Procurement jargon buster
You may encounter some of the following terms in the procurement profession. This list, while by no means comprehensive (new terms are being added all the time), will help you identify some of the more commonly used word and phrases.
Agent
A person or organisation acting on behalf of the council or on behalf of another organisation.
Agreement
The legally binding contract terms and conditions between the parties, another word for a contract.
Approved list
An eligible list of potential suppliers.
Audit trail
System or paper generated evidence showing how and why and by whom certain processes and functions were carried out.
Authorised officer
An officer of the council who has been nominated by the chief officer to manage a contract or contracts with a contractor or supplier.
Award
The issue of an order or contract to a supplier.
Award Criteria
The criteria by which the successful quotation or Tender is to be selected - see further Rules 10 and 11 of the contract Standing Orders.
Award Procedure
The procedure for awarding a contract as specified in Rules 8, 10 and 15 of the contract Standing Orders.
Best practice
The most effective and desirable method of carrying out a function or process derived from experience rather than theory.
Best Value
The duty, which Part I of the Local Government Act 1999 places on local authorities, to secure continuous improvement in the way in which functions are exercised, having regard to a combination of economy, efficiency and effectiveness as implemented by the council. This terminology has now in many instances been superseded by Value for Money (VfM).
BIP
Business Information Publications Ltd. And a good source for procurement training and information.
BME
Black and Minority Ethnic. The term refers to communities whose origins lie mainly in South Asia (e.g. India, Pakistan, Bangladesh, Sri Lanka), Africa, The Caribbean (originally Africa), and China. In Lambeth, Black Groups total 25.8% (Black Caribbean 12.1%, Black African 11.6%, Other Black 2.1%,); Asian groups make up 4.6%; Chinese/Other 4.8%; and Mixed Ethnic 2.4% of the total population.
Bond
An insurance policy: if the contractor does not 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% of the contract value). A bond is intended to protect the council against a level of cost arising from the contractor's failure.
Business Questionnaire (BQ)
This document is used in a restricted OJEU (Official Journal of the European Union) tendering process and the responses are used to help us shortlist suppliers. Where the Open procedure is used the Business Questionnaire is also required to be completed and will be sent out with the tender documents. Also known as PQQ – prequalification questionnaire and 'RFI' - request for information.
BVR
Best Value Review. Under Best Value, local authorities are required to review all of their services. Authorities must decide in which order services are to be reviewed, draw up a programme and publish this in their Best Value Performance Plan. It is also a requirement of the Local Government Act that all councils ensure that they achieve "best value" from all of their contracts.
Cabinet
the council's cabinet as defined in the Constitution.
Call off contract
An enabling agreement with one or more suppliers for a defined range of works, goods or services covering terms and conditions (including price) which users 'call off' to meet their requirements.
Candidate
Any person who asks or is invited to submit a quotation or tender.
Cashable and non-cashable savings
Cashable savings can be defined as money saved by the council through the letting of the contract; these savings will be realised and returned to the council. The only exceptions to savings being returned to the council are in respect of the Housing Revenue Account, grant maintained accounts in CYPS and Capital Accounts as these accounts are ring-fenced. Where cashable savings are made in ring-fenced accounts, the savings are to be returned to the original account, and the savings recorded as Non-Cashable.
Non-cashable savings arise as a result of the letting of a contract but are not realised as money; these are also referred to as 'efficiency savings'. An example would be re-Tendering a cleaning contract at the same price, but getting more buildings cleaned, or getting the same buildings cleaned better.
Chief Finance Officer
The Director of Finance and Performance or such other officer as may be designated chief finance officer by the council.
Chief Officer
The departmental Executive Director.
Code of Conduct
The code regulating conduct of all officers of the council.
Commissioning
The process of specifying, securing and monitoring services to meet people's needs at a strategic level. This applies to all services, whether they are provided by the local authority, NHS, other public agencies, or by the private and voluntary sectors.
Committee
A committee which has power to make decisions for the council, for example a joint committee with another local authority, but not a scrutiny committee.
Competitive Tendering
Awarding contracts by the process of seeking competing Tenders.
Complex Purchase
Any purchase over £25,000 in value that requires formal Tendering procedures to be adopted.
Constitution
The document approved by the council which:
- Allocates powers and responsibility within the council and between it and others
- Delegates authority to act to the Cabinet, Committees, Portfolio Holders and Officers
- Regulates the behaviour of individuals and groups through rules of procedure, codes and protocols.
The Lambeth Council constitution
Contract
A binding agreement made between two or more parties, which is intended to be enforceable at law.
contracting decision
Any of the following decisions:
- Composition of Approved Lists
- Withdrawal of Invitation to Tender
- Whom to invite to submit a quotation or tender
- Shortlisting
- Award of contract
- Any decision to terminate a contract.
contractor
A firm or person who has made a contract to supply goods and/or services.
