided for, for the years the asset was being used.
Disposal notice (DIS) A notice to the market seeking potential buyers for an asset at the end of its useful life.
Due diligence Making sure you get what you think you are paying for.
Duopoly A market controlled by two suppliers.
Dutch auction An unprofessional practice where the buyer plays off one supplier against the other to get a cheaper price or better deal.
E-auction An online auction that takes place in real time. It gives suppliers the opportunity to bid against each other to improve their offers and can take many forms from open to sealed bids in reverse format
E-commerce Using electronic systems such as the internet to buy and sell goods.
Education services A generic term for public education services provided by government that includes:
E-marketplace An online market place where buyers and sellers can do business electronically.
Emergency A sudden unforeseen catastrophe that results in injury, loss of life or critical damage to property or infrastructure
End date The date a contract ends.
E-procurement The ability to buy and sell on the internet.
Escrow A neutral third-party holds an asset, document or money until agreed conditions are met by another party to an agreement
Estimate A rough guess at the price for supplying particular goods or services.
Ethics A set of moral principles or values. A business may adopt these to safeguard against activities or products that are harmful to society or the environment eg child labour, exploitation.
Evaluation criteria The criteria that are used to evaluate responses. These include measures to assess how well competing responses meet requirements and expectations eg criteria to shortlist suppliers following a registration of interest or criteria to rank responses to a request for tender
Evaluation methodology The collective processes for evaluating responses eg bids, tenders or proposals.
Exemption from open advertising The recognised circumstances where an agency does not need to openly advertise a contract opportunity, for example; procurement in response to an emergency. An agency choosing not to advertise under this Rule must document the reason(s) and publish a contract award notice after the contract has been awarded.
Expenses The costs of operating a business to earn revenue eg, supplier payments, employee wages, factory leases, and depreciation.
Expression of interest (EOI) A summary from a potential supplier that shows they are interested in and capable of delivering particular goods or services. Asking for EOIs is usually the first stage of a multi-step tender process.
Extraordinary event An event beyond the control of the parties that legally excuses a party from fulfilling contract conditions. Also known as a force majeure
Fees The amount the buyer pays the supplier for the time spent delivering services. Fees may be fixed price or calculated on an hourly or daily basis.
Financial year The  year that finances will submit the accounts for the agency or the business
Firm price A price that parties to a contract agree may not change during the term of the contract. Also fixed price
Fixed price Same as a firm price
Force majeure An uncontrollable event that legally excuses a party from fulfilling contract conditions. Also extraordinary event
Framework agreement In relation to panel contracts, it is the umbrella agreement that governs the relationship between an agency and each panel supplier. It sets out the terms and conditions (including pricing) that the parties agree to contract on when a panel supplier is allocated a contract. It is not usually a contract, but an ‘in-principle’ agreement. Parties only contract once a specific deliverable is determined. Parties then enter into a separate contract that refers to the terms and conditions set out in the framework agreement.
Free Trade Agreement (FTA) A trade treaty between two or more countries. Usually, these agreements aim to improve access to markets and remove barriers to trade.
Gap analysis An assessment of the time, money, skillset and human resources needed to achieve the difference ‘between where we are and where we want to be’.
Geospatial information Information about the relative position of things on the earth’s surface.
Goods Items that can be owned. This includes physical goods and personal property as well as intangible property such as intellectual property eg a software product.
Government Procurement Agreement (GPA) The World Trade Organization’s Agreement on Government Procurement.
Grant Financial assistance in the form of money paid by the government to an eligible organisation with no expectation that the funds will be paid back.
Hidden costs Expenses that are not normally included in the purchase price for a piece of equipment or machine eg maintenance, supplies, training, support and upgrades.
Hosting fee Payment for server space or the computer that allows your website to be online.
Hourly fee rate The fee a buyer pays a supplier for each hour spent delivering contracted services.
ICT Information and communications technology.
Infrastructure The basic systems that are integral to a business’s economic well-being
Inputs The people, material, energy, information, and financial resources used to produce a desired output.
