Procurement, Concession & Disposal Glossary

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ABANDONMENT: Surrendering of the claim to goods (and / or a ship) so damaged during a voyage as to render them worthless to the owners who choose to abandon their rights and interest in these in favour of the underwriter and prefer their claims under the insurance cover. Abandonment is the basis for a claim to be preferred under a policy of marine insurance for "CONSTRUCTION TOTAL LOSS".
See also: Freight Abandonment

ACCEPTABLE QUALITY LEVEL (AQL): System of material inspection based on statistical probability (sampling) theory - checking only a certain percentage of the lot delivered, and accepting the lot if the number of defectives in the sample is less than or equal to the acceptable number.
See also: Inspection Lot-sampling, Quality Assurance, Quality Control

ACCEPTANCE OF BID / OFFER: The assent of the procuring entity to a bid / an offer made by the bidder. A necessary element of a contract is the unqualified "acceptance" by the procuring entity of a bid / an offer made by one bidder. If the procuring entity amends or adds elements of the bid / offer previously received, this leads to a new offer from his side to the bidder to conclude a contract based on revised or changed terms and conditions.
See also: Counter Offer

ACCEPTANCE OF GOODS: The procuring entity is said to have accepted the goods, works or services supplied by the supplier, when he does not reject them, in whole or part, for non-conformance to contract terms and conditions (e.g. quality, delivery schedule, etc.).
See also: Provisional Acceptance, Final Acceptance

ACCEPTANCE OF ORDER: In case the contract is not based on any specific bid / offer made by a bidder this is the confirmation of the recipient and acceptance of the order to supply goods, works or services ordered as stipulated in the order.

ACQUISITION COST: The total sum of the procurement costs in order to obtain a contract.

ACTUAL TOTAL LOSS: In the context of an insurance policy a total loss may occur if: (a) the goods are completely destroyed., (b) the owner is irretrievably deprived of the ownership of goods; (c) goods are transformed to such an extent that they no longer can be said to be the same as those insured; (d) the subject matter of the insurance, a carrier or goods, are declared as missing by an accredited under-writing agency.

ADMINISTRATIVE LEAD TIME: The time interval between the identification of the need to buy and the placing of the contract.
See also: Lead Time

ADMINISTRATIVE REVIEW COMMITTEE: Panel appointed by the Head of the PPU in accordance with the public procurement Law for the purpose of providing administrative review of applications for review filed pursuant to the Law.

ADVANCE PAYMENT: A payment to a supplier in case of a major infrastructure or an industrial project or a longterm arrangement, either to enable the supplier to procure materials for fabrication and to meet his other costs or in token of the sheer ability of the supplier to exert his selling power. In either case such payments would always be as per terms and conditions of contract. Advance payments are to be distinguished from progress payments which are related to contract performance. Normally advance payments are secured by bonds / guarantees for the same amount on behalf of the supplier.
See also: Cash on Delivery, Cash With Order, COD, Payment, Progress Payment

ADVICE OF SHIPMENT: A notice informing the procuring entity that the goods have been shipped. The notice usually gives details of packing.

ADVICE NOTE: A communication sent by the supplier to the procuring entity informing him that the goods are ready for dispatch and await forwarding instructions (in case of ex-works contracts) or shipment instructions (in case of FOB contracts).

AFREIGHTMENT: A contract for the carriage of goods