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Purchasing Glossary of Terms


INTRODUCTION

DEFINITIONS OF TERMS TYPICALLY USED IN PROCUREMENT AND CONTRACTING ACTIVITIES

DEFINITIONS

Acceptance

Agreement

Bid Bond

Bidder/Offeror

Buyer

Change Order/Modification

Consent of Surety

Contract or Agreement

Contract Administrator

Contract Administration Lead Time (CALT)

Corporate Contract Administration

Contract Coordinator

Contractor

Contractor Lead Time (CLT)

Economically Disadvantaged Individuals

Field Contracts and Materials Inspections

Invitation for Bid (IFB)

Minority Business Enterprise

Modification/ PCO/Change Order

Notice of Award and Instructions to Proceed

Off-the-Shelf-Item

Payment Bond

Penal Sum or Amount

Performance Bond

Project Manager

Request for Contract (RFC)

Request for Proposal (RFP)

Request for Qualifications

Request for Quotation (RFQ)

Shipping Lead Time     (SLT)

Small Business Concern

Small Disadvantaged Business Concern

Socially Disadvantaged Individuals

Solicitation

Supplier

Supplier Lead Time (SLT)

Teaming Partner

Teaming Contract

Testing

Warranty

Women-Owned Small Business and Women’s Business Enterprise

 



Acceptance

                       The act of an authorized representative of Purchaser by which Purchaser for itself or as agent of another assumes ownership of existing identified supplies tendered or approves specific services rendered as partial or complete performance of the contractual agreement.



Agreement    

See Contract



Bid Bond      

A form of security that accompanies a proposal and assures that the proposer will not withdraw its proposal within the period specified and will execute a written contract and furnish such bonds as may be required within the period specified in the proposal (unless a longer period is allowed) after receipt of the specified forms.



Bidder/Offeror

                       A vendor or contractor responding to solicitations.  This term is interchangeable with such terms as bidder, offeror, and subcontractor. 



Buyer            

A person who solicits, either orally or by written solicitation, prices for various types of supplies, equipment, or services.  The buyer performs all necessary steps to prepare, negotiate, formulate, and issue a purchase order.  The buyer may place oral orders followed by a confirming purchase order.



Change Order/Modification

                       A written instrument changing or otherwise modifying a contract or purchase order.



Consent of Surety

                       An acknowledgement by a surety that its bond given in connection with a contract continues to apply to the contract as modified.



Contract or Agreement

                       In general terms, a contract and/or agreement includes any bilateral agreement (contract or purchase order) issued for supplies, equipment, materials, services, or construction that is a mutually binding legal relationship obligating the contractor to furnish items or services and the buyer to pay for them.  A contract becomes enforceable when it is formally acknowledged or accepted by a responsible representative of the contractor or work is initiated (which constitutes acceptance).



Contract Administrator

                       An employee who administers a contract on behalf of Purchaser.  This person is the primary contact between Purchaser and the contractor.  For simplicity, the term Contract Administrator as used throughout the manual refers to any person with specific contract administration authority, e. g., buyer, Contract Administration representative, contract specialist, or Contract Administrator.  A Contract Administrator prepares solicitations of various types of contracts.  The administrator performs all the necessary steps involved in the preparation, negotiation, formulation, administration, and closeout of contractual agreements.  The Contract Administrator also oversees the performance of the contract and ensures that both parties meet the various obligations set forth in the contract.



Contract Administration Lead Time (CALT)

                       Is the time between receipt of a Contract Inquiry Package from Project Management by the Contract Administrator and the time a contract is awarded to the successful bidder.



Corporate Contract Administration

                       Refers to the contract administration organization that is part of Purchaser Corporate Management.  The terms such as “Home Office Contracts” and  “Corporate Contracts” refer to operations within Corporate Contract Administration.



Contract Coordinator

                       A person designated by Purchaser Project Manager to provide technical assistance to the Contract Administrator assigned to the project.  The contract coordinator will monitor the work as it progresses.  Specific duties, responsibilities, and authority are limited.



Contractor   

Provider of goods or services.  This term is interchangeable with such terms as subcontractor, vendor, seller, and consultant.



Contractor Lead Time (CLT)

                       The time between issuing a notice of award with instructions to proceed and completion of the contracted services or delivery of the product to the Property Site.



Economically Disadvantaged Individuals

                       Socially disadvantaged individuals whose ability to compete in the free enterprise system is impaired due to diminished opportunities to obtain capital credit as compared to others in the same line of business that are not socially disadvantaged.  Individuals who certify that they are members of named groups (Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Asian-Indian Americans, etc.) are to be considered socially and economically disadvantaged.

“Asian-Indian Americans” mean United States citizens whose origins are in India, Pakistan, or Bangladesh.

“Asian-Pacific Americans” mean United States citizens whose origins are in Japan, China, the Philippines, Vietnam, Korea, Samoa, Guam, the U. S. Trust Territory of the Pacific Islands, the Northern Mariana Islands, Laos, Cambodia, or Taiwan.

“Native Americans” means American Indians, Eskimos, Aleuts, and native Hawaiians.

“Affiliates” are business concerns, which are affiliates of each other if, directly or indirectly, either one controls or has the power to control the other, or another concern controls or has the power to control both.  In determining whether affiliation exists, consideration is given to all appropriate factors including common ownership, common management, and contractual relationships; provided that restraints imposed by a franchise agreement are not considered in determining whether the franchiser controls or has the power to control the franchisee, if the franchisee has the right to profit from its effort, commensurate with ownership, and bears the risk of loss or failure.  Any business entity may be found to be an affiliate, whether or not it is organized for profit or located inside the United States. 