Installation Putting in place, connecting and preparing for use.
Integration Making connections or combining parts so that they work together or form a whole. In ICT, creating links between previously separate computer systems, applications, services or processes.
Intellectual property Property that is the product of creative imagination eg a novel, house design, an idea for a new IT software system. Some intellectual property can be protected by law including confidential information, copyrights, trademarks, registered designs or design rights or patents.
Invitation To qualify An invitation to suppliers, published on the e-tenders website, to apply to be included in an agency’s pre-qualified suppliers list. The invitation details the criteria each supplier must meet to be included in the list and explains how the agency will check each supplier meets those criteria.
Invitation to register An invitation to suppliers published on the e-tenders website, to register their interest in supplying a specific type of good or service. Suppliers who register their interest are included in a registered suppliers list
Invitation to tender (ITT) Asking potential suppliers to submit tenders to supply goods or services.
Issues register A record of issues used to track and manage problems in a project.
Joint and several liability A legal obligation where two or more parties are each liable for the whole amount of a debt or a claim. The person owed the money can collect the entire amount from any one of the debtors or choose to sue one or more debtors. The opposite of joint liability.
Joint liability A legal obligation where two or more persons are equally liable for a debt or claim. The person owed the money can collect an equal share from each debtor or sue them jointly. The debtors cannot be sued individually. The opposite of joint and several liability.
Key performance indicators (KPIs) A set of financial and non-financial values used to measure the success of an organisation or a particular activity eg a project or contract deliverables.
Lead time The time between the start and end of a process. In supply change management, it’s the time from when a customer places an order, any manufacturing takes place, and the goods or services are delivered.
Letter of intent A letter that outlines a plan to do business at a later date. Letters of intent are not legally binding.
Licence Permission granted by an authority to own or use something or to allow an activity to take place that would otherwise be illegal.
Lost benefit The cost of any activity measured in terms of the value of the next best alternative that is not selected.
Maintenance The work of keeping something in proper condition, care or upkeep including:
Maintenance kit A collection of items which provide replacement parts and facilitate functions such as inspection, test, repair, or preventive maintenance, for the purpose of restoring a component or equipment to its original efficiency.
Maintenance repair and operating (MRO) Consumables used to repair, maintain or operate any part of the production process but that are not part of the end product. This might include spare parts to repair machinery that makes a product or tools to maintain the facility where the product is made.
Manage for results (MfR) A process that combines strategic planning, performance indicators and budgeting to focus more on the results of programmes and less on how much money was spent or how much work was done. Some business’s have adopted MfR, which complements the balanced scorecard.
Management information systems (MIS) A computer system used to analyse operational activities and performance. MIS provide information about people, technology and resources needed to manage organisations efficiently and effectively.
Market A virtual or real place where sellers offer their goods or services in exchange for money (or barter) from buyers. The competition at market affects the price of goods and services.
Market engagement Asking potential suppliers what they think of possible solutions and about their interest in, capability and capacity to provide those solutions without expecting any commitment from the suppliers.
Maximum total estimated value A genuine estimate of the total cost that an agency will pay over the whole-of-life of the contract. It covers the full contract cost of goods or services, and any other expenses such as maintenance and repairs, and the cost of disposing of the goods at the end of the contract.
Milestone A measure of progress toward an outcome. Contract payments are sometimes linked to successfully completing each milestone.
Minimum time periods The least amount of time that an agency must allow suppliers to respond to a particular contract opportunity.
Misrepresentation A false or misleading statement made by one party to induce another party to enter into a contract
Monopoly A market with a single supplier.
Monopsony A market with a single buyer.
Multi-step process A procurement process with more than one step eg a registration of interest followed by a request for proposal. See two stage tendering
Negotiation A dialogue between two or more people or parties, intended to produce outcomes to satisfy the various interests of two people or parties involved.
Negotiation plan A plan that details what you need from a supplier as well as the things that you are willing to give up or compromise on.
