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    Government Contracting Database

    Glossary of Procurement Terms

    Glossary of Procurement Terms

    Abstract Of Bids – a list of the bidders for a sealed bid procurement indicating the significant portions of their bids.

    Acceleration – ordered or voluntarily expedited performance necessary for recapturing project delay.

    Acceptance – compliance by an offeree with the terms and conditions of an offer.

    Accord & Satisfaction – an agreement between parties to a contract whereby one accepts payment in the compromise of a dispute, claim or change proposal (see Settlement).

    Act Of God – an act, event or happening resulting from natural causes without interference or aid from man.

    Administrative Remedy – non – judicial remedy provided by an agency, board, commission or the like.

    Agency Law – rules, regulations and procedures promulgated by an agency.

    Agent – relation in which one person acts for or represents another.

    Allocable Cost – a cost which is assignable to a particular contract or other cost objective.

    Allowable Cost – any reasonable cost which, according to the FAR, may be recovered under the contract to which it is allocable.

    Appeal Notice – a notice to a Board of Contract Appeals that a Contracting Officer’s final decision or failure to issue a decision will be appealed.

    Arbitration – reference of a dispute to an impartial, third person(s) chosen by the parties to the dispute who agree in advance to abide by the arbitrator’s decision after a hearing at which both parties have an opportunity to be heard.

    Audit – the examination of records, documents and other evidence for the purpose of determining the propriety of transactions and assessing the contractor’s compliance with relevant cost and accounting requirements.

    Bid Bond – a surety bond which protects the government in the event the winning bidder fails to execute the contract documents and proceed with performance.

    Bidders Mailing List – a list of contractors to whom the government sends invitations for bids for particular procurements.

    Bid Guarantee – an instrument, including a bid bond, which protects the government in the event the winning bidder fails to execute the contract documents and proceed with performance.

    Bid Protest – a challenge by a disappointed bidder usually submitted to the Contracting Officer or the GAO, against the award of a government contract.

    Bilateral Contract – a contract in which both contracting parties are bound to fulfill obligations reciprocally towards each other.

    Brand Name Or Equal – type of product description which identifies one or more commercial products by brand name and which sets forth those characteristics of the named product essential to the government’s needs.

    Breach Of Contract – failure, without legal cause, to perform any promise under a contract.

    Buy – In – a bidder’s attempt to win a contract by submitting a price which will result in a loss, with the hope of making the contract profitable through change orders or follow – on contracts.

    Cardinal Change – contract change which alters the ba sic nature of the work the parties bargained for when the contract was awarded, and thereby constitutes a breach of contract by the government.

    Change – any action that causes a revision, or addition to the contractor’s original contract requirements.

    Change Order – a written order pursuant to the Changes Clause of the contract directing the contractor to make changes to the contract work.

    Claim – a contractor’s request for additional compensation or an extension of time pursuant to the contract terms.

    Compensatory Damages – an award which compensates a party for actual injuries or damages sustained.

    Constructive Acceleration – a requirement that a contractor completes his work earlier than the contract time, including time extensions to which he is entitled because of excusable delays.

    Constructive Change – a change to a contract resulting from conduct by the government which has the effect of requiring the contractor to perform work different from that presented in the contract.

    Contract – an agreement between two parties to perform work or provide goods, including an agreement or order for the procurement of supplies or services.

    Contract Change – a change to the contract requirements within the general scope of the contract.

    Contract Modification – any unilateral or bilateral written alteration of the contract in accordance with the governing regulations and contract clauses.

    Contract Type – specific pricing arrangements are employed for the performance of work under contracts. These arrangements include firm fixed – price, fixed – price – incentive, cost – plus – fixed – fee, cost – plus – incentive – fee, and several others.

    Contracting Officer – representative of a government procuring agency with authority to bind the government in contract matters.

    Contracting Officer’s Decision – Contracting Officer’s final ruling regarding a properly submitted claim.

    Cost – Reimbursement Contract – type of contract in which the pricing arrangement involves the payment of allowable costs incurred by the contractor during performance.

    Debarment – the formal sanction by the government prohibiting a contractor from receiving contracts as a result of certain prescribed actions including crimes, fraud, etc.

    Deductive Change – a change resulting in a reduction in contract price.

    Default – an omission or failure to perform a contractual duty.

    Delay – an extension to the planned contract completion date or to elements of project operations caused by action or inaction by either the owner or the contractor.

    Design Specification – type of specification which prescribes the materials and methods to be used for contract performance.

    Differing Site Conditions – unanticipated physical conditions at the site which differ materially from those set forth in the contract or ordinarily encountered in work of the nature provided.

