Definition of procurement terms

The following terms are frequently used during the procurement process.

A  |  B  |  C  |  D  |  E  |  F  |  G  |  H  |  I  |  J  |  K  |  M  |  N  |  O  |  P  |  Q  |  R  |  S  |  T  |  U  |  V  |  W  |  X  |  Y  |  Z  |

 

A

Authorised officer

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

Award

The issue of an order or contract to a supplier.

back to top

B

BME

Black and minority ethnic (EMB is ethnic minority business), as used in the Southwark procurement ethnicity monitoring form - a 'minority-led/diverse enterprise is defined as a business which has a majority (51 percent or more) ownership or senior management team comprising individuals from black and ethnic minority groups, women, disabled people, lesbian, gay, bisexual and trans-gendered people or faith groups'.

BVR

Best value review. It's a requirement of the Local Government Act that all councils ensure that they achieve best value from all of their contracts.

Business questionnaire (also known as PQQ - pre-qualification questionnaire)

This document is used in the tendering process and the responses are used to help us shortlist suppliers.

Benchmarking

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

Bond

An insurance policy. If the contractor doesn't do what it has promised under a contract with the council, the council can claim from the insurer the sum of money specified in the bond (often 10 per cent of the contract value). A bond is intended to protect the council against a level of cost arising from the contractor's failure.

back to top

C

Candidate

Any person who asks or is invited to submit a quotation or tender.

Competitive tendering

Awarding contracts by the process of seeking competing tenders.

Contract

The legal agreement which sets out the rights and obligations of all parties, which is intended to be enforceable in law.

Contract finder

Government website for the publication of lower value contract opportunities in the UK. Contracting authorities can publish expressions of interest or invite companies to tender, as well as publishing details of awarded contracts.

Contract standing orders

Southwark council's own internal control procedures for procurement and contracting.

Collusion 

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

Competitive dialogue

A variation of the negotiated process, now available under the EU directives, which permits discussion of different options before choosing a particular solution. It can be used in complex contracts where technical solutions are difficult to define or where development of the best solution is desired.

Consortium

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

Consultant

An organisation or individual employed by the council for specific tasks, usually where specialist knowledge or objective review is required.

Contract documents 

Documents incorporated in the enforceable agreement between the council and the contractor, including contract conditions, specification, pricing document, form of tender and the successful tenderer's responses (including method statements) and all other relevant documents expressed to be contract documents (such as relevant correspondence etc).

Contract notice

Notice published in the Official Journal of the European Union (OJEU) and/or Contracts Finder by contracting authorities, seeking expressions of interest or inviting companies to tender.

Contract award notice

Notice of an award of a contract published in the Official Journal of the European Union (OJEU) and/or Contracts Finder, in fulfilment of the requirements of Public Contract Regulations.

Contract value

The total monetary value of a contract over its full duration (not annual value). The method of payment for contracts for which tenderers quote rates per chargeable day.

back to top

D

Default

A breach of a contract condition (eg a delay in the promised delivery).

back to top

E

E-procurement

The use of electronic methods in every stage of the purchasing process from identification of requirement through to payment and potentially to contact management. Suppliers can register on the system for free by visiting London Tenders.

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 provider for a defined piece of work.

EU

The European Union.

EU legislation

Public Contract Regulations are the rules and regulations that public sector organisations must comply with when completing any procurement process. They're derived from the EU Procurement Directives.

EU Threshold

The contract value over which the Public Contract Regulations apply. There are three threshold values which are set every 2 years from 1st January. These cover goods and services, works (construction) and Light Touch Regime for Health, Education and Social Care service requirements. 

Threshold values are confirmed in December of the preceding year by publication of a Procurement Policy Note.

Evaluation

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

Exor

Exor Management Services Ltd, who manage the approved list of contractors and consultants on behalf of the council.

back to top

F

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.

back to top

G

back to top

H

back to top

I

Invitation to tender

An invitation to contractors, suppliers or service providers to bid for the provision of works, goods or services. Also known as an 'ITT'.