Net present value (NPV) A calculation that compares the present value of a dollar with its future value, taking into account inflation and returns to analyse the profitability of an investment.
Net profit What’s left of the profit after all of the expenses and losses are deducted, either before or after tax.
New construction works It means the goods and services associated with delivering new civil or building construction works eg buildings, roads, bridges and dams. It covers new builds and replacing existing constructions. It includes various stages in the project such as:
Nominated contact officer An employee an agency nominates to be the ‘go to’ person for potential suppliers during the procurement process. Suppliers are directed to contact only this person for information about the procurement. The nominated contact officer should not be involved in evaluating offers.
Notice A formal or legal communication from one party to another.
Notice of tender The document published on the e-tenders website that advertises a new contract opportunity eg a registration of interest or a request for tender. It sets out all the information that suppliers need to prepare and submit a meaningful response
Offset An offset is a condition or undertaking intended to develop the local economy or improve the balance-of-payments accounts by requiring or encouraging suppliers to purchase national products.
Oligopoly A situation where a few large and powerful suppliers and manufacturers try to maintain their position by excluding newcomers from a particular market. This situation is not good for buyers because it limits competition
Oligopsony A market where many suppliers compete to sell their product to a few large and powerful buyers who have a disproportionate influence over the market.
Open advertising Publishing a contract opportunity on the e-tenders website and inviting all interested domestic and international suppliers to participate in the procurement.
Open tender An invitation to all interested suppliers to tender for a job that is openly advertised
Operational expenses Costs that relate to the routine functioning and activities of a business or organisation.
Opportunity cost The cost of any activity, measured in terms of the value of the next best alternative that was not selected.
Opt-out procurements Specific types of procurement activities where applying rules is optional.
Other tender documents Any documents that provide suppliers with additional information about a procurement. These can be attached as appendix to a notice of procurement or be standalone documents.
Outputs (economic) The goods and services procured as a result of a buying decision
Outsourcing Contracting out core and non-core business activities to outside suppliers.
Panel contract An arrangement with a group of suppliers to supply goods and services on an ‘as needs’ basis for the term of a contract. Each supplier has agreed in advance to the terms and conditions of supplying the goods or services, including the price.
Panel supplier A supplier included in a panel of suppliers
Parties The buyer(s) and the supplier(s) taking part in a contract
Party The buyer or supplier taking part in a contract
Performance criteria Measures used to judge whether a person has carried out a task or a contract has been fulfilled to a specified standard.
Personnel (contract) All individuals engaged by either party to a contract or to deliver services in a contract. For example, the owner of the business, its director, employees, sub-contractors, agents, external consultants, specialists, technical support and elected or seconded personnel.
Post-tender negotiation (PTN) A practice the public sector uses to negotiate better terms after receiving formal tenders and before awarding contracts
Pre Qualification Questionnaire (PQQ) A select set of requirements suppliers much achieve a minimum in to be suitable to supply goods / services
Pre-conditions A condition that a supplier must meet to be considered for a particular contract opportunity
Predictive maintenance (PdM) Techniques that help determine the condition of in-service equipment to predict when maintenance should be carried out.
Pre-existing intellectual property rights Intellectual property rights that were secured before the date of a contract. Later modifications, adaptations or additions are not covered.
Preferred supplier list (PSL) A list of suppliers an agency has pre-approved to supply particular goods or services and who have agreed to the agency’s terms and conditions for supply.
Premises Any building or land occupied and used for commercial purposes.
Pre-qualified supplier A supplier included in a pre-qualified suppliers list
Pre-qualified suppliers list A list of suppliers that a government agency has pre-approved as capable of delivering specific goods or services.
Present value The value a sum of money has now, in contrast with the value it will have when it has been invested and has accrued compound interest. See net present value
Preventative maintenance (PM) The regular inspection, adjustment and lubrication of equipment designed to keep it in satisfactory working order.
Price The amount of payment or compensation given by one party to another in return for goods or services.