    Discovery – pretrial procedure providing for the full disclosure of all facts and documents related to a contract dispute.

    Dispute Procedure – the administrative procedure for processing a dispute arising under the contract. This procedure is provided by the Contract Disputes Act for contracts with the United States government.

    Disruption – disruption results from actions or inactions which interfere with performance efficiency causing additional effort required in performance of the contract work.

    Equitable Adjustment – an adjustment to the contract price or time resulting from a change, differing site condition or the like, which compensates the contractor for reasonable costs, plus overhead and profit.

    Excess Reprocurement Costs – additional costs which the government incurs following a default termination to reprocure the defaulted quantity of supplies, services, or unfinished work.

    Excusable Delay – delay to contract performance which is beyond control, fault, or negligence of the contractor and will prevent a termination for default.

    Extended Overhead – overhead costs associated with compensable delay periods when full production was not achievable.

    Fixed – Price Contract – type of contract in which contractor agrees to perform for an established price, agreed in advance.

    Flow – Downs – clauses from a prime contractor’s contract with the government that are incorporated into the prime’s subcontracts.

    GAO – T he U. S. Government Accountability Office which, under the direction of the Comptroller General of the United States, has jurisdiction over bid protests. The GAO is an arm of the Congress.

    Implied Contract – contract not created by explicit agreement between the parties, but inferred by law from their acts or conduct.

    Industry Specification – type of specification prepared by technical or industry associations that is approved for use by federal agencies. Interest Expense – a contractor’s cost of borrowing funds or use of equity capital.

    Invitation For Bids – information forwarded to potential bidders requesting bids for a sealed bid procurement. Jurisdiction – the authority of a judicial or administrative forum to hear and resolve disputes.

    Liquidated Damages – a specific sum of money which has been expressly stipulated by the parties to a contract as the amount of damages to be recovered in the event of a breach.

    Litigation – a lawsuit or other adversary proceeding, to resolve disputes by conducting a hearing and presenting arguments to a judge for a decision on the merits.

    Meeting Of The Minds – mutual agreement to the terms and conditions of a contract. Mitigation Of Damages – duty to minimize damages following a breach of contract.

    Negotiated Procurement – procedure for contracting whereby the government and potential contractors negotiate on both price and technical requirements after submission of proposals. Award is made to the contractor whose final proposal is most advantageous to the government.

    Notice To Proceed – a written order by the government to the contractor to proceed with the contract work.

    Offer – a manifestation of willingness to enter into a contract.

    Payment Bond – a bond which secures a contractor’s obligation to pay its laborers and materialmen.

    Performance Bond – a bond which secures a contractor’s obligation to properly complete the contract work.

    Performance Specification – type of specification which sets forth an end result, leaving method of performance to the contractor.

    Privity Of Contract – occurs when a party has a direct contractual relationship with another party.

    Progress Payment – periodic contract payments made as work progresses.

    Proposal – a submission by the contractor used as a basis for awarding a contract or pricing a contract modification.

    Reasonable Cost – a cost which would be incurred by an ordinarily prudent person in the conduct of competitive business.

    Request For Proposals (RFP) – material provided to potential contractors to communicate government requirements and solicit proposals.

    Responsibility – a bidder’s ability to properly perform the contract work.

    Responsiveness – the bid’s conformance with the solicitation’s salient requirements (price, quantity, quality, performance time).

    Sealed Bidding – a basic method of procurement which involves the solicitation of bids and the award of a contract to the responsible bidder submitting the lowest responsive bid.

    Settlement – an agreement by which the parties consent to settling a dispute between them.

    Specification – a detailed description of the contract performance requirements.

    Statute Of Limitations – time limit established by statute within which one may file a notice of appeal, or bring a lawsuit.

    Substantial Performance – performance which deviates only in minor respects from the contract’s requirements, thereby precluding a termination for default.

    Supplemental Agreement – a change to an existing contract which is accomplished by the mutual action of the parties.

    Suspension Of Work – situation where the contractor must stop performance of the contract work due to the action or inaction of the government.

    Termination For Convenience – unilateral right of the government to terminate contracts at will.

    Termination For Default – sanction which the government may impose for a contractor’s unexcused failure to perform.

    Two – Step Sealed Bidding – procurement method whereby contractors submit technical proposals in response to government performance specifications. Each contractor whose technical proposal is acceptable then submits a sealed bid in accordance with normal bidding procedures.

    Unilateral Modification – a change in the contract requirements unilaterally directed by the government.

    Updated: June 27, 2017

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