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Procurement jargon buster
You may encounter some of the following terms in the procurement profession. This list, while by no means comprehensive will help you identify some of the more commonly used words, acronyms and phrases.
The legally binding contract terms and conditions between the parties, another word for a Contract.
An eligible list of potential suppliers.
System or paper generated evidence showing how and why and by whom certain processes and functions were carried out.
An officer of the council who has been nominated by the chief officer to manage a contract or contracts with a contractor or supplier.
The issue of an order or contract to a supplier.
Black, Asian minority ethnic.
The most effective and desirable method of carrying out a function or process derived from experience rather than theory.
BIP – Business Information Publications Ltd
And a good source for procurement training and information.
Black and minority ethnic (EMB is ethnic minority business).
Best value review. It is a requirement of the Local Government Act that all councils ensure that they achieve ‘best value’ from all of their contracts.
Call off contract
An enabling agreement with one or more suppliers for a defined range of works, goods or services covering terms and conditions (including price) which users ‘call off’ to meet their requirements.
Another word for procurement, this means the process of buying or purchasing goods or services.
Awarding contracts by the process of seeking competing tenders.
Any purchase over £25,000 in value that requires formal tendering procedures to be adopted.
A binding agreement made between two or more parties, which is intended to be enforceable at law.
A firm or person who has made a contract to supply goods and/or services.
In this context a group of public sector organisations that engage in joint procurement for a portfolio of works, supplies or services. Often when doing this the organisations involved obtain better value through economies of scale and reduced tendering costs.
Crown Commercial Service (CCS)
The CCS brings together policy, advice and direct buying; providing commercial services to the public sector and saving money for the taxpayer.
European Community of Nations (now referred to as the EU – European Union).
Expression of interest.
This is a notice that identifies a breach of contract has occurred. It also sets about a plan to rectify that breach.
Initially meant procurement functions performed by electronic means, i.e. using IT- but now the ‘e’ also stands for ‘efficient and ‘effective’. The use of an electronic system to acquire goods, works and services and payments form third parties.
Solutions currently on the market include:
- complete ‘end to end’ procurement systems that are integrated with financial back office systems.
- stand-alone modules used to seek tenders or quotations (known as e-Sourcing)
- web-based systems that enable ordering from approved catalogues (e-Marketplaces)
- other web-based systems such as e-Auctions.
- procurement cards for ordering and payment.
- payment through BACS and CHAPS.
A set of secure Tender documents (see below) that are prepared using a variety of software programmes and which are intended for completion by a tenderer using IT or a PC.
The researching and gathering of product or service information by electronic means, chiefly by Internet or email use.
The European Union.
The eco-management and audit scheme. This is a voluntary scheme designed to improve organisations environmental performance. Its aim is to recognise and reward organisations that go beyond minimum legal compliance and continuously improve their environmental performance.
Environmental management system. This is a system of rules and directives setup by an organisation with the aim to reduce the impact it has on the environment.
Detailed assessment and comparison of supplier offers.
An agreement with suppliers which set out terms and conditions under which specific call-offs (purchases) can be made throughout the term of the agreement
Invitation to tender
An invitation to suppliers to bid for the provision of works, goods or services.
Invitation to negotiate. This document would be used in the tendering process where the nature of the goods or services is such that the specification cannot be established. We strive to be very clear on our requirements and therefore this procurement process is not used very often by the Council.
Invitation to tender. This document is used in the tendering process and will advise of when and where tenders should be submitted.
Key performance indicator. KPIs are placed against certain elements of an SLA and indicate that they will be monitored more closely than others to help us measure the performance of suppliers against their contractual obligations to identify that service levels are being met
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 her/him in the future but creates no liability in regard to that future contract.
London contract supplies group. A consortia of London authorities.
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. Most economically advantageous award criteria may embrace sustainability issues.
OJEU – Official Journal of the European Union
Formerly OJEC (Official Journal of the European Community). Contracts that fall within the EU threshold values and are not exempt categories must be advertised for tender by placing a notice in the OJEU.
Parent company guarantee
A legal guarantee required on award that ensures that the parent company will meet any costs of maintaining levels of service and/or the cost of re-letting the contract in the event of the subsidiary company being unable to meet the requirements of the contract.
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.
Public private partnership. Very similar to a PFI arrangement, but the aim is centred more on service delivery than finance.
Pre-qualification questionnaire. This document is used in a restricted OJEU (Official Journal of the European Union) tendering process and the responses are used to help us shortlist suppliers. Where the open procedure is used the PQQ is also required to be completed and will be sent out with the tender documents.
The buying, leasing, renting of goods, services and works required by an organisation.
A term meaning any procurement exercise that involves observance of OJEU directives.
To obtain goods or services in exchange for money or its equivalent; to buy. Also to acquire by effort or to earn.
Any offer by a supplier to supply goods, works or services requested either orally or in writing. A quotation may be the written confirmation of an earlier, oral offer.
Request for bid.
Request for quotation.
A list of suitable prospective suppliers that has been drawn up through a preliminary evaluation exercise for a particular contract or procurement activity.
Service level agreement. These are agreed during the tendering process and set out exactly what is expected from an organisation should the contract be awarded to them. Failure to meet these service levels could result in action being taken against the organisation SLAs usually sit on top of a service or supply Contract, enforcing the KPIs of the Agreement. This can also be used internally between council departments.
Small and medium size enterprise. Used in context, this may indicate navigation away from larger, global companies. Can also mean local businesses.
The researching and gathering of product or service information – specifications, costs, service delivery means, and so on.
The document used to establish the requirements for the goods or services to be purchased.
The environmental issues to be considered in a procurement exercise.
Document submitted by an organisation including business questionnaire, instructions to tenderers, contract conditions, specification, pricing document, form of tender and tenderers’ responses for the delivery of supplies, services or works in response to an invitation to tender. This normally involves submission of the offer in a sealed envelope to a specified address by a specified time and date.
The official process of advertising a contract, inviting organisations to tender, evaluation of tender submissions and subsequent award of a contract.
Not exclusively a procurement term, TLA stands for three letter acronym – of which there are many on this list. The TLA is itself a TLA.
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.
A situation whereby the council shall suffer significantly either financially or operationally, if immediate action is not taken.
Any alteration, modification, addition to or deletion of any requirement of the contract terms or specification.
Value for money.