Principles Short for the Principles of  Procurement
Private sector The part of the economy that is not state controlled, and is run by individuals and companies for profit
Probity Applying the principles of honesty and integrity to business processes.
Probity plan A plan that details how to make sure that selection and decision-making processes are honest and fair and can stand up to scrutiny from a risk management point of view.
Procurement All aspects of acquiring and delivering goods, services and works. It starts with identifying a need and finishes with either the end of a service contract or the end of the useful life and disposal of an asset.
Procurement card (P-card) A bank-issued charge card that gives employees the ability to order from suppliers without raising a purchase order, within the business’ limits. The bank reports to businesses on spend by employee or supplier. Also purchase card
Procurement forecasts Initial estimates of the products and services that an agency will need for a particular period of time.
Procurement plan A plan to analyse the need for specific goods, services or works and the outcome the agency wants to achieve. It identifies an approach to market strategy based on market research and analysis and summarises the proposed procurement process. It usually includes the indicative costs (budget), specification of requirements, indicative timeline, evaluation criteria and weightings.
Product differentiation Characteristics of a product or service that are perceived to be unique and valuable and so are a source of competitive advantage.
Product/service clinic A meeting between an agency and potential suppliers where agency discusses their needs and suppliers present possible solutions in response.
Profit The financial gain resulting from selling goods or services at a price that exceeds the cost of bringing them to market. See also net profit
Prototype An early sample or model built to test a concept or process.
Public private partnerships (PPPs) A long term contract for the delivery of a service that involves building a new asset or infrastructure eg a prison or enhancing an existing asset. The project is privately financed on a non-recourse basis and the agency retains full legal ownership.
Public sector A collective term that includes the Public Service, State Services, State Sector and local council
Purchase card A bank-issued charge card that gives employees the ability to order from suppliers without raising a purchase order, within the business’ limits. The bank reports to businesses on spend by employee or spend by supplier. Also procurement card.
Purchasing Ordering, processing, receiving and paying for goods or services to complete a purchase from a supplier.
Pure competition A market situation where a large number of suppliers have equal opportunity to offer comparable goods or services to a large number of buyers.
Quality The degree of excellence of something, as measured against other things of a similar kind.
Quality assurance The process of making sure that goods or services perform to agreed quality standards.
Quality control The process of making sure that goods and services are produced and maintained to agreed quality standards.
Quotation An offer to supply particular goods or services for a specific price. Not the same as an estimate
Reasonable cost Costs that are consistent with what a reasonable person would pay for the delivery of same goods or services, in the same or similar circumstances.
Records All information relating to a contract for delivering goods or services eg reports, letters, emails, meeting notes, photographs.
Refurbishment works The goods or services or works associated with refurbishing an existing construction including renovating, repairing or extending an existing construction. Refurbishment works do not include replacing a construction, which is considered to be new construction works.
Registered supplier A supplier included in a registered suppliers list
Registered suppliers list A list of suppliers who have registered an interest in supplying specific goods or services to a government agency.
Registration of interest (ROI) A formal request from an agency asking potential suppliers to:
Request for information (RFI) A market research tool. A formal request from an agency to the market asking for information to get an idea of the number and type of suppliers and the range of solutions, technologies and products or services they can provide. It is not a type of notice of procurement and it must not be used to select or shortlist suppliers.
Request for proposal (RFP) A formal request from an agency asking suppliers to propose how their goods or services or works can achieve a specific outcome, and their prices. An agency may be open to innovative ways of achieving the outcome.
Request for quote (RFQ) A formal request from an agency asking potential suppliers to quote prices for ‘stock standard’ or ‘off-the-shelf’ goods or services or works, where price is the most important factor.
Request for tender (RFT) A formal request from an agency asking for offers from potential suppliers to supply clearly defined goods or services or works. Often there are highly technical requirements and a prescriptive solution.
Request for x (RFx) A generic term for an RFQ, ROI, EOI, RFP or RFT
Response A supplier’s reply to a notice of tender. Examples include:
Re-tender cost The cost to the supplier of tendering or re-tendering towards the end of a contract term.
