APPENDIX A

Glossary of Terms Used in Procurement

A

Accelerated Procedure

Procedure 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.

Adjudication

A 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 Note

Advice of goods being despatched (sometimes called a

despatch note).

Aggregation

Adding 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.

Agreement

A generic term for a legally binding undertaking between

a buyer and a seller.

Amendment

Any agreed alteration to a contract.

Appraisal

See Supplier Evaluation

Approved List

An eligible list of potential suppliers.

Arbitration

A method of solving a dispute between parties. The

parties involved choose a mutually acceptable arbitrator
who suggests a way of settling disputes.

Audit Trail

System or paper generated evidence showing how and

by whom certain processes and functions were carried
out.

Award

The issue of an order or contract to a supplier.

Best & Final Offer

The 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.
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APPENDIX A
Glossary of Terms Used in Procurement

Best Practice

The most effective and desirable method of carrying out

a function or process derived from experience rather
than theory.

Best Value

Continuous improvement in the exercise of all functions

undertaken by the Council, whether statutory or not,
having a regard to economy, efficiency and
effectiveness.

Bid

A 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 Clarification

Ensuring that a clear understanding of requirements

exist between buyer and seller.

Bid Conditioning

Placing all suppliers bids on a common basis.

Break Clause

A 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.

BSI

British Standards Institution. The National Standards

body in the UK, which brings together suppliers and
users to draw up standards.

Bulletin Board

The 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 Local

As 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.

Call-off Contracts

A 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 Paid

Delivery of goods to a named destination with all

charges up to the point of delivery being borne by the
supplier.
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APPENDIX A
Glossary of Terms Used in Procurement
Cartel

A group of suppliers acting illegally in concert to

artificially influence the price and quantity of supply.

Caveat Emptor

Let the Buyer Beware

C.I.F.

Cost, insurance and freight

C.I.P.S.

Chartered Institute of Purchasing & Supply.

Collusion

A fraudulent arrangement between two or more parties

whereby prices or service requirements are manipulated
so as to circumvent competitive tendering.

Competitive Tendering

The awarding of contracts by the process of seeking

competing tenders.

Consultant

A person or organisation commissioned to carry out a

specific assignment, usually the giving of specialist
advice/services.

Contract

A binding agreement made between two or more parties

which is intended to be enforceable at law.

Contract Notice

Notice published in the Official Journal of the European

Commission by contracting authorities, inviting
companies to tender.

Contract Award Notice

Notice of award published in the Official Journal of the

European Commission, in fulfilment of the requirements
of EC public procurement directives.

Contract Value

The estimated total monetary value of a contract over its

full duration (not annual value).

Contractor

A firm or person who has made a contract to supply

goods and/or services.

Controlled Contact

A 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
Catalogue

A 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 Analysis

A procedure for examining how the quoted price relates

to the cost of production.
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APPENDIX A
Glossary of Terms Used in Procurement

Council

North East Lincolnshire Council

CPRs

Contract Procedure Rules

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
an agreement.

Detailed Specification

The 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.

Economic Order
Quantity

The most cost-effective quantity to order when

purchasing for stock based on the mathematical
formulae known as EOQ theory.

EN29000

The European equivalent to BS5750 and ISO9000

Series.

Evaluation

Detailed assessment of suppliers offers

Exclusion Clause

A clause to exclude, limit or qualify liability within a

contract (also called exemption clause).

Expediting

A planned activity to monitor a suppliers progressive

achievement with the objective of receiving deliveries on
time.

Ex-works

Goods made available for collection by the customer

from the suppliers factory, i.e. exclusive of transport
costs.

Firm Price

A price which is not subject to variation.

Framework Agreements

Agreements 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 Issue

The 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.

APPENDIX A
Glossary of Terms Used in Procurement
Free on Board (FOB)

Goods Received Note

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.
A form used to check the accuracy of goods received
against a requisition or order.

H
I

In-house

Pertaining 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.

Invoice

A request to pay submitted by a supplier of works, goods

and/or services.

