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Tenders and contracts glossary

A glossary of terms frequently used in procurement:

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

This list is not exhaustive; if you would like to see other procurement terms defined here, please email david.willoughby@sheffield.gov.uk with your suggestions.
 

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.
 

Alcatel period

The Alcatel Mandatory Standstill Period is a period of at least 10 calendar days following the notification of an award decision in a contract tendered via the Official Journal of the European Union, before the contract is signed with the successful supplier(s).

Its purpose is to allow unsuccessful bidders to challenge the decision before the contract is signed. It is named after a pair of linked European Court of Justice cases which are jointly known as the Alcatel case. Within the UK, it was introduced by the Office of Government Commerce in 2005.
 

Appraisal

A detailed assessment of the general capacity of a contractor, supplier or service provider to meet certain general criteria or standards. This is also sometimes known as an Evaluation.
 

Approved list

A list approved by us of potential contractors, suppliers or service providers, who have met pre-set criteria; for more details, please see Approved Contractors List.
 

Audit Trail

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

Authorised Officer

An officer who has been nominated by us to manage a contract or contracts with a contractor, supplier or service provider.
 

Award

The issue of an order or contract to a supplier.

 

Benchmarking

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

Best and Final Offer (BAFO)

The detailed and fully priced offer submitted by the bidder for the contract following our invitation to submit BAFO documentation. Where we accept 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).

 

Category Management

A structured approach to identifying key categories of goods and services and managing these as business units.
 

Collaborative Procurement

Working with other parts of your own organisation, or with external organisations, to undertake procurement activities in order to achieve value for money benefits.
 

Collusion

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

Commissioning Cycle

This process spans the whole life cycle from identification of needs, through to the end or renewal of a services contract.

The process may involve acquiring goods, works and services, covering acquisition from third parties and from in-house providers.
 

Common Procurement Vocabulary

The list of reference numbers that are used to identify goods and services for procurement purposes so that there is a common understanding of what is required across the EU Member States.
 

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'.
 

Competitive Dialogue Procedure

This tender procedure is only used in particularly complex or highly specialised procurements where a specification for the goods, works or services cannot be established.

A contract is advertised and interested parties complete a Pre-Qualification Questionnaire. The questionnaires are evaluated and a shortlist is drawn up. The short-listed organisations are then invited to develop one or more solutions with us to meet the requirements.
 

Competitive tendering

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

Consortium

An unincorporated group of firms or individuals, often formed to tender for a contract, with a view to forming an organisation or working in some other way in the event of winning.
 

Contract

A binding agreement made between two or more parties, which is intended to be enforceable by 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 ourselves 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 Procedure Rules (CPRs)

CPRs are a our internal regulations that govern buying and offering contracts.
 

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.
 

Corporate Contract

Corporate contracts are negotiated for our use and benefit.
 

Cost Plus

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

 

Daily Rates

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

Day works

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.

 

E-Auction

An online exercise in which potential suppliers anonymously compete against each other to lower their tender price.
 

E-Marketplace

An internet based facility that enables trade between one or more purchasing organisations and a variety of suppliers.
 

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.
 

E-Tendering

Sending requests for information and prices to suppliers and receiving the tender responses from suppliers using Internet technology.
 

EU Procurement Directives

The European Union (EU) Procurement Directives, and the Regulations that implement them in the UK, set out the law on public procurement. Their purpose is to open up the public procurement market and to ensure the free movement of goods and services within the EU.

The rules apply to purchases by public bodies and certain utilities which are above set monetary thresholds. They cover all EU Member States and, because of international agreements, their benefits extend to a number of other countries worldwide.

Where the Regulations apply, contracts must be advertised in the Official Journal of the EU (OJEU) and there are other detailed rules that must be followed. The rules are enforced through Member States’ courts, and the European Court of Justice (ECJ).
 

EU Thresholds

These thresholds indicate above which value the EU Procurement Directives apply. The current threshold levels can be found from the OGC , along with relevant exemptions for Part B Services.
 

Evaluation

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

Expression of Interest (EOI)

Where prospective contractors, suppliers or service providers provide a response to an advertisement in the Official Journal of the EU (OJEU) indicating that they are interested in being considered further.

 

Firm (Fixed) 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'.

 

Inputs

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

Invitation to tender (ITT)

An invitation to contractors, suppliers or service providers to bid for the provision of works, goods or services.

 

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.

 

Liquidated and ascertained damages

A genuine pre-estimate of the loss that we 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 ourselves and the successful tenderer prior to entering into a formal contract.
 

Letter of Intent

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

Lowest Price

1 of 2 systems which the EU allows for tender selection (Most Economically Advantageous Tender being other). This allows for selection on the basis of price alone.

 

Market Brief

The Market Brief is for information only, and provides an outline of the requirements for the contract.
 

Market Testing

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

Method Statement

Tenderers’ proposals for dealing with aspects of the work which are outlined in the specification, and where detailed operational information about the delivery of the contract is required.
 