Reverse auction An auction where suppliers bid the price down in competition with each other. Reverse auctions commonly take place over the internet.
Risk The probability of something going wrong and the effect that might have on the desired outcome. For example, the outcome is not achieved or the effect that an unexpected event has a negative effect on the outcome.
Risk analysis Identifying, assessing, prioritising the risks that apply to a particular scenario along with the costs and other effects of those risks if they were to occur and minimising, monitoring and controlling the probability and impact of those effects.
Risk management A disciplined and objective approach to identifying, analysing, assessing risk to make it easier to decide what actions to take to minimise and manage the risks and their impacts.
Risk management plan A plan that identifies the risks in a specific project, assesses these risks, the likely impact of the risks and the options for accepting, eliminating or managing the risks.
Risk management strategy A complex strategy that details the processes that will be implemented to identify, assess and manage risk. Options for managing risk include avoiding risk, controlling or minimising risk, transferring risk and accepting risk.
Risk register A register that records of all the risks for a specific project. It includes the potential risks, the probability of those risks occurring, the potential impact if they did occur, and any action taken to reduce the likelihood and impact of the risk. Risk registers are monitored and updated throughout the life of the project.
Risk statement A statement that identifies the potential risks of a procurement. It may include processes for identifying and managing the risk(s).
Rules of Sourcing Focus mainly on the process of sourcing, including:
Sale of Goods Passing ownership or title for goods from a seller to a buyer in exchange for money.
Schedule An attachment to a particular contract that forms a material part of the contract.
Selective tender Selected organisations are invited to submit offers or proposals for goods and services, usually as the second phase of a two stage tender process.
Seller’s market A market situation where sellers can dictate the price, terms of delivery, quality and so on.
Service level agreement (SLA) A formal agreement that sets out the minimum level of service a service provider agrees to provide while delivering the service. An SLA should define any action the service provider will take if the service does not meet the agreed levels.
Services Acts or work performed for another party eg accounting, legal services, cleaning, consultancy, training, medical treatment, or transportation.
SMART An acronym for specific, measurable, achievable, realistic, time-bound. A project management tool used to set project objectives and evaluate if those objectives fit the project.
Sourcing The parts of the procurement lifecycle that relate to planning, market research, approaching the market, evaluating responses, negotiating and contracting.
Specifications A tendering requirement that either:
Staff In government terms, all members, trustees, office holders, managers, and employees of a public entity
Standing offer Another expression for a framework agreement
Start date The date when a contract begins and the supplier must start providing the contracted goods or services.
Strategic procurement objectives A high level summary of an agency’s purpose and goals and how these relate to its regular procurement activities.
Strategic sourcing Proactively planning sourcing activities to make sure that the sourcing process is as efficient as possible. For example, analysing supply markets, and selecting suppliers who can deliver solutions that meet pre-determined and agreed business needs.
Subcontractor An individual, business, or company a supplier contracts to deliver or carry out any part of the supplier’s contract obligations.
Sufficient time The necessary time a government agency must give suppliers to respond to a notice of procurement to support:
Sunk costs Sunk costs are costs incurred in the past that cannot be recovered if a project is cancelled eg research and development costs.
Supplier The person, business, company or organisation that supplies or can supply goods or services or works to a buyer.
Supplier appraisal An assessment of a supplier’s suitability and capability to supply specific goods or services, before awarding a contract
Supplier debrief Information an agency provides to a supplier who has been unsuccessful in a particular contract opportunity that explains:
Supplier rationalisation A strategy to determine the optimal number of suppliers to reduce procurement costs and leverage value from the supply base.
Supplier relationship management (SRM) Managing the interactions between an entity who supplies goods or services and the buying entity to create closer, more collaborative relationships that add value and reduce risk
Supply The amount of a product or service offered for sale.
Supply As a noun: a generic term for the total amount of a specific good or service that is available for purchase. It can also refer to specific goods or services in a contract for purchase, hire or procurement.
