Vendor Management Glossary
Bidding: “An offer (often competitive) to set a price by an individual or business for a product or service or a demand that something be done. Bidding is used to determine the cost or value of something.”
Ex: The contractor bid $10,000 less than his nearest competitor.
Bulk Purchasing: “To purchase in volume with the expectation of reducing the unit price of an item. To aggregate quantities of material in hope of achieving deeper discounts and better pricing.”
Ex: We will be using bulk purchasing in hopes of obtaining those items at a lower price.
Certificate of Compliance: “A document submitted by a supplier or manufacturer that provides the buyer with a written affidavit that the goods or services delivered fulfill the contractual requirements.”
Ex: The Certificate of Compliance was signed upon delivery of all items ordered.
Collusive Bidding: “A secret agreement among suppliers to control prices when submitting bids in an attempt to win contracts by illegal means or methods.”
Ex: The use of collusive bidding by the contractors jeopardized the City’s ability to continue with the development project.
Competitive Bidding: “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 that contract.”
Ex: The competitive bidding process has begun and Company X expects to pick the most reasonable contractor by the end of the month.
Competitive Sealed Bidding: “Method for acquiring goods, services, and construction for public use in which award is made to the lowest responsive bid and responsible bidder, based solely on the response to the criteria set forth in the Invitation for Bids (IFB); does not include discussions or negotiations with bidders.”
Ex: During the competitive sealed bidding process, Company X will prepare an invitation for bids and then publicize the invitation to prospective bidders.
Compliance Audit: “An audit conducted to determine the degree of adherence to established laws, regulations, policies, and procedures relative to accounting, financial, and business processes.”
Ex: Unfortunately, the compliance audit demonstrated a low rate of compliance with the new law.
Environmental Compliance: “Procurement decisions that impact the environment such as energy consumption, recycled products, and waste disposal. Governmental buying decisions should also incorporate environmental and societal costs and benefits not contained in the purchase price of a product or service, such as the pollution produced or avoided when using a particular product or service.”
Ex: Company X has ensured us that their services maintain environmental compliance with the regulations put in place by the City.
Environmentally Preferable Purchasing: “An attempt to address environmental challenges by taking advantage of government’s vast purchasing power to create strong markets for environmentally-friendly products and services. Purchasing goods and services in a way that does not harm the environment. Also known as green purchasing.”
Ex: The City intends to use environmentally preferable purchasing in order to avoid further environmental damage to the lake.
Formal Bid: “A bid that must be submitted in a sealed envelope and in conformance with a prescribed format to be opened in public at a specified date and time.”
Ex: The City of Albuquerque has requested formal bids to resurface the parking lot at the fairgrounds. Bids must be received by February 15 and will be opened for review on March 1.
Forward Purchasing: “The purchasing of supplies and materials in quantities exceeding the immediate needs, often in anticipation of a price increase, strike threat, or future supply disruption.”
Ex: Because we expect Product X to go up in price, we’ve allotted extra cash to make some forward purchases.
Group Purchasing Organization (GPO): “An organization created by groups of purchasers in related areas of endeavor who come together and form a purchasing consortium to achieve aggregated volume, thus achieving economies of scale. Hospitals, universities, school districts, and airports are examples of GPO groups.”
Ex: The City’s schools have created a GPO in an effort to receive better prices on computer purchases.
In-House Bidding: “The practice of allowing public agencies to compete against private providers of services. When a decision is made to contract out a service, the public service provider submits an offer/proposal to perform the services just as a private provider would.”
Ex: The in-house bidding process has begun and we expect to have proposals from both private and public entities by the end of the month.
Joint Administrative Purchasing: “An arrangement under which part or all of the purchases of two or more governmental units are made by a joint purchasing office. Also referred to as consolidated purchasing.”
Ex: The joint administrative purchasing office will be contacting us in a week to place an order for both the City and the County offices.
Multi-Step Bidding: “A method of source selection involving two competitive steps, combining the elements of both Invitation for Bids and Request for Proposals. The first step may require the submission of technical and price proposals with only the technical proposals being evaluated and scored. The second step involves the opening of price proposals of those firms who have achieved the highest technical scores.”
Ex: During the multi-step bidding process we will first review the technical proposals and then request pricing from the competing vendors.
Procurement Methods: “Methods by which goods, services, or material may be acquired by public purchasers. The methods may include blanket orders, emergency purchases, standing offers, purchase orders, transfers, competitive bidding, competitive negotiation, intergovernmental cooperative agreements, small purchase contracts, purchases via a credit card, etc.”
Ex: The procurement methods in place are varied and allow purchasers flexibility in their purchasing means.
Request for proposal (RFP): “A document that solicits proposal, often made through a bidding process, by an agency or company interested in procurement of a commodity, service, or valuable asset, to potential suppliers to submit business proposals. It is submitted early in the procurement cycle, either at the preliminary study, or procurement stage.”
Ex: Company X has sent out a RFP and expects to have offers to examine by the end of the month.
Supplier: “A person or entity that provides goods and/or services.”
Ex: Part of the ongoing debate was over which supplier should provide all the necessary items for this development project.
Vendor: “A person or entity that provides goods and/or services, usually for low-cost, low-risk, and short-term engagements.”
Ex: While hiring our vendors, we turned to many of the wedding industry’s best.