Invoice

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

Invoice payment terms

Specified terms of payment agreed between the supplier and purchaser.

back to top

J

back to top

K

Key performance indicator (KPI)

Key performance indicator. KPIs are tools which help us to measure the performance of suppliers against their contractual obligations. KPIs are normally detailed in the service specification document.

back to top

L

Liquidated and ascertained damages

A genuine pre-estimate of the loss that the authority 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.

back to top

M

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, having taken a number of factors into consideration, including quality and cost, and may also embrace sustainability issues. 

back to top

N

Negotiated procedure

One of the procedures for procurement under the EU Directives, available only in limited circumstances, under which client authorities negotiate with at least three eligible applicants who meet their criteria.

back to top

O

Official Journal of the European Union (OJEU)

The Official Journal of the European Union. Contracts with values over the EU threshold must be advertised for tender by placing a notice in the OJEU, unless using a framework agreement or DPS already agreed.

Offer

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

Official order

A pre-printed form, which incorporates the council's terms and conditions of purchase, used to place an order with a supplier. See also 'purchase order'. 

Open procedure

One of the procedures for procurement under the EU Directives, under which all eligible applicants are invited to tender in a one-stage procurement process. 

back to top

P

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 failure by that subsidiary to fulfil and complete its obligations and liabilities under a contract. 

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. 

Pre qualification questionnaire or 'PQQ'

See 'business questionnaire'.

Private finance initiative (PFI)

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.

Procurement

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

Public private partnership (PPP)

Very similar to a PFI arrangement, but the aim is centered more on service delivery than finance. 

Purchase order

See 'official order'.

Procurement strategy

The document setting out the council's approach to procurement and key priorities for the next few years.

PQQ

Pre-qualification questionnaire - see business questionnaire.   

back to top

Q

Quality

The level of fitness for purpose which is specified for or achieved by any service, work or product.
Quality Assurance (QA) is 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. Such tender are not normally acceptable.

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 offer.

back to top

R

Restricted procedure

One of the procedures for procurement under the EU Directives, under which only eligible applicants who meet the client authority's criteria are invited to tender in a two-stage procurement process.

RFQ

Request for quotation. A formal procurement process for all requirements up to a total aggregated value of £75,000, where the documentation issued is less detailed and less specific than is used for tenders. An RFQ process is the least formal of the procurement processes. 

back to top

S

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. 

Select list

A list of suitable prospective contractors, suppliers or service providers that has been drawn up through a short listing exercise for a particular contract or procurement activity. 

Services 

Services provided to the council by an external service provider (an individual or a company). Those that have a value exceeding the current threshold defined by the EU rules will be subject to the European tendering requirements. Contract Standing Orders may have different values covering works, services or supplies.

Short listing

The process of selecting candidates who are to be invited to quote or bid or to proceed to final evaluation.

SLA

Service level agreement. This is sometimes used internally between council departments.

SME

Small and medium business enterprises. Defined by the Companies’ Act, in which two of the three characteristics are met – turnover (less than £25m), employees (less than 250) and gross assets (less than £12.5m).

Social value

Considerations included in the procurement process that can benefit and improve the economic, social and environmental well-being of the relevant local area that are in addition to the contract spend with a third party supplier, as specified in the Public Services (Social Value) Act 2012.

Specification

The document which we use to set out our requirements for the goods or services.

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

Sustainability

The environmental, social and economic sustainability issues to be considered.

back to top

T

Tender

The procurement process of inviting and evaluating bids from suppliers to provide goods, works or services.

Formal procurement process for all requirements with an aggregated value of between £75,000 and the relevant EU threshold, with very detailed and specific documentation, but where the timetable is more flexible than in an OJEU process.

Tender documents

Documents provided to prospective tenderers when they're 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 the responses from tenderers.

Tender evaluation panel 

A group of people who analyse tenders received and make final recommendations on the award of contracts.

Total aggregated value

The total value of the overall requirement over the contract term. Individual or annual values are irrelevant where goods, services or works are of the same type or have similar characteristics.

TUPE

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.

back to top

U

back to top

V

Variation 

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

Variants

Tenders that 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.

back to top

W

Works

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

back to top

X

back to top

Y

back to top

Z

back to top

Page last updated: 22 September 2022

}

Privacy settings