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Glossary of Procurement Terms

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Aggregation

Adding together the value of separate contracts for the same supply, works or service

Agreement

The legally binding terms and conditions between the parties, another word for a contract

Appraisal

A detailed assessment of the general capacity of a contractor, supplier or service provider to meet certain general criteria or standards

Approved List

A list approved by the Council of potential contractors, suppliers or service providers, who have met pre-set criteria. See also ‘preferred supplier list’

Audit Trail

System or paper generated evidence showing how and by whom certain processes and functions were carried out

Authorised Officer

An officer of the Council who has been nominated by the Council to manage a contract or contracts with a contractor, supplier or service provider

Award

The issue of an order or contract to a supplier
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B

Benchmarking

Comparison of performance against other providers of similar services, particularly those recognised as adopting best practice

Best and Final Offer

The detailed and fully priced offer submitted by the respondent for the contract, following the issue of the Council’s Invitation to submit best and final offer (BAFO) documentation. Where the Council accepts the offer it becomes legally binding on both parties.

Best Practice

The most effective and desirable method of carrying out a function or process derived from experience rather than theory

Best Value

Arrangements to secure continuous improvement in the exercise of an Authority’s functions, having regard to a combination of economy, efficiency and effectiveness as required by the Local Government Act 1999; the relationship between worth and cost.

BME

Black and Minority Ethnic (EMB is Ethnic Minority Business)
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C

Call Off Contract

A contract made following a formal tendering process with one or more contractors, suppliers or service providers for a defined range of works, goods or services covering terms and conditions (including price) which users ‘call off’ to meet their requirements. See also ‘Framework Agreement’

Collusion

A fraudulent arrangement between two or more parties whereby prices or service requirements are manipulated to get round competitive tendering

Competitive Tendering

Awarding contracts by the process of seeking competing bids from more than one firm

Confidential Reporting Code

This code applies to all employees and contractors working for the Council. The Council is committed to the highest possible standards of openness, probity and accountability. In line with that commitment we expect employees and others that we deal with, who have serious concerns about any aspect of the Council’s work to come forward and voice those concerns.

Consortium

An unincorporated group of organisations or individuals, often formed to tender for a contract with a view to working together

Contract

A binding agreement made between two or more parties, which is intended to be enforceable at law

Contract Award Notice

Notice of an award of a contract published in the Official Journal of the European Union (OJEU), in fulfilment of the requirements of EU public procurement directives

Contract Documents

Documents incorporated in the enforceable agreement between the Council and the contractor, including contract conditions, specification, pricing document, form of tender and the successful tenderers responses (including method statements), and other relevant documents expressed to be contract documents (such as correspondence, etc.)

Contract Notice

Notice published in the Official Journal of the European Union (OJEU) by contracting authorities, seeking expressions of interest or inviting companies to tender.

Contract Value

The total monetary value of a contract over its full duration (not annual value)

Contractor

An organisation or individual who has made a contract to undertake works, supply goods or provide services.

Cost Plus

The method of payment for contracts for which tenderers quote a lump sum or % addition to their costs (which would be reimbursed)
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D

Daily Rates

The method of payment for contracts for which tenderers quote rates per chargeable day

Dayworks

The method of payment for contracts for which tenderers quote rates per attendance hour

DBFM (design, build, finance and manage)

A contract (as used for the PFI) in which the service provider is responsible for all four aspects of the provision and management of a service

DBFO (design, build, finance and operate)

A contract (as used for the PFI) in which the service provider is responsible for all four aspects of the provision and operation of an asset

Default

A breach of a contract condition, e.g. a delay in the promised delivery

Deliverables

A collective name for the tangible goods and/or services that the supplier or contractor is required to supply under agreement
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E

E-Procurement

The use of electronic methods in every stage of the purchasing process from identification of requirement through to payment, and potentially to contract management.

Estimate

A genuine and realistic price calculated by an officer that represents an estimate for defined works, goods or services, as required by EU rules or standing orders for the purposes of determining the procurement process and ensuring adequate budget provision. This should not be confused with an estimate from a contractor, supplier or service provided for a defined piece of work

EU Rules

The Public Contract Regulations 2006

Evaluation

Detailed assessment and comparison of contractor, supplier or service provider offers, against financial and quality criteria
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F

Firm Price

A price which is not subject to variation

Framework Agreement

An arrangement under which a contracting authority establishes with a provider of goods, works or services, the terms under which contracts subsequently can be entered into or called off (within the limits of the agreement) when particular needs arise. See also ‘call-off contract’)
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I

Inputs

The resources that contribute to a programme or activity including income, staff, volunteers and equipment

Invitation to Tender

An invitation to contractors, suppliers or service providers to bid for the provision of works, goods or services. Also known as an ITT
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K

KPI

Key Performance Indicator. KPI’s are tools that help us to measure the performance of suppliers against their contractual obligations. KPI’s are normally detailed in the service specification
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L

Liquidated and ascertained damages

A genuine pre-estimate of the loss that the Authority will suffer if the contractor defaults when performing the contract. This may form the basis of deductions from payments, which will be calculated according to the specific circumstance relating to each type of contract

Letter of Acceptance

A letter that creates an immediate binding contractual relationship between the Council and the successful tenderer prior to entering into a formal contract.

