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Glossary of Procurement Terms

Source: Executive of Office of the President, Office of Administration

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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

8(a) Contractors:
Those companies which meet the criteria for Small Disadvantaged Businesses and are certified by the Small Business Administration under Section 8(a) of the Small Business Act as eligible for awards as subcontractors to contracts awarded if the total of the contract is less than $3 million for services and less than $5 million for products. Any contract over these thresholds must be competitively awarded; the competition is limited to 8(a) certified contractors.

Obtaining supplies or services by contract or purchase order with appropriated or non-appropriated funds, by and for the use of Federal agencies through purchase or lease, whether the supplies or services are already in existence or must be created, developed, demonstrated, and evaluated. An acquisition begins at the point when program personnel identify and establish needs and ends with the close out of the contract file.

Acquisition Plan (AP)
The acquisition plan is an administrative tool in which agency program offices report their upcoming formal contract actions. It is designed to assist the program and procurement offices in planning effective and efficient accomplishments of an assigned procurement.

Acquisition Planning
The process by which the efforts of all personnel responsible for a procurement are coordinated and integrated through a comprehensive plan for fulfilling an agency's needs in a timely manner and at a reasonable cost. It includes developing an overall acquisition strategy for managing the acquisition plan.

Administrative Change
A unilateral contract change, in writing, that does not affect the significant rights of-the parties (e.g., a change in the paying office or the appropriate data).

Affiliates
Business firms, organizations, or individuals are affiliates of each other if: (a) one controls or has the power to control the other, or (b) a third party controls or has the power to control both.

Agency
Any executive department, Government corporation, Government controlled corporation, or other establishment in the executive branch of the government.

Anti-Deficiency Act
Prohibits authorizing or incurring obligations or expenditures in excess of amounts appropriated by the Congress and apportioned by the Office of Management and Budget (OMB).

Assistance
A relationship between a Federal agency and contractor/recipient, the principal purpose of which is the transfer of money, property, services, or anything of value to a contractor/recipient in order to accomplish a public purpose of support or stimulation authorized by Federal statute rather than of acquisition by purchase or lease of property or services for the direct benefit or use of the Federal government.

Award
Any instrument, signed by a contracting officer, providing government funds or other resources to an offeror, that permits expenditure of such government funds or use of such government resources.

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Best and Final Offer (BAFO)
Upon completion of discussions during a negotiated procurement, contractors within the competitive range may submit a revised proposal to the contracting officer addressing issues raised during negotiations. This proposal is considered the best and final offer (BAFO).

Brand Name Description
A purchase description that identifies a product by its brand name and model or part number, or other appropriate terminology by which the product is offered for sale.

Budgeting
The process of translating approved expenditures into funding allocations for a specified period of time.

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Change Order
Unilateral written change order issued to a contractor to modify contractual requirements within the general scope of the contract. Such modifications are limited to changes to the drawings, designs, specifications, the method of shipment or packing, or the place of delivery.

Commerce Business Daily (CBD)
A Department of Commerce publication used by Federal agencies to publish a summary or synopsis of their upcoming procurements to notify interested businesses.

Commercial Market Representation
A Small Business Administration representative who reviews and rates the small business, small disadvantaged business and women-owned business subcontracting programs of major prime contractors and makes recommendations for improvement.

Commitment
The reserving of funds for obligation at the time the contract is signed by an agency's warranted Contracting Officer.

Competition
A procurement strategy where more than one contractor that is capable of performing the contract is solicited to submit an offer for supplies and services. The successful offeror is selected on the basis of criteria established by the agency's contracting office and the program offices for which the work is to be performed.

Competition Advocate
Senior official appointed to promote full and open competition in the acquisition of supplies and services by the agency.

Contract
A mutually binding legal relationship obligating the contractor to furnish the supplies or services, and an agency to pay for them. It includes all types of commitments that obligate agencies to an expenditure of funds that, except as otherwise authorized, are in writing. In addition to bilateral instruments, contracts include (but are not limited to) awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; and bilateral contract modifications. Contracts do not include grants and cooperative agreements covered by 31 U.S.C. 6301.

Contract Action
An action resulting in a contract, a modification to a contract, or a delivery order placed against an indefinite delivery-indefinite quantity (IDIQ) contract.

Contract Administration
All the activities associated with the oversight of the contractor's performance of a contract from awards to closeout.

