Dictionary of Procurement Terms

An inventory control system in which identical stock is stored in two separate bins, with the stock in the second bin equal to that calculated for the order point. Withdrawals are made from the first bin and a requisition to replenish the supply is generated when that bin is emptied.

A procurement conducted in two stages, usually a first phase to evaluate technical proposals, and a second phase to evaluate price.

A supplier-imposed restraint in which the purchaser is forced to buy an unwanted item to acquire the desired one. See also: Sherman Antitrust Act.

An action that is beyond the powers granted by authority or by law.

Expense incurred by the contractor that does not meet the authorized criteria under the contract terms.

A bid that contains pricing aberrations. This may happen in time and material contracts or in construction contracts in which upfront payment may be made for mobilization. Unbalanced bids may be deemed to be non-responsive and may be both mathematically and materially unbalanced. Many public entities use a bid analysis procedure to help identify unbalanced bids. (Martin and Miller 2006) See also: Front-End Loading.

Dividing a service into smaller portions to encourage competition. Frequently done on the basis of geography. For example, a large service area, such as a city or county, is divided into smaller geographical regions.