Letter of Intent

A letter informing a successful tenderer that it is the Council’s intention to enter into a contract with them in the future but creates no liability in regard to that future contract
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M

Market Testing

The process of comparing the efficiency of in-house services against tenders from outside companies

Method Statement

The document used in a tender process which sets out questions for the suppliers to answer which helps the purchaser or procurement officer to understand how the goods or services will be delivered

Most Economically Advantageous Tender (MEAT)

The tender that will bring the greatest benefit to the Council having taken a number of factors into consideration, including quality and cost
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O

Offer

A supplier’s offer to provide goods and/or services for a consideration in response to a buyer’s enquiry

Official Order

A pre-printed form, which incorporates the Council’s terms and conditions of purchase, used to place an order with a supplier

OJEU

Official Journal of the European Union
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P

Parent Company Guarantee

A parent company guarantee binds the guarantor (the ‘parent company’) to fulfil and complete a subsidiary company’s obligations and liabilities in the event of a failure by that subsidiary to fulfil and complete its obligations and liabilities under a contract

Partnering Contracts

Contracts in which prices and specifications are not decided until after contracts are let, usually to enable contractors to contribute to design solutions and other aspects of the work (as proposed by the Government’s Construction Task Force, the Egan Committee)

Performance Bonds

Bonds or guarantees given to clients by specialist insurers, on behalf of contractors and at their expense, binding the insurers to compensate clients (up to the amount of the bond obtained) in the event of a default.

PFI

Private Finance Initiative. A form of partnership between the private and public sector which is normally used for high risk/high value contracts, principally to raise money for higher value projects

PPP

Public Private Partnership. Very Similar to a PFI arrangement, but the aim is centred more on service delivery than finance

Preferred Suppliers List

A list of organisations preferred by the Council to undertake certain works, supplies or services, following a competitive tendering exercise

Pre Qualification Questionnaire

A questionnaire completed by companies that wish to be considered for a procurement activity. The purpose is to assess the company’s general suitability in terms of financial and economic standing, technical capability and experience, quality assurance, health and safety procedures, environmental issues and equalities considerations. A prequalification questionnaire is sometimes referred to as a business questionnaire or a PQQ

Procurement

The process of acquiring goods, works and services, covering acquisition from third parties and from in-house providers. The process spans the whole life cycle from identification of needs, through to the end of a services contract or the end of the useful life of an asset.

Purchase Order

See ‘Official Order’
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Q

Quality

The level of fitness for purpose which is specified for or achieved by any service, work or product

Quality Assurance (QA)

A discipline to assess quality standards, covering all activities and functions concerned with the attainment of quality

Quotation

A written or verbal price given by a contractor, supplier or service provider, after being requested either orally or in writing. A quotation may be the written confirmation of an earlier, oral offer
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R

RFI

Request for Information

Risk

The probability of an unwanted event occurring and its subsequent impact

Risk Transfer

The risks, such as construction delay risks, which are required to be transferred to contractors in order for PFI schemes to be approved
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S

Schedule of Rates

Lists of jobs, like those in bills of quantities except that they contain no quantities. Rates may be inserted by tenderers, or by clients. In the latter case, tenderers specify their overall percentages on or off these rates

Shortlist

A list of suitable prospective suppliers that has been drawn up through a preliminary evaluation exercise for a particular contract or procurement activity

Service Manager

An officer of the Council who has a responsibility to manage a particular service.

SLA

Service Level Agreement, and usually sits on top of a service or supply contract, enforcing KPI’s of the agreement. This can be used internally between council departments

SME

Small and Medium Size Enterprise. Used in context, this may indicate navigation away from larger global companies. Can also mean local businesses

Sourcing

The process of establishing potential suppliers of specified works, goods or services

Specification

A description of requirements and standards to which the goods, works or services should conform. Also known as a statement of needs, a statement of requirement, an operational requirement, or a brief. Its purpose is to present prospective suppliers with a clear, accurate and full description of the organisation’s needs, to enable them to propose a solution to meet them

Stage Payments

An agreed percentage or part of the contract price, which is payable when specified stages of completion/delivery have been reached

Stakeholder

An individual or organisation that has an active interest or a stake in a particular organisation or issue. For example, funders, members, contractors, purchasers, trustees, beneficiaries, volunteers and paid staff are all stakeholders in a voluntary organisation

Sub-contracting

The process where a contractor assigns part of the contract to another contractor(s)

Sustainability

The environmental issues to be considered in a procurement exercise
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T

Tender

An official written offer to an invitation that contains a cost proposal to perform the works, services or supplies required, and is provided in response to a tendering exercise. This normally involves the submission of the offer in a sealed envelope to a specified address by a specified time and date

Tender Documents

Documents provided to prospective tenderers when they are invited to tender and that form the basis on which tenders are submitted, including instructions to tenderers, contract conditions, specification, pricing document, form of tender and tenderers responses

Tender Evaluation Panel

A group of people who analyse tenders received and make final recommendations on the award of contracts

TUPE Regulations

The Transfer of Undertakings (Protection of Employment) Regulations. The purpose of TUPE is to preserve continuity of employment and to safeguard employment rights of all employees whose employment transfers to a new employer as a result of a relevant transfer.
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V

Value for Money

The provision of the right goods and services from the right source, of the right quality, at the right time, delivered to the right place and at the right price (judged on whole life costs and not simply initial costs)
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W

Whole Life Costs

The systematic consideration of all relevant costs and revenues associated with the acquisition and ownership of an asset
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