Contract Award
Occurs when the contracting officer has signed and distributed the contract to, or notified the contractor.

Contract Quality Requirements
The technical requirements in the contract relating to the quality of the supply or service, and those contract clauses prescribing inspection, and other quality controls that are binding to the contractor, to assure that the supply or service conforms to the contractual requirements.

Contract Requirements
In addition to specified performance requirements, contract requirements include those defined in the statement of work; specifications, standards and related documents; management systems; and contract terms and conditions.

Contracting
Involves purchasing, renting, leasing, or otherwise obtaining supplies or services from non-Federal sources. Contracting includes a description of the supplies and services required, solicitation and selection of sources, preparation and award of contracts, and all phases of contract administration. It does not include making grants or cooperative agreements.

Contracting Office
The office authorized by an agency's Senior Procurement Executive that awards or executes a contract for supplies or services.

Contracting Officer
A person with delegated written authority, by-an agency's Senior Procurement Executive or designee, to enter into, administer, and/or terminate contracts and assistance agreements and make related determinations and findings.

Contracting Officer's Representative (COR) or Contracting Officer's Technical Representative (C0TR)
Individuals identified by program offices who are designated and authorized by the contracting officer to perform contract administration functions on his/her behalf. COR/COTR functions are limited to those specifically designated in writing by the contracting officer.

Contractor
An entity in private industry which enters into contracts with an agency to provide supplies or services.

Cooperative Agreement
An assistance instrument used when substantial involvement is anticipated between the Federal government and the State or local government or other recipient during performance of the contemplated activity.

Cost Analyses
The review and evaluation of the separate cost elements and proposed profit of a contractor's cost or pricing data. Cost analysis always includes price analysis.

Cost or Pricing Data
Factual and verifiable data that includes: (a) direct costs; (b) indirect costs; (c) profit or fee; (d) vendor quotations; (e) information on changes in production methods and in production or purchasing volume; and (f) information on management decisions that could have a significant bearing on costs.

Cost Reimbursement Contracts
Contracts based on payment by an agency to a contractor of allowable, reasonable and allocable costs incurred in the contract performance to the extent prescribed in the contract. These contracts may not require completion of the contract work, but rather the Best efforts of the contractor. The types of cost reimbursement contracts include: (a) cost, (b) cost sharing, (c) cost-plus-fixed-fee (CPFF), (d) cost-plus incentive fee (CPIF), and (e) cost-plus-award fee (CPAF) contracts.

Cradle-To-Grave
The total concept of a procurement from inception through development, procurement, performance, and final disposition.

Current Year
The fiscal year in progress. Also called execution year.

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Defective Pricing
Inaccurate cost/pricing data, to include delivery orders placed against Federal Supply Schedules (FSS), certified by a contractor to be accurate, current, and complete.

Deliverable
A report or product that must be delivered to the government by the contractor to satisfy contractual requirements.

Dependability
A measure of the degree to which an item is operable and capable of performing its required function at any time during the life of the contract.

Direct Cost
Any cost specifically identified as a final cost objective for a particular contract action. Includes cost factors such as direct labor and materials.

Direct Labor
Labor required to complete a product or service. Includes fabrication, assembly, inspection and test for constructing an end product. Also, labor expended by contractor personnel in performing contractual requirements.

Direct Materials
Includes raw materials, purchased parts and subcontracted items required to manufacture and assemble completed products. A direct material cost is the cost of material used in making a product.

Disbursements
In budgetary usage, gross disbursements represent the amount of checks, cash, or other payments issued, less refunds received.

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Effective Competition
A market condition which exists when two or more contractors, acting independently, actively compete for an agency's business in a manner which ensures that the agency will be offered the lowest price or best technical design to meet its minimum needs.

Escalation
Determination of price adjustments based on increases or decreases to indexes specifically identified in the contract.

Evaluation Criteria
Standards which are used to evaluate an offeror's technical and operational effectiveness.

Expenditure
A charge against available funds, evidenced by a voucher or a claim. Expenditure represents the actual payment of funds.

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Facilities Contract
Provides for the procurement, construction, and installation of facilities or the use, maintenance, management, accountability, or disposition of facilities.