Field Contracts and Materials Inspections

                       Examining and testing of materials, equipment, supplies, and services (including, when appropriate, raw materials, components, and intermediate assemblies) to determine whether they conform to the contractual requirements.



Invitation for Bid (IFB)

                       A document used to solicit written and in some cases sealed bids from prospective contractors.  The IFB is a method of acquisition that employs competitive bids, formal opening of sealed bids, and awards.  IFB’s are only used when (1) time permits the solicitation, submission, and evaluation of bids; (2) the award will be on the basis of price and other price-related issues; (3) all clarifications are sent to all bidders; and (4) there is a reasonable expectation of receiving more than three bids. 



Minority Business Enterprise

                       Is a business concern that at least 51 percent is unconditionally owned by one or more individuals that have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their qualities as individuals.  This also includes any publicly owned business having at least 51 percent of its stock unconditionally owned by and whose management and daily business is conducted by one or more such individuals.



Modification/ PCO/Change Order

                       A written instrument changing or otherwise modifying a contract or purchase order.



Notice of Award and Instructions to Proceed

                       A notice to the successful offeror that the offer submitted (as is or as modified through discussions) is accepted and award is made.  Completion and execution of the contract is required before work can begin unless a supplementary “Instructions to Proceed” is also included.  Authorization to proceed with the work before contract execution is only issued when it is otherwise not possible to complete the usual contract forms in time to allow the contractor to commence work within the time required.



Off-the-Shelf-Item

                       An item that has been developed and produced to governmental or commercial standards and specifications, is readily available for delivery from an industrial source, and may be acquired without change to satisfy a requirement.



Payment Bond

                       A bond which is executed in connection with a contract agreement and which secures the payment of all persons supplying labor and material in the performance of the work provided for in the contract.



Penal Sum or Amount

                       The dollar amount shown in a bond, representing the maximum payment for which the surety is obligated.



Performance Bond

                       A bond that is executed in connection with a contract to secure the performance and fulfillment of all the undertakings, covenants, terms, conditions, and agreements contained in the contract.



Project Manager

                       A person designated by Purchaser management to manage and be responsible for a capital project and/or property site support.  The Project Manager also provides technical assistance to the Contract Administrator assigned to the project.



Request for Contract (RFC)

                       A package from the Project Manager or Design Team containing all the documents required to adequately convey to all bidders the scope of work being contracted out.  Typically, the following documents are supplied with the RFC:

·         Listing of services, materials, and equipment to be supplied by contractor.

·         Schedule and work breakdown structure (if applicable)

·         Special instructions to bidders

·         Technical documents (specifications, drawings, standards, etc.)

·         Engineering data need dates

·         Field completion dates

·         Special certification and testing requirements



Request for Proposal (RFP)

                       A document used to communicate requirements to and solicit written proposals, both sealed and unsealed, from prospective contractors.  The RFP shall be used only when there is a definite intent to award a contract.  A proposal received in response to an RFP is an offer that can be accepted to create a binding contract, either following negotiations, or when authorized, without discussions.  An RFP shall not be used as a solicitation for information or planning purposes.



Request for Qualifications

                       A document used to obtain information about a prospective contractor in order to verify that the prospective contractor is fully licensed and qualified to perform the work at hand.



Request for Quotation (RFQ)

                       A document used to obtain price, delivery, or other market information used for planning purposes only when there is no intent to award a contract based on the request.  A quotation received in response to an RFQ is not an offer and cannot be accepted by the Contract Administrator to create a binding contract unless the bidder formally acknowledges that the price is firm.



Shipping Lead Time (SLT)

                       The time required for delivery from the origination or FOB point to the point of receipt.



Small Business Concern

                       Is a concern, including its affiliates, that is independently owned and operated, is not dominant in the field of operation in which it is bidding, and qualifies as a small business by applicable Federal Regulations.



Small Disadvantaged Business Concern

                       Is a small business concern that is at least 51 percent unconditionally owned by one or more socially and/or economically disadvantaged individuals, or a publicly owned business having at least 51 percent of its stock unconditionally owned by one or more socially disadvantaged individuals and whose management and daily business is conducted by one or more such individuals.  (Also see Economically Disadvantaged Individuals.)



Socially Disadvantaged Individuals

                       Individuals who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their qualities as individuals.



Solicitation    

A request for proposal, request for quotation, or request for qualification.



Supplier        

Provider of goods or services.  This term is interchangeable with such terms as contractor, vendor, seller, and consultant.



Supplier Lead Time (SLT)

                       The time between the contractor/vendor’s notice of award and completion of the contracted services or delivery of the product to the FOB point.



Teaming Partner

                       One who has established a mutual relationship with one or more parties whom jointly have contractual responsibilities to the other parties in the agreement in accordance with the terms of the agreement or contract.



Teaming Contract

                       A bilateral contractual relationship that defines the legal responsibilities of two or more business entities (partners) for the purpose of obtaining a contract with a third party (client) to provide supplies or services of any kind.  After the award of the prime contract, the document that defines the relationship is called the teaming contract.



Testing          

That element of inspection that determines the properties or elements, including functional operation of supplies or their components, by the application of established scientific principles and procedures.



Warranty     

A promise or affirmation given by a contractor or supplier to a buyer regarding the nature, usefulness, or condition of the supplies, services, or construction furnished under a contract or purchase order.  The warranty also certifies that the end product will be “Fully Functional and Operational for the intended Purpose.”



Women-Owned Small Business and Women’s Business Enterprise

                       A small business that is at least 51 percent unconditionally owned by a woman or women who are U. S. citizens and who also control and operate the business.







 
 



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