Dictionary of Procurement Terms

The number of years during which an asset is expected to remain in active use.

A provision that limits the total costs for which a contractor can be reimbursed under the terms of a costreimbursement contract.

A written guarantee with respect to a product or service that specifically restricts the conditions under which that guarantee will be honored.

One of the three identified functions of a procurement department. This includes issuing invitations for bids, requests for proposals, and contracts with suppliers to obtain the necessary materials and services in support of entity operations. See also: Service Function, Staff Function.

An item of supply or service, specified in an invitation for bids or request for proposals, for which the bidder or proposer must offer a separate price.

Fixed budgets with monies appropriated for a particular period, usually one year, that can be tied to a specific project or item and cannot be used for other purposes.

A defined, maximum amount of money that a borrower may access as needed and repay immediately or over time with interest.

Damages (usually in the form of money) to be paid by a party who breaches all or part of a contract with another party. The amount of damages is agreed upon by all parties to a contract. These damages may be applied on a daily basis for as long as the breach is in effect, but they may not be imposed as an arbitrary penalty. The key to establishing liquidated damages is reasonableness; it is incumbent upon the buyer to demonstrate, through quantifiable means, that damages did occur. See also: Penalty Charge, Damages.

The current published price for a good or service. See also: Administered Price.