Procurement Glossary

– LABOR SURPLUS AREA
A civil jurisdiction designated by the U.S. Department of Labor, usually updated annually in the late fall. Used as one of the criteria for designating economically disadvantaged (ED) vendors.

– LEAD TIME
The time that it would take a supplier to delivery goods after receipt of order.

– LEASE
A contract conveying from one entity to another the use of real or personal property for a designated period of time in return for payment or other consideration.

– LESS-THAN-TRUCKLOAD (LTL)
A quantity of freight less than the amount necessary to constitute a truckload.

– LESSEE
One to whom a lease is granted.

– LESSOR
One who grants a lease.

– LIFE CYCLE COSTING
A procurement evaluation technique which determines the total cost of acquisition, operation, maintaining and disposal of the items acquired; the lowest ownership cost during the time the item is in use.

– LINE ITEM
An item of supply or service specified in a solicitation for which the vendor must specify a separate price.

– LIQUIDATED DAMAGES
A specific sum of money, agreed to as part of a contract to be paid by one party to the other in the event of a breach of contract in lieu of actual damages, unless otherwise provided by law.

– LIST PRICE
The price of an article published in a catalog, advertisement or printed list from which discounts, if any, may be subtracted.

– LOWEST RESPONSIBLE VENDOR
The vendor with the lowest price whose past performance, reputation and financial capability is deemed acceptable.

– MANDATORY
Required by the order stipulated, e.g., a specification or a specific description that may not be waived.

– MANUFACTURER
A business that makes or processes raw materials into a finished product.

– MARKET
The aggregate forces (including economics) at work in trade and commerce in a specific service or commodity. To sell, analyze, advertise, package, etc.

– MATERIAL VARIANCE/MATERIAL DEVIATION
A variance or deviation in a response from specifications of conditions that allows a responder a substantial advantage or benefit not enjoyed by all other responders or that gives the state something significantly different from what the state requested in the solicitation document.

– MATERIALS MANAGEMENT
Embraces all functions of acquisition, standards, quality control and surplus property management.

– MODEL PROCUREMENT CODE (MPC)
A publication approved by the American Bar Association which sets forth procurement statutory principles and policy guidelines for managing and controlling the procurement of supplies, services and construction for public purposes; administrative and judicial remedies for the resolution of controversies relating to public contracts; and a set of ethical standards governing public and private participants in the procurement process.

– MULTIPLE AWARD
Contracts awarded to more than one supplier for comparable supplies and services. Awards are made for the same generic types of items at various prices.

– NAICS (NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM) CODE [FORMERLY KNOWN AS SIC (STANDARD INDUSTRIAL CLASSIFICATION) CODE]
Classification of business established by type of activity for the purpose of facilitating the collection, tabulation, presentation, and analysis of data collected by various agencies of the United States government, state agencies, trade associations, and private research organizations for promoting uniformity and comparability in the presentation of statistical data relating to those establishments and their fields of endeavor.

– NAPM
National Association of Purchasing Management. A nonprofit educational and technical organization of purchasing and materials management personnel and buying agencies from the public and private sectors.

– NASPO
National Association of State Purchasing Officials. An organization of state procurement representatives for the purpose of promoting efficient and effective public purchasing policies and procedures at the state level. NASPO is an affiliate of the Control of State Governments (CSG).

– NEGOTIATION
Requests for proposals are sometimes used as a starting point for negotiations to establish a contract. RFPs generally include more than just price considerations. This method is especially applicable when dealing with a single source manufacturer.

– NET PRICE
Price after all discounts, rebates, etc., have been allowed.

– NIGP
National Institute of Governmental Purchasing. A nonprofit, educational and technical assistance corporation of public purchasing agencies and activities at the federal, state and local levels of government.

– NO BID
A response to a solicitation for bids stating that respondent does not wish to submit an offer. It usually operates as a procedure consideration to prevent suspension from the vendors list for failure to submit a response.