Departmental Procurement Boards (DPBs)
Department Procurement Boards will approve smaller contracts (usually over £25,000) within their department as well as determining the procurement strategy at department level.
EU (European Community)
European Community of nations now referred to as the EU European Union.
EU (European Union) procedure
The procurement procedure required by the EU where the Total Value exceeds the EU Threshold.
EU Threshold
The contract value at which the EU public procurement directives apply. The thresholds as of 1 January 2008 are:
- £139,893 for goods and services
- £3,497,313 works and construction
eProcurement
Initially meant procurement functions performed by electronic means, i.e. using IT - but now the 'e' also stands for 'Efficient' and 'Effective'. The use of an electronic system to acquire goods, works and services and payments form third parties.
Solutions currently on the market include:
- Complete 'end to end' procurement systems that are integrated with financial back office systems
- Stand-alone modules used to seek tenders or quotations (known as e-Sourcing)
- Web-based systems that enable ordering from approved catalogues (e-Marketplaces)
- Other web-based systems such as e-Auctions
- Procurement cards for ordering and payment
- Payment through BACS and CHAPS
e-ITT
A set of secure Tender documents (see below) that are prepared using a variety of software programmes and which are intended for completion by a Tenderer using IT or a PC.
e-Sourcing
The researching and gathering of product or service information by electronic means, chiefly by Internet or email use.
European Economic Area
This includes the 27 members of the European Union, along with the three Western European countries that have chosen not to join the EU - Iceland, Liechtenstein and Norway. Microstates Andorra, Liechtenstein, Monaco, San Marino and Vatican City are too small to have full membership but use the Euro and have special relations with the EU. Switzerland is not a member of the EU and not in the European Economic Area but has similar ties to the EU countries through bilateral treaties.
European Union
As of 1 January 2008 the 27 member states are: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, the Netherlands, Portugal, Spain, Sweden and the United Kingdom, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovak Republic, Slovenia, Bulgaria and Romania.
Evaluation
Detailed assessment and comparison of supplier offers.
Exor
Exor Management Services Ltd manages the Lambeth approved list of suppliers and service providers.
Financial Officer
The most senior officer representing the Deputy Chief Executive Corporate Services or designated by him to provide financial advice to the Chief Officer.
Financial Regulations
The regulations outlining officer responsibilities for financial matters issued by the Chief Finance Officer in accordance with the Constitution.
Framework Agreement
An enabling agreement similar to a Call Off contract but where suppliers may be asked to submit a competitive Tender.
Government Procurement Agreement
The successor agreement to the General Agreement on Trade and Tariffs. The main signatories other than those in the European Economic Area are Canada, European Union, Hong Kong (China), Iceland, Israel, Japan, Korea, Liechtenstein the Netherlands with respect to Aruba, Norway, Singapore, Switzerland, United States.
Head of Legal Services
As identified in the Constitution.
High profile
A high-profile purchase is one that could have an impact on functions integral to Council service delivery should it fail or go wrong.
High risk
A high-risk purchase is one which presents the potential for substantial exposure on the council's part should it fail or go wrong.
High value
A high-value purchase is where the value exceeds the EU Threshold values.
Invitation to Tender
An invitation to suppliers to bid for the provision of works, goods or services.
Invitation to Negotiate / ITN
This document would be used in the tendering process where the nature of the goods or services is such that the specification cannot be established. We strive to be very clear on our requirements and therefore this procurement process is not used frequently by Lambeth.
ITT
Invitation to Tender. This document is used in the Tendering process and will advise of when and where Tenders should be submitted.
Key Decisions
Decisions that are defined as key decisions in the Constitution.
Key Performance Indicator (KPI)
KPIs are tools that help us to measure the performance of suppliers against their contractual obligations. KPIs are normally detailed in the service specification document.
Letter of acceptance
A letter that creates an immediate binding contractual relationship between the council and the successful Tenderer prior to entering into a formal contract.
Letter of intent
A letter informing a successful Tenderer that it is the council's intention to enter into a contract with her/him in the future but creates no liability in regard to that future contract.
Line Manager
The officer's immediate superior or the officer designated by the Chief Officer to exercise the role reserved to the line manager by these contract procedure rules.
London contracts and Supplies Group (LCSG)
Recognition of the collective expertise and resources of the London Boroughs, the GLC, and ILEA, and the desirability of increased participation in the development of policy led to the creation of the London Joint Supplies Board which in 1991 was renamed The London contracts and Supplies Group (LCSG).