Supply chain The people, activities, information, and resources involved in transforming raw materials into a finished product for supply to an end customer
Supply chain management Managing the people, activities, information and resources involved in moving goods or services from a supplier to a customer. For example, sourcing raw materials, selling the product, delivering the goods, and disposing of the goods.
Supply chain networks A network of organisations that are linked together to manage the flow of materials and information needed to transform natural resources into finished products to serve an end-customer.
Sustainability In the context of operating a business, taking into account the social, environmental and economic impacts of business activities to make sure today’s needs can be met without compromising the needs of future generations. Examples of sustainable business practices include building efficiently, minimising waste, and maximising resources.
Syndicated contracts (SCs) A type of collaborative contract that has been approved by the Procurement Functional Leader. SCs typically involve a cluster of agencies aggregating their needs and collectively going to market for common goods, services or works. It may involve an agency or agencies anticipating future collaboration and including a common use provision clause in the resulting contract, so that other agencies can contract with the supplier on the same terms later.
Syndicated procurement A group of agencies who combine their needs and go to market for common services together to:
Technical specifications A tendering requirement that sets out the engineering requirements of a system to be procured eg the functional, mechanical, operational, and quality and performance requirements.
Technical support A service that provides users with help and advice about their products, which is usually provided by a hardware or software company.
Tender An offer to provide goods or services for a specified price, in response to a request for tender
Terms and Conditions (Ts & Cs) The terms and conditions that detail the rules that apply to fulfilling a particular contract and that form an integral part of that contract. Buyers and sellers must agree the terms and conditions to form a contract.
Third party agent A party who is contracted to manage a procurement process on behalf of an agency. The agency remains responsible and accountable for ensuring that the procurement complies with the OJEU procedures.
Time value of money (TVM) The value of a sum of money, taking into account the amount of interest that could be earned over a period of time.
Total Cost of Maintenance (TCM) The total cost of ownership of a service.
Total cost of ownership (TCO) An estimate of the total cost of the goods, services or works over the whole of their life. It’s the combination of the purchase price and all other expenses and benefits that they agency will incur eg installation and training, operating and maintenance costs, repairs, decommissioning and cost disposal and residual value on disposal. It is a tool often used to assess the costs, benefits and risks associated with the investment at the business case stage of a procurement.
Treaty A formal agreement between two or more countries, usually relating to peace or trade.
Two stage tendering A competitive tender process is about identifying a preferred contracting organisation and working with the preferred contractor to negotiate a final price for the procurement. See also multi-step process.
Unenforceable contract A contract that is valid, but which the court will not enforce because of some defect such as nondisclosure, an extraordinary event or other legislation.
Upgrade A new version of or addition to a hardware or software product that is already installed or in use.
Value The total amount of money spent on a contract while it’s in force. It’s also used as short hand for value for money.
Value added The increase in the value of a product or service from a change in its form, location or availability, less the initial costs of the change.
Value analysis A systematic review of the design and other factors affecting the cost of an existing product or service to analyse whether it met the required quality and reliability standards at the lowest cost. See also value engineering.
Value engineering A systematic method to increase the value of goods or services by either improving the function or reducing the cost.
Value for money (VFM) A measure of quality that assesses the monetary cost of the product or service against the quality and/or benefits of that product or service, taking into account subjective factors such as fitness for purpose, along with whole-of-life costs such as installation, training, maintenance and disposal, and wastage.
Value threshold The minimum € value at which the OJEU Rules apply to a particular procurement type.
Variation A written agreement signed by both parties that changes any part of a contract between them.
Vendor rating Measuring a supplier’s performance against contract deliverables.
Warranty A legally binding written guarantee, issued to the purchaser of an article by its manufacturer, promising to repair or replace it if necessary within a specified time and at no cost to the buyer.
Without prejudice A term used in the negotiation process to indicate that a particular conversation or letter cannot be used as evidence in court.

 

 

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