Dictionary of Procurement Terms

The ability of an individual or business to produce a good or service at a lower price than competitors. See also: Absolute Advantage.

Compensation received by a contractor for increased costs as a result of a delay when an entity orders work to be suspended.

People who are mentally and legally capable of entering to contracts that are enforceable by law (i.e., of legal age, of sound mind, not under the influence of drugs or alcohol).

The process or act among suppliers of submitting their best offer with the most favorable terms to be awarded a contract.

Circumstances or factors, such as technology or location, that allow a supplier to offer better goods or services at lower prices or with more favorable terms.

The process of inviting and obtaining bids from competing suppliers, by which an award is made to the lowest responsive bid from a responsible bidder meeting written specifications. The process provides potential bidders with a reasonable opportunity to win a contract.

The existence of many responsible suppliers that can provide the goods and services needed by an entity with no competitive advantage over other suppliers.

A procurement method for obtaining goods, services, and construction in which discussion and negotiation may be conducted with responsible proposers who submit responsive proposals. The process concludes with the award of a contract to the proposer who offers the best value. See also: Competitive Sealed Proposals

The group of responsible proposers chosen for additional discussions and negotiations based on an evaluation of their proposals, which are determined to be responsive and have a reasonable chance of being selected for an award.

A business management strategy that rethinks and restructures an organization's operations to improve effectiveness, efficiency, or customer service.