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. 'Most Economically Advantageous' award criteria may embrace sustainability issues.
Officer
The officer designated by the Chief Officer to deal with the contract in question.
Office of Government Commerce (OGC)
The Office of Government Commerce (OGC) is an office of HM Treasury, responsible for improving value for money by driving up standards and capability in procurement
Official Journal of the European Union (OJEU)
Official Journal of the European Union, formerly OJEC (Official Journal of the European Community). contracts that fall within the EU threshold values and are not exempt categories must be advertised for tender by placing a notice in the OJEU.
Parent Company Guarantee
A legal guarantee required on award that ensures that the parent company will meet any costs of maintaining levels of service and/or the cost of re-letting the contract in the event of the subsidiary company being unable to meet the requirements of the contract.
Private Finance Initiative (PFI)
Private Finance Initiative. 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.
Portfolio holder
A member of the Cabinet to whom political responsibility is allocated in respect of specified functions.
Public Private Partnership (PPP)
Very similar to a PFI arrangement, but the aim is centered more on service delivery than finance.
Pre-Qualification Questionnaire (PQQ)
See 'Business Questionnaire (BQ)'.
Priority services
Those services required to be tendered as defined in the EU public procurement directives.
Procurement
The planning, sourcing, researching, contracting, purchasing, negotiating, leasing, renting, or selling of materials, services, equipment or supplies. Facets include strategy planning, statutory implications marketing and international statues and agreements.
Procurement strategy
The document setting out the council's approach to procurement and key priorities for the next few years.
Purchase
To obtain goods or services in exchange for money or its equivalent; to buy. Also to acquire by effort or to earn.
Purchasing Guide
The suite of guidance documents, together with a number of standard documents and forms, which supports the implementation of these contract procedure rules.
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, oral offer.
Relevant contract
Contracts to which these contract procedure rules apply.
Request for Information (RFI)
See 'Business questionnaire (BQ)'.
Responsible procurement
The new term for Sustainable Procurement, Responsible Procurement emphasises the importance of both social and environmental objectives in ensuring best value in procurement.
Shortlisting
The process of selecting candidates who are to be invited to quote or bid or to proceed to final evaluation.
Simple purchase
Any purchase up to £25,000 in value or one that does not require the adoption of formal Tendering procedures.
SLA
Service Level Agreement, and usually sits on top of a service or supply contract, enforcing the KPIs of the Agreement. This can also be used internally between council 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 researching and gathering of product or service information - specifications, costs, service delivery means, and so on..
Specification
The document used to establish the requirements for the goods or services to be purchased.
Strategic Procurement Board (SPB)
This board has been set up to ensure that a strategic overview is taken of all significant contracts and purchases. The SPB will approve all procurement activity over £100,000 in value and take responsibility for the council's overall strategy and approach relating to procurement.
Supervising officer
The line manager's immediate superior.
Sustainability
The environmental and sustainable development issues that must be considered in a procurement exercise. Lambeth has adopted the term 'responsible procurement' in place of 'sustainable procurement'.
Tender
A candidate's proposal submitted in response to an Invitation to Tender.
Tender record log
The log kept by the Director of Resources to record details of tenders.
Total value
The whole of the value or estimated value (in money or equivalent value) for a single purchase or disposal calculated as follows:
- Where the contract is for a fixed period, by taking the total price to be paid or which might be paid during the whole of the period
- Where the purchase involves recurrent transactions for the same type of item, by aggregating the value of those transactions in the coming 12 months
- Where the contract is for an uncertain duration, by multiplying the monthly payment by 48
- For feasibility studies, the value of the scheme or contracts which may be awarded as a result
- For Nominated Suppliers and Sub-contractors, the total value shall be the value of that part of the main contract to be fulfilled by the Nominated Supplier or Sub-contractor.
TUPE
The Transfer of Undertakings (Protection of Employment) Regulations. Subject to certain conditions, these regulations apply where responsibility for the delivery of works or services for the authority is transferred from one organisation (eg private contractor, local authority in-house team) to another (eg following a contracting out or competitive tendering process) and where the individuals involved in carrying out the work are transferred to the new employer.
These regulations seek to protect the rights of employees in such transfers, enabling them to enjoy the same terms and conditions, with continuity of employment, as existed with their former employer. Broadly, TUPE regulations ensure that the rights of employees are transferred along with the business.
Urgency
A situation whereby the council shall suffer significantly either financially or operationally, if immediate action is not taken.
Value for Money (VfM)
Value for money is not the lowest possible price; it combines goods or services that fully meet your needs, with the level of quality required, delivery at the time you need it, and at an appropriate price.
Variation
Any alteration, modification, addition to or deletion of any requirement of the contract terms or specification.