Contract Procedure Rules - Glossary of Terms Used in Procurement

APPENDIX A

Glossary of Terms Used in Procurement

AAccelerated ProcedureProcedure under which shorter advertising periods are permitted due to urgency. Justification must be published as part of the tender notice. Applies to Public Sector only. Extreme urgency can also be used as the justification for using the negotiated procedure.

Acceptance (legal)The act of the buyer accepting a suppliers bid or offer.

Acceptance (procedural)The process of accepting goods/services in accordance with the agreed acceptance criteria.

AdjudicationA method of solving a dispute between parties. Under The Housing Grants Construction & Regeneration Act 1996 either party to a construction contract is entitled to submit a dispute to adjudication without the prior agreement of the other party.

Advice NoteAdvice of goods being despatched (sometimes called a despatch note).

AggregationAdding together the value of separate contracts for the same supply, service. Aggregation is often required in order to decide whether a PIN needs to be issued. It appears not to apply to devolved units who buy from their own budgets for their own use.

AgreementA generic term for a legally binding undertaking between a buyer and a seller.

AmendmentAny agreed alteration to a contract.

AppraisalSee Supplier Evaluation

Approved ListAn eligible list of potential suppliers.

ArbitrationA method of solving a dispute between parties. The parties involved choose a mutually acceptable arbitrator who suggests a way of settling disputes.

Audit TrailSystem or paper generated evidence showing how and by whom certain processes and functions were carried out.

AwardThe issue of an order or contract to a supplier.

BBest & Final OfferThe detailed and fully priced offer submitted by the Respondent for the contract, following the issue of the Councils Invitation to submit BAFO documentation. Where the Council accepts the offer it becomes legally binding on both parties.

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

Best ValueContinuous improvement in the exercise of all functions undertaken by the Council, whether statutory or not, having a regard to economy, efficiency and effectiveness.

BidA suppliers offer to provide works, goods or services for reward in response to a buyers enquiry or invitation to tender.

Bid Appraisal

The formal process of examining suppliers bids to identify which provides best value for money.

Bid ClarificationEnsuring that a clear understanding of requirements exist between buyer and seller.

Bid ConditioningPlacing all suppliers bids on a common basis.

Break ClauseA clause setting out the rights and liabilities of both parties if the contract should be terminated before it has run its full term, enabling the contract to be determined before the anticipated end date.

BSIBritish Standards Institution. The National Standards body in the UK, which brings together suppliers and users to draw up standards.

Bulletin BoardThe Buy Local Bulletin Board is a computer based system designed to give South Bank organisations easy access to a wide range of selling opportunities. The system allows buyers, such as the Authority, to interface with local suppliers for their purchasing requirements.

Buy LocalAs part of its commitment to creating new jobs, the Council runs a highly acclaimed local purchasing programme. This programme helps buyers to find competitive local suppliers for a wide range of goods and services.

CCall-off ContractsA contract or arrangement for the supply of goods or services at pre-stated prices for a specified period under which orders are placed for varying quantities. (See Corporate Contracts Catalogue).

Carriage PaidDelivery of goods to a named destination with all charges up to the point of delivery being borne by the supplier.

CartelA group of suppliers acting illegally in concert to artificially influence the price and quantity of supply.

Caveat EmptorLet the Buyer Beware

C.I.F.Cost, insurance and freight

C.I.P.S.Chartered Institute of Purchasing & Supply.

CollusionA fraudulent arrangement between two or more parties whereby prices or service requirements are manipulated so as to circumvent competitive tendering.

Competitive TenderingThe awarding of contracts by the process of seeking competing tenders.

ConsultantA person or organisation commissioned to carry out a specific assignment, usually the giving of specialist advice/services.

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

Contract NoticeNotice published in the Official Journal of the European Commission by contracting authorities, inviting companies to tender.

Contract Award NoticeNotice of award published in the Official Journal of the European Commission, in fulfilment of the requirements of EC public procurement directives.

Contract ValueThe estimated total monetary value of a contract over its full duration (not annual value).

ContractorA firm or person who has made a contract to supply goods and/or services.

Controlled ContactA policy where only authorised purchasing officers have contact with suppliers, to ensure that all contacts with suppliers are controlled and to high and professional standard.