Federal Acquisition Regulation (FAR)
The primary regulation used by all Federal agencies in their acquisition of supplies and services with appropriated funds. It is issued within applicable laws under the joint authorities of the Administrator of General Services, the Secretary of Defense, and the Administrator for the National Aeronautics and Space Administration, under the broad policy guidelines of the Administrator, Office of Federal Procurement Policy, Office of Management and Budget.

Federal Information Processing (FIP)
A machine or a group of inter-connected machines, consisting of input, storage, computing, control, and output services. These services function by using electronic circuitry in the main computing element to perform logical operations automatically through internally stored or externally controlled programmed instruction.

FIP Resources
A comprehensive term referring to all computer related resources including computer hardware, firmware, software, personnel, documentation, supplies, services, and support services.

Firmware
Software that is built into integrated circuits in a permanent or semi-permanent form. Firmware lies midway between hardware and software in terms of performance and flexibility.

Fixed Price Contract
A type of contract that provides for a firm price or, under appropriate circumstances, for an adjustable price for the supplies or services being procured.

Federal Supply Schedule (FSS) Program
A simplified process for procuring commonly used supplies or services by placing delivery orders against Federal Supply Schedule contracts which have been awarded by the General Services Administration (GSA) for use by all agencies.

Fraud
Acts of fraud or corruption or attempts to defraud an agency or to corrupt its agents, acts that constitute a cause for debarment or suspension under FAR 9.4062(a) and 9.407-2(a), and acts that violate the False Claims Act, 31 U.S.C., sections 3729-3731, or the Anti-Kickback Act, 41 U.S.C., sections 51 and 54.

Full and Open Competition
All responsible sources are permitted to compete.

Full and Open Competition After Exclusion of Sources
All responsible sources which meet certain criteria, such as business size or location in a labor surplus area, are permitted to compete. These competitions are specifically authorized by the Competition in Contracting Act (CICA).

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Government Property
Equipment and facilities furnished by the government to a contractor or recipient, or acquired by a contractor or recipient, at government expense for use during the performance of a contract or assistance agreement.

Grant
An assistance instrument used when little Federal Government involvement is anticipated in the performance by the recipient.

Grants Officer
A contracting officer who contractually obligates the government by awarding grants.

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Improper Influence
An influence that induces or tends to induce a Federal employee to consider awarding a Federal contract or purchase on any basis other than its merit.

Independent Verifications and Validation Contract (IVV or IV & V)
Contracts through which testing and validation or developed software is accomplished by someone other than the developer.

Interested Party
A prime contractor or an actual or perspective offeror whose direct economic interest would be affected by the award of a contract or by the failure to award a contract.

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Kickback
Any money, fee, commission, credit, gift, gratuity, thing of value, or compensation of any kind which is provided, directly or indirectly, to agency procurement or program officials by any prime contractor employee, subcontractor, or subcontractor employee for the purpose of improperly obtaining or receiving favorable treatment in connection with obtaining a contract.

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Life-cycle Cost
The total cost to any agency for reoccurring, operations, supporting, and disposing of the items being acquired over the life of the contract.

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Market Survey
Attempt to determine the availability of qualified sources capable or satisfying an agency's procurement requirements. This testing of the marketplace may range from written or telephone contacts with knowledgeable Federal, and non-Federal experts, regarding similar or duplicate requirements, and the results of any market test recently undertaken, to the more formal sources-sought announcements in pertinent publications (e.g., technical/scientific journals, or the Commerce Business Daily, or solicitations for information of planning purposes.

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Offer
A response to a solicitation that, if accepted, would bind the offeror to fulfill the resulting contract. Responses to invitations for bids (IFB) are called bids or sealed bids; responses to requests for proposals (RFP) are referred to as offers or proposals; responses to requests for quotations (RFQ) are designated as quotes.

Office of Small and Disadvantaged Business Utilization (OSDBU)
Section 15(K) of the Small Business Act reads, "There is hereby established in each Federal agency having procurement powers an office to be known as the 'Office of Small and Disadvantaged Business Utilization.' The management of each such office shall be vested in an officer or employee of such agency who shall -.