– OPEN MARKET REQUISITION (OMR)
The document to request the purchase of a non-contract item when the requested item’s estimated cost exceeds the authority for purchase level of the buyer. An OMR conveys the request for purchase to the person with the authority to purchase. The resulting order type is most often the Purchase Order Requisition (POR).

– OPTION TO EXTEND/RENEW
A provision (or exercise of a provision) which allows a continuance of the contract for an additional time according to permissible contractual conditions.

– OSHA
The Occupational Safety and Health Administration. Created by the OSHA Act.

– PACKING LIST
A document which itemizes in detail the contents of a particular package or shipment.

– PARTIAL PAYMENT
The payment authorized in a contract upon delivery of one or more units called for under the contract or upon completion of one or more distinct items of service called for thereunder.

– PER DIEM
By the day.

– PERFORMANCE BOND
A contract of guarantee, executed subsequent to award by a successful vendor to protect the buyer from loss due to the vendor’s inability to complete the contract as agreed.

– PERFORMANCE SPECIFICATION
A specification setting forth performance requirements determined necessary for the item involved to perform and last as required.

– PLANT-MATTER BASED OR BIO-BASED PRODUCT
A product derived from renewable resources, including fiber crops, such as kenaf; chemical extracts from oilseeds, nuts, fruits and vegetables (such as corn and soybeans); agricultural residues, such as wheat straw and corn stover; and wood wastes generated from processing and manufacturing operations. These products stand in contrast to those made from fossil fuels (such as petroleum) and other less renewable resources (such as virgin timber).

– POINT OF ORIGIN
(shipping point)
The location where a shipment is received by a transportation line from the shipper.

– POLITICAL SUBDIVISION
A subdivision of a state which has been delegated certain functions of local government. Can include counties, cities, towns, villages, hamlets, boroughs and parishes.

– POST-CONSUMER MATERIAL
A finished material which would normally be disposed of as a solid waste after its life cycle as a consumer item is completed. Does not include manufacturing or converting wastes. This refers to material collected for recycling from office buildings, homes, retail stores, etc.

– PRE-CONSUMER MATERIAL
Material or by-products generated after the manufacture of a product but before the product reaches the consumer, such as damaged or obsolete products. Pre-consumer material does not include mill and manufacturing trim, scrap, or broken material which is generated at a manufacturing site and commonly reused on-site in the same or another manufacturing process.

– PREFERENCE
An advantage in consideration for award for a contract granted to a vendor by reason of the vendor’s residence, business location, or business classifications (e.g., minority, small business).

– PREPAID
A term denoting that transportation charges have been or are to be paid at the point of shipment.

– PREQUALIFICATION OF VENDORS
The screening of potential vendors in which such factors as financial capability, reputation and management are considered when developing a list of qualified vendors. See Vendors List, Qualified Vendor/Responsible Vendor.

– PRICE
The amount of money that will purchase a definite weight or other measure of a commodity.

– PRICE AGREEMENT
A contractual agreement in which a purchaser contracts with a vendor to provide the purchaser’s requirements at a predetermined price. Usually involves a minimum number of units, orders placed directly with the vendor by the purchase, and limited duration of the contract. See Blanket Order and Requirements Contract.

– PRICE FIXING
Agreement among competing vendors to sell at the same price.

– PROCUREMENT
The combined functions of purchasing, inventory control, traffic and transportation, receiving, inspection, store keeping, and salvage and disposal operations.

– PROPRIETARY
The only items that can perform a function and satisfy a need. This should not be confused with “single source.” An item can be proprietary and yet available from more than one source. For example, if you need a camera lens for a Nikon camera, the only lens that will fit is a Nikon lens, thus, this lens is “proprietary.” However, the Nikon lens is available from more than one source, thus, it is not single source.

– PUBLIC PURCHASING
The process of obtaining goods and services for public purpose following procedures implemented to protect public funds from being expended extravagantly or capriciously.

– PURCHASE MANUAL
A document that stipulates rules and prescribes procedures for purchasing with suppliers and other departments.

– PURCHASE ORDER
The signed written acceptance of the offer from the vendor. A purchase order serves as the legal and binding contract between both parties.