Corporate Contracts CatalogueA catalogue of corporate contracts representing an efficient use of resources and capitalising on the financial benefits of using the Councils substantial buying power to best effect.

Cost AnalysisA procedure for examining how the quoted price relates to the cost of production.

CouncilNorth East Lincolnshire Council

CPRsContract Procedure Rules

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

DeliverablesA collective name for the tangible goods and/or services that the supplier or contractor is required to supply under an agreement.

Detailed SpecificationThe definition and description of the works, goods or services required. It should be in such detail as to attract the maximum level of competition and hence secure the best value for money.

EEconomic Order QuantityThe most cost-effective quantity to order when purchasing for stock based on the mathematical formulae known as EOQ theory.

EN29000The European equivalent to BS5750 and ISO9000 Series.

EvaluationDetailed assessment of suppliers offers

Exclusion ClauseA clause to exclude, limit or qualify liability within a contract (also called exemption clause).

ExpeditingA planned activity to monitor a suppliers progressive achievement with the objective of receiving deliveries on time.

Ex-worksGoods made available for collection by the customer from the suppliers factory, i.e. exclusive of transport costs.

FFirm PriceA price which is not subject to variation.

Framework AgreementsAgreements laying down terms, conditions & prices governing future contracts. Apply to the Utilities Sector, and run for a fixed period. If awarded according to the Directives, then the ensuing contracts may be awarded without further call for competition.

Free IssueThe issue of stores or equipment to a supplier for incorporation in equipment under construction etc, in accordance with a contract which provides for the issue without payment.

Free on Board (FOB)Delivery of goods by the supplier on board a named vessel at a specific port, all costs & risks up to and including loading being borne by the supplier.

GGoods Received NoteA form used to check the accuracy of goods received against a requisition or order.

H

IIn-housePertaining to a separate unit within an entity, as distinct from a third party. Awards are outside scope of Directives if no contract exists (in the case of Public bodies) and always provided the unit does not sell outside the entity (in the case of Utilities).

Invitation to Tender (ITT)An invitation to sellers to submit an offer (tender) in response to the needs of a buyer which has been laid out in a service specification included within the invitation to tender documentation.

InvoiceA request to pay submitted by a supplier of works, goods and/or services.

Invoice ItemA line item on an invoice.

Invoice Payment TermsSpecified terms of payment agreed between the supplier and purchaser.

ISOInternational Standards Organisation. The international standards making body.

JJust in Time (JIT)A procedure to avoid holding stocks, primarily developed in manufacturing in which the delivery of material is made just in time when it is needed in the production schedule.

K

LLead TimeThe period of time that is considered to be required between defined events, i.e. placing an order and delivery of goods.

Liquidated DamagesAn amount of money, defined in the contract, to which one party is entitled in the event of a breach of contract by the other.

MMarket TestingThe process of comparing the efficiency of in-house services against tenders from outside firms.

MEATMost Economically Advantageous Tender.

MemberElected Member of the Council.

Most Economically Advantageous TenderAward criterion taking account of other factors as well as price.

NNegotiation Position StatementThe detailed and priced bid submitted by the Respondent(s) for negotiation together with all supporting information and documentation.

Negotiated ProcedureA procedure under European Procurement Directives which enables Local Authorities, under prescribed circumstances, to consult with suppliers of their choice and to negotiate terms of contract.

OOGCOffice of Government Commerce

OfferA suppliers offer to provide goods and/or services for a consideration in response to a buyers enquiry.

OJECOfficial Journal of the European Commission.

Open ProcedureA procedure under European Procurement Directives which allows any company which responds to a notice to be able to tender.

Order AcknowledgementA confirmation from a supplier that they have received your order, and understand the terms & conditions and specification of works, goods and services to be supplied under the order.

PPartnership sourcingLong term relationship between purchaser and supplier involving mutual trust. The Directives do not provide clear guidance but it seems possible for a public sector body to request bidders to offer a partnership sourcing arrangement.

Performance SpecificationThe formal description in objective & measurable terms of the performance characteristics of the required goods or services.

Periodic Indicative NoticeSummarises the procurements the advertiser expects to place in coming period. Gives no guarantee that procurements will be made. Normally covers 1 year.