  • be known as the 'Director of Small and Disadvantaged Business Utilization' for such agency,
  • be appointed by the head of such agency,
  • be responsible only to, and report directly to, the head of such agency or to his deputy,
  • be responsible for the implementation and execution of the functions and duties under Section 8 and 15 of this Act,
  • have supervisory authority over personnel of such agency to the extent that the functions and duties of such personnel relate to functions and duties under sections 8 and 15 of this Act,
  • assign a small business technical advisor to each office to which the Administration has assigned a procurement center representative -
    • who shall be a full-time employee of the procuring activity and shall be well qualified, technically trained and familiar with the supplies or services purchased at the activity, and
    • whose principal duty shall be to assist the Administration procurement center representative in his duties and functions relating to section 8 and 15 of this Act, and
  • cooperate, and consult on a regular basis, with the Administration with respect to carrying out the functions and duties described in paragraph (4) of this subsection. (PUBLIC LAW 95-507, OCT. 24, 1978)."

Option
A clause contained in a contract which gives an agency the unilateral right to extend the term of the contract or obtain additional quantities of products or services at the prices contained in the contract for that option period or additional quantity of products or services.

Organizational Conflict of Interest
Activities or relationships with other persons that interfere with a contractor or contractor employee rendering impartial assistance or advice to an agency.

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Parties Excluded from Procurement Programs
Contractors included on the "Consolidated List of Debarred, Suspended, and Ineligible Contractors." This list is compiled, maintained, and distributed by the General Services Administration (GSA). .

Pre-award Survey
An evaluation by a contracting activity of a prospective contractor's capability to perform a proposed contract. Site visits to contractor facilities are often conducted to determine qualifications and eligibility to receive awards.

Price Analysis
The process of examining and evaluating a proposed price by comparing it with other offered prices or prices previously paid for similar goods or services.

Prime Contract
A contract entered into by an agency for the purpose of obtaining supplies, materials, equipment, or services of any kind.

Prime Contractor
A corporation, partnership, business association, trust, joint-stock company, education institution or other non-profit organization, or individual who has entered into a prime contract with an agency.

Procurement Activity
The organization within an agency authorized to enter into contractual relationships.

Procurement Automated Source System (PASS)
A database managed by the Small Business Administration that contains information on over 230, 000 small businesses. PASS must be queried and reviewed by agency personnel to locate potential contractors. Not all small businesses are in the PASS database, but it does represent a good sampling of the availability of business in a particular industry. One of the primary reasons for the PASS search is that if any sources are found, the results are included in the "Justification for Other than Full and Open Competition (JOFOC).".

Procurement Center Representative (PCR)
Small Business Administration (SBA) representatives assigned to Federal agencies to assist in conducting their small business programs by recommending sources and the use of appropriate set-asides. PCRs have the authority to challenge a contracting officer's decision not to conduct a particular procurement as a set-aside; they also review and make recommendations on proposed subcontracting plans.

Procurement List
A List of supplies and services that the Committee for Purchase from People Who Are Blind or Severely Disabled has determined to be available for mandatory purchase by Federal Agencies.

Procurement Official
Any civilian or military official or employee of an agency who has participated personally and substantially in any of the following activities for a particular procurement:

  1. Drafting a specification or a statement of work for that procurement;
  2. Reviewing or approving a specification or statement of work developed for that procurement;
  3. Preparing or developing procurement or purchase requests for that procurement;
  4. Preparing or issuing a solicitation for that procurement;
  5. Evaluating bids or proposals for that procurement;
  6. Selecting sources for that procurement;
  7. Negotiating to establish the price or terms and conditions of a particular contract or contract modification; or
  8. Reviewing and approving the award of a contract or contract modification. (FEDERAL ACQUISITION REGULATION, 3.104-4,(h)(1))

Protest
A written objection by an interested party to a procurement action conducted by an agency.

Purchase Order
An offer made by an agency to buy certain supplies or nonpersonal services from commercial sources and based on specified terms and conditions. The aggregate amount shall not exceed the small purchase limit, currently $100,000.

Purchase Request (PR)
A document that is used to initiate a procurement action. Whether referred to as a PR, requisition, or procurement directive, it provides the necessary authorization to proceed with a procurement.

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Qualified Film Producers List (QFPL)
A list of producers qualified to make Government film productions. The Department of Defense (DOD), Federal Audiovisual Contract Management Office (FACMO) maintains this list.

Qualified Producers List (QPL)
A list of vendors who have been qualified in advance of a solicitation to provide a particular product or service.

Qualified Video Producers List (QVPL)
A list of producers qualified to make Government video productions. The DOD, FACMO maintains this list. .

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Ratification
The process used by an agency's contracting officers to approve and legitimize an otherwise proper contract made by an individual without contracting authority.

