Dictionary of Procurement Terms

During negotiations, the gradual lowering of an asking price or the gradual raising of an offered price until the buyer and seller settle on a mutually agreed-upon price.

A purchase of the smallest quantity to satisfy a current need.

A negotiation strategy that involves aggressive, uncollaborative tactics intended to give an advantage to only one party.

A sound, widely accepted currency that is unlikely to fluctuate greatly or depreciate suddenly.

Any material that, under the conditions of transportation or storage, is capable of posing an unreasonable risk to health, safety, or property; includes material classified as explosive, flammable, corrosive, combustible, poisonous, toxic, biological, or radiological, and compressed gases. See also: Waste.

A strategy of entering into a contract for the purpose of protecting against unfavorable pricing for commodities in an unstable market, such as petroleum and agricultural products.

Contract rendition and supplementation classified according to rank, capacity, or authority; order is conventionally conceived of as a multi-stage process in which various sources—including express terms, course of performance, course of dealing, trade usages, default rules, and general standards of reasonableness—are sequentially resorted to. The decisionmaker should not turn to any particular source before exhausting the previous ones; in case of inconsistency, each source trumps the following ones.

A term that generally refers to minority-owned, women-owned, and small businesses. See also: Minority-Owned Business Enterprise (MBE), Small Disadvantaged Business, Woman-Owned Business Enterprise (WBE), Economically Disadvantaged Individuals.

A public sector regulatory requirement that primarily appears in construction solicitation projects; the retainage of a predetermined portion of the full payment by the entity for a predetermined length of time before the final payment is made by the entity to the prime contractor to ensure that the prime's subcontractors have been paid for their work and materials. See also: Retainage.

A contract clause that requires one or both parties to pay for costs and damages suffered by the other. See also: Indemnification.