PFI

Private Finance Initiative a form of PPP which allows public bodies to draw upon the expertise and resources of the private sector. Commonly used in capital intensive projects. Takes the form of a longer term contractual arrangement.

PINPrior Information Notice A published indication in OJEC of an intention that contracts will be placed. Does not guarantee that contracts will actually be awarded. Placed by public sector body. Allows reduction in the timescale for the subsequent procurement process.

Post Tender NegotiationDiscussions with a supplier or suppliers after their offers have been received, with the aim of achieving clarifications and/or improvements. (Strict guidelines apply to conduct during this process).

PPP

Public Private Partnership is a generic term describing a collaborative approach of service delivery, which involves both public bodies and private organisations. Examples include joint ventures; licensing; sponsorship; contracts; leasing; partnerships; and lettings.

Pre-QualificationSystem for selecting bidders to be invited to tender for a Utilities contract. Criteria used may (but need not) be those laid down in the Works/Supplies/Services Directives General Suitability; Financial and Economic Standing and Technical Ability.

Price Variation ClauseA clause in a contract which sets out conditions governing additional or reduced payment terms on the contract due to the rise or fall in the cost of materials and/or labour.

Proprietary GoodsThose protected by patent, brand name or trademark.

Purchase OrderA pre-printed form, which usually incorporates the buying organisations terms & conditions of purchase, used to place an order with a supplier.

Purchase Order ItemA line item of a purchase order form.

Purchase RequisitionA formal request for works, goods and services made by a cost centre (departmental section).

QQuality Assurance (QA)A discipline to assess quality standards. Covering all activities and functions concerned with the attainment of quality.

Qualified TenderA tender which is qualified because it does not fully meet the intended contractual requirements.

RRestricted ProcedureA procedure under European Procurement Directives which enables Local Authorities, under prescribed circumstances, to receive tenders from invited companies only.

RoyaltyPayment made for the use of a patented invention or registered design process.

SService Level Agreement (SLA)This is a contract between two or more departments within the same organisation, where one undertakes to deliver a quantity of service in return for a specified annual payment. An S.L.A can also set out a scale of fees for ad hoc works.

ServicesAll purchases other than Works or Supplies. (Mixture of supplies and services are usually put in the category to which more than 50% by value belongs.

Single TenderingThe process of inviting only one supplier to tender.

SourcingThe process of establishing potential suppliers of specified works, goods or services.

SpecificationThe formal description in objective and measurable terms of the characteristics of the works, goods or services required.

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

Standing ListA list of approved contractors or suppliers qualified for Invitation to Tender for works or services.

Stock ControlA generic term for the business functions and processes to account for, monitor and physically control the quantity of stock held.

Stock IssueA despatch of stock from a store to a specified, person, section, cost centre or department.

Sub-ContractingThe process where a contractor assigns part of the contract to another contractor(s).

Supplier EvaluationThe process of establishing whether a supplier is capable of providing the goods or services required, and assessing a suppliers subsequent performance against requirements.

SuppliesGoods, including both consumables and capital items. (Mixtures of supplies and services are usually put in the category to which over 50% of the value belongs.

Supplies, Services & Works

See individual definitions

TTenderA suppliers bid in response to a buyer or invitation to tender.

Tender Evaluation PanelA group of people who analyse tenders received and take final decisions on the award of contracts.

Total Quality Management (TQM)An overall means of managing quality in all areas of business.

TransactionOfficial Purchase Order, contract or call-off contract (but not an order placed against a call-off contract).

TUPETransfer of Undertakings (Protection of Employment) Regulations 1981, governing the transfer of staff identified with an undertaking to and between successive contractors.

UUnqualified AcceptanceThe unconditional acceptance of an offer.

VValue AnalysisThe breakdown of price into its constituent cost elements (e.g. labour, materials, administration, distribution, profit) to identify opportunities for reduction and/or a more cost-effective mix of resources.

Value for MoneyThe 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).

VariantsTenders which meet minimum specifications but vary in technical terms. May be allowed by a contracting authority where award criterion is that of most economically advantageous tender.

WWorksConstruction and civil engineering (Also referred to as public works).

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