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Senior Procurement Executive
The Senior Procurement Executive for an agency is appointed by the agency head pursuant to Section 16(3) of the Office of Federal Procurement Policy (OFPP) Act (41 U.S.C. 414(3)), and is responsible for managing an agency's procurement activities.

Settlement Agreement
A written agreement, in the form of a modification to a contract, settling all or a severable portion of a settlement proposal resulting from termination of a contract for the convenience of the agency.

Small Business
A small business that is at least 51 percent unconditionally owned by one or more individuals who are both socially and economically disadvantaged, or owned by an Indian tribe or native Hawaiian organization.

  • "Socially disadvantaged individuals" are 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.

  • "Economically disadvantaged individuals" are socially disadvantaged individuals whose ability to compete in the free enterprise system is impaired due to diminished opportunities to obtain capital and credit as compared to others in the same line of business who are not socially disadvantaged.

  • Individuals who certify that they are members of named groups (Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Sub-continent-Asian Americans) are to be considered socially and economically disadvantaged.

  • The preferred terminology for these businesses is Minority Business Enterprises (MBEs).

Small Purchase
Currently the term "small purchases" applies to procurements with thresholds of $100,000 or less. FASA has replaced the current term and threshold for "small purchase" with a new term called "simplified acquisition threshold" whose threshold includes procurements of $100,000 or less. There are two purchase categories under the simplified acquisition threshold. Purchases under $2,500 are called micro purchases. For these purchases, the small purchase set-aside for small business is dissolved. Small business reservation does apply to values of $2,501 - $100,000. If an agency has interim or full Federal Acquisition Computer Network (FACNET) capability, which is the ability to perform certain functions electronically, the $100,000 threshold on simplified acquisitions applies; otherwise, the threshold is $50,000. The higher threshold for simplified acquisition supports the acquisition streamlining initiative and provides small business contractors with increased set aside opportunities.

Software
A combination of associated computer instructions and computer data definitions required to enable computer hardware to perform computational or control functions.

Sole Source Procurement
A contract for the purchase of supplies or services that is entered into by an agency after soliciting and negotiating with only one source. Such procurements must be fully justified to indicate the reasons why competition is not possible.

Solicitation
A formal document which elicits proposals for acquisition or financial assistance awards. Solicitation instruments include Invitations for Bid (IFB), Requests for Proposals (RFP), and for small purchase actions, Requests for Quotation (RFQ).

Source Selection Plan
The document that explains how proposals from offerors will be evaluated. The Plan includes the evaluation factors to be used, relative weight of the factors, and the methodology to be used by evaluators in evaluating proposals.

Subcontract
A contract between a prime contractor and another source to obtain outside supplies for services that prime contractor reeds to perform the contract requirements. Subcontracts include any agreement, other than an employer employee relationship, which a prime contractor enters into for the purpose of fulfilling a government contract.

Subcontracting Plan
A written plan, submitted by a prime contractor and approved by a contracting officer, that describes goals and actions the contractor plans to take to use small and small disadvantaged businesses to the maximum practicable extent in performing the contract.

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Technical Direction
The direction or guidance of the scientific, engineering, and other technical aspects of a project, as distinguished from the administrative and business management aspects.

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Unauthorized Commitment
The placing of an order, orally or in writing, for supplies or service by an agency employee who does not have a contracting officer warrant authorizing them to enter into a contract on the behalf of the agency. Unauthorized commitments also include orders placed by contracting officers which exceed their authorized dollar limit.

Unsettled Contract Change
Any pending contract change or contract term for which a modification is required, to include a change order that has not been negotiated, but has been effected.

Unsolicited Proposal
A written proposal that is submitted to an agency by an outside source offering to perform an agency's work more effectively or efficiently. The unsolicited proposal shall not be in response to a formal or informal request, unless it is an agency request constituting a publicized general statement of need.

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Value Engineering
An organized effort to analyze the functions of systems, equipment, facilities, services, and supplies for the purpose of achieving the essential functions at the lowest life-cycle cost consistent with required performance, reliability, quality, and safety.

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Women-Owned Small Business
Companies which meet the definition of a small business (noted above), and are at least 51% owned by a woman or women who are U.S. citizens and who also control and operate the business. The preferred terminology for these businesses is Women Business Enterprises (WBEs).

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