Open hand presenting a transparent envelope
Open hand presenting a transparent envelope

Procurement jargon explained

December 17, 2020
Procurement, Suppliers

Do you need a quick way to explain procurement terms? Here’s a run down of some common terms used in procurement, including acronyms to watch out for:

Alcatel (‘standstill’) period

  • A ten calendar day standstill period between the announcement of a contract award on OJEU and the signing of a contract, designed so unsuccessful bidders have time to challenge the decision. It is named after two linked cases that came to the European Court of Justice in 1998.

Competitive Dialogue Procedure

  • When a public body wants to achieve an outcome through awarding a contract but does not know the best way to reach this goal, the authority can hold confidential discussions with shortlisted bidders before the final call for bids.

CPV codes — Common Procurement Vocabulary

Direct award

  • A direct award occurs when a buyer awards a contract directly to a supplier. A ‘direct award’ is a catch-all phrase. This can be under a formal process, for instance VEATs (see below) or informally, that is to say not governed by transparent processes. Contracts awarded this way are at least 10% more expensive and informal direct awards are a corruption risk.

DPS — Dynamic Purchasing System

  • A DPS is similar to a framework agreement (see below). In a DPS, unlike a framework agreement, new suppliers can join at any time and this is done electronically.

EMAT/MEAT — Economically Most Advantageous Tender/Most Economically Advantageous Tender

  • “[We] were sitting on top of two million parts — all built by the lowest bidder on a government contract” This saying, attributed to the late astronaut John Glenn, is a representation of EMAT/MEAT. EMAT/MEAT criteria are regularly used in the public sector although other factors such as innovation and business ethics can be taken into account too.

Framework Agreements

  • An agreement between a small number of suppliers and a public body to provide works, supplies or services at shorter notice than through a normal procurement process. A buyer opens up a bidding process for the framework agreement and suppliers apply to join. Upon success, a supplier remains on this agreement throughout the duration of the framework agreement

LTR — Light Touch Regime

  • A process for tenders below the OJEU threshold that is less intensive than some higher value processes but still fulfills the requirements for equal treatment and transparency, including ensuring the process is competitive and publishing a contract award notice.

Negotiated Procedure

  • An agreement between an authority and a bidder without prior publication when there have been no suitable responses to an open or restricted procedures, but only when there is no reasonable alternative.

OJEU/TED — Official Journal of the European Journal, Tenders Electronic Daily

  • All EU tenders over a threshold are published in the Official Journal of the European Union (OJEU). Tenders Electronic Daily (TED) is the online version of OJEU.

Open procedure

  • A tender open to all bidders without any pre-qualification requirements.

PBR — Payment by Results

  • A policy by which supplier payments are dependent on verifiable results.

Parent company guarantee

  • If a subsidiary of a large company wins a contract, the larger company can provide a guarantee to fulfil the subsidiary’s contractual obligations and liabilities should the subsidiary fail to deliver.

Performance bonds

  • Also known as surety, these bonds or guarantees are provided to government buyers by specialist insurers at the expense of contracted suppliers and paid in the event of contract default.

Restricted procedure

  • In a restricted procedure, bidders must first complete a pre-qualification questionnaire or PQQ. Upon success at PQQ stage, they are invited to tender by the buyer.

Reverse auction

  • Potential suppliers offer open pricing bids to a supplier , competing for the lowest bid. The Crown Commercial Service promotes online Reverse eAuctions to government buyers as a method of reducing costs: https://www.gov.uk/guidance/eauctions.

Single bid tender

  • Where a tendering process has only resulted in a single bid from a seller.

SVA — Social Value Act

  • The Public Services (Social Value) Act 2014, calls for public sector bodies in England and Wales to consider factors concerning social value, such as local socio-economic development and environmental.

TUPE regulations — Transfer of Undertakings (Protection of Employment)

  • TUPE is a safeguard that protects the rights of workers who are transferred from one business to another. It applies when a service originally provided in-house is outsourced to ensure the staff providing the service continue to be employed on the same terms as before.

VEAT — Voluntary Ex-Ante Transparency Notice

  • A VEAT is notice from a buyer to let a contract without opening it up to a formal process of competition. This is similar to a ‘direct award’ above but is subject to the processes outlined in the Remedies Directive. For instance, a contracting authority executing a VEAT must give sufficient information about the justification for direct award. The authority must also still observe the minimum standstill period to allow economic operators the opportunity to challenge the decision.

Whole life costs

  • Whole life costs refers to the cost of an asset from when it is acquired to when it is divested. It covers revenues, environmental impacts and maintenance as well as the straightforward cost of acquisition.
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