Invoice Item

A line item on an invoice.

Invoice Payment Terms

Specified terms of payment agreed between the supplier

and purchaser.

ISO

International Standards Organisation. The international

standards making body.

Just 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.

Lead Time

The period of time that is considered to be required

between defined events, i.e. placing an order and
delivery of goods.

Liquidated Damages

An amount of money, defined in the contract, to which

one party is entitled in the event of a breach of contract
by the other.

Market Testing

The process of comparing the efficiency of in-house

services against tenders from outside firms.

MEAT

Most Economically Advantageous Tender.

K
L

APPENDIX A
Glossary of Terms Used in Procurement

Member

Elected Member of the Council.

Most Economically
Advantageous Tender

Award criterion taking account of other factors as well as

price.

Negotiation Position
Statement

The detailed and priced bid submitted by the

Respondent(s) for negotiation together with all
supporting information and documentation.

Negotiated Procedure

A 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.

OGC

Office of Government Commerce

Offer

A suppliers offer to provide goods and/or services for a

consideration in response to a buyers enquiry.

OJEC

Official Journal of the European Commission.

Open Procedure

A procedure under European Procurement Directives

which allows any company which responds to a notice to
be able to tender.

Order Acknowledgement

A 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.

Partnership sourcing

Long 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
Specification

The formal description in objective & measurable terms

of the performance characteristics of the required goods
or services.

Periodic Indicative
Notice

Summarises 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.
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APPENDIX A
Glossary of Terms Used in Procurement

PIN

Prior 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 Negotiation

Discussions 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-Qualification

System 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 Clause

A 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 Goods

Those protected by patent, brand name or trademark.

Purchase Order

A pre-printed form, which usually incorporates the

buying organisations terms & conditions of purchase,
used to place an order with a supplier.

Purchase Order Item

A line item of a purchase order form.

Purchase Requisition

A formal request for works, goods and services made by

a cost centre (departmental section).

Quality Assurance (QA)

A discipline to assess quality standards. Covering all

activities and functions concerned with the attainment of
quality.

Qualified Tender

A tender which is qualified because it does not fully meet

the intended contractual requirements.

APPENDIX A
Glossary of Terms Used in Procurement

Restricted Procedure

A procedure under European Procurement Directives

which enables Local Authorities, under prescribed
circumstances, to receive tenders from invited
companies only.

Royalty

Payment made for the use of a patented invention or

registered design process.

Service 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.

Services

All 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 Tendering

The process of inviting only one supplier to tender.

Sourcing

The process of establishing potential suppliers of

specified works, goods or services.

Specification

The formal description in objective and measurable

terms of the characteristics of the works, goods or
services required.

Stage Payments

An agreed percentage or part of the contract price,

which is payable when specified stages of
completion/delivery have been reached.

Standing List

A list of approved contractors or suppliers qualified for

Invitation to Tender for works or services.

Stock Control

A generic term for the business functions and processes

to account for, monitor and physically control the
quantity of stock held.

Stock Issue

A despatch of stock from a store to a specified, person,

section, cost centre or department.

Sub-Contracting

The process where a contractor assigns part of the

contract to another contractor(s).

Supplier Evaluation

The process of establishing whether a supplier is

capable of providing the goods or services required, and
assessing a suppliers subsequent performance against
requirements.

APPENDIX A
Glossary of Terms Used in Procurement
Supplies

Goods, 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

Tender

A suppliers bid in response to a buyer or invitation to

tender.

Tender Evaluation Panel

A 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.

Transaction

Official Purchase Order, contract or call-off contract (but

not an order placed against a call-off contract).

TUPE

Transfer of Undertakings (Protection of Employment)

Regulations 1981, governing the transfer of staff
identified with an undertaking to and between
successive contractors.

Unqualified Acceptance

The unconditional acceptance of an offer.

Value Analysis

The 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 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).

Variants

Tenders 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.

Works

Construction and civil engineering (Also referred to as

public works).