Most Economically Advantageous Tender (MEAT)

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

 

Negotiated Procurement

One of the four key procurement processes allowed under the EU Directive. Can only be used in very limited circumstances defined by the EU Procurement Directive.

 

Offer

The supplier's offer to provide goods and/or services in response to a buyer's enquiry.
 

Official Order

A pre-printed form, which incorporates our terms and conditions of purchase, used to place an order with a supplier.
 

OJEU

The Official Journal of the European Union. This is the publication in which all contracts from the public sector which are valued above a certain threshold must be published.
 

Open Procedure

The open procedure is a one-stage tender process, where a contract is advertised, and all interested parties may submit a tender. If you apply for a contract that is tendered under this procedure you will receive all of the tender documents to complete by a specified deadline.
 

Outcome Focused Services

An outcome is the impact or end result of something. Outcome focused services aim to achieve the goals, aspirations or priorities of the individuals they serve.

 

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.
 

Part A Service

Services listed in the EU Procurement Directive (commonly referred to as ‘priority’ services), which must comply with the regulatory requirements.
 

Part B Service

Services listed in the EU Procurement Directive, including some health and social care requirements, which do not need to comply with all of the regulatory requirements.
 

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 route for procurement where, instead of owning the assets needed for their services, public authorities arrange for private sector bodies (often in the form of consortia) to provide and own them.

These bodies then make the assets available, under operating leases, to enable public authorities to deliver the services required.
 

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.

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 ourselves to undertake certain works, supplies or services, following a competitive tendering exercise.
 

Pre-Qualification Questionnaire (PQQ)

The first stage of a two-stage procurement process (either competitive dialogue or restricted); the information provided in this questionnaire is evaluated to assess the suitability of organisations to tender for the contract, in terms of their technical, economic and financial capability.
 

PRINCE2

(Projects In a Controlled Environment) An internationally recognised project management methodology which may be used to manage a procurement project.
 

Procurement

The process or acquiring goods, works and services, covering acquisitions 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 contract or the end of the useful life of an asset.
 

Purchase Order

See Official Order.
 

Purchasing Cards

Also abbreviated as PCard or P-Card is a form of company charge card that allows goods and services to be procured without utilising a traditional purchasing process.

 

Qualified Tender

A tender which is qualified because it does not fully meet the intended contractual requirements. Such tenders are not normally acceptable.
 

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.

 

Restricted Procedure

The restricted procedure is a two-stage tender process, where a contract is advertised, and interested parties must first complete a Pre-Qualification Questionnaire.

Following this evaluation, a shortlist of the organisations that meet our criteria is drawn up. These organisations are invited to submit a tender and will be sent full tender documents to be completed by a specified deadline.
 

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.

 

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.
 

Services

Services provided to ourselves by an external service provider (an individual or organisation).
 

Service Manager

Our officer with responsibility to manage a particular service.
 

Shortlist

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

Single Tender Action

The award of a contract to a supplier, contractor or service provider without undertaking a competition.

Should only be used in exceptional circumstances such as for the procurement of very low value, non-repetitive requirements.

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 our 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

The specification details our requirements and standards for individual contracts, including the scope and specific details of the activities we require.

It should present you with a clear, accurate and full description of our needs, so that you can propose a solution to meet them.

You must read the specification carefully; if you are not sure about what is being asked for, contact the named contact in the tender for clarification.
 

Spot Purchasing

Procuring on an ‘as and when needed’ basis rather than planning the procurement strategy that might achieve the best value for money.
 

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.
 

Standing Orders

Our rules and procedures that govern its activities, including procurement of goods, works and services. Further details see Standing Orders.
 

Sub-Contracting

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

Supplies

Goods, either purchased or hired. Those that have a value exceeding the current threshold defined by the EU rules will be subject to the European tendering requirements.

Standing orders may have different values covering works, services or supplies.
 

Supply Chain Management

The identification of the chain of parties who contribute to the delivery of a requirement with a view to maximising value and minimising risk.
 

Sustainability

The environmental issues to be considered in a procurement exercise.

 

T & C’s

Terms and conditions under which a contract is offered.
 

Tender

An official written offer to an invitation that contains a costed proposal to perform the works, services or supplies required, and is provided in response to a tendering exercise.

This normally involves submission of the offer, in a sealed envelope, to a specific 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 1981 (as amended from time to time) implementing the Acquired Rights Directive on the acquired rights of workers.

 

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).

 

Whole Life Costs

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

Works

Building, construction and engineering related to works. Those that have a value exceeding the current threshold defined by the EU rules will be subject to the European tendering requirements.

Standing Orders may have different values covering works, services or supplies.

 

YORtender

An electronic eTendering system used by the Yorkshire and Humber public sector.

 

About the glossary

This list is not exhaustive; if you would like to see other procurement terms defined here, please email david.willoughby@sheffield.gov.uk with your suggestions.

  • Modified: Apr 17, 2014 8:09:40 AM