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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.

Agreement

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

Approved list

An eligible list of potential suppliers.

Audit trail

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

Authorised officer

An officer of the council who has been nominated by the chief officer to manage a contract or contracts with a contractor or supplier.

Award

The issue of an order or contract to a supplier.

BAME

Black, Asian minority ethnic.

Best practice

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.

BME

Black and minority ethnic (EMB is ethnic minority business).

BVR

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.

Commissioning

Another word for procurement, this means the process of buying or purchasing goods or services.

Competitive tendering

Awarding contracts by the process of seeking competing tenders.

Complex purchase

Any purchase over £25,000 in value that requires formal tendering procedures to be adopted.

Contract

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

Contractor

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

Consortia

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.

EC

European Community of Nations (now referred to as the EU – European Union).

EOI

Expression of interest.

Default notice

This is a notice that identifies a breach of contract has occurred. It also sets about a plan to rectify that breach.

e-Procurement

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.

e-ITT

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.

e-Sourcing

The researching and gathering of product or service information by electronic means, chiefly by Internet or email use.

EU

The European Union.

EMAS

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.

EMS

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.

Evaluation

Detailed assessment and comparison of supplier offers.

Framework agreement

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.

ITN

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.

ITT

Invitation to tender. This document is used in the tendering process and will advise of when and where tenders should be submitted.

KPI

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.

LCSG

London contract supplies group. A consortia of London authorities.

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. 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.

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.

PQQ

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.

Procurement

The buying, leasing, renting of goods, services and works required by an organisation.

Project

A term meaning any procurement exercise that involves observance of OJEU directives.

Purchase

To obtain goods or services in exchange for money or its equivalent; to buy. Also to acquire by effort or to earn.

Quotation

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.

RFB

Request for bid.

RFQ

Request for quotation.

Shortlist

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

SLA

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.

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 researching and gathering of product or service information – specifications, costs, service delivery means, and so on.

Specification

The document used to establish the requirements for the goods or services to be purchased.

Sustainability

The environmental issues to be considered in a procurement exercise.

Tender

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.

Tender process

The official process of advertising a contract, inviting organisations to tender, evaluation of tender submissions and subsequent award of a contract.

TLA

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.

TUPE

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.

Urgency

A situation whereby the council shall suffer significantly either financially or operationally, if immediate action is not taken.

Variation

Any alteration, modification, addition to or deletion of any requirement of the contract terms or specification.

VfM

Value for money.

Page updated on: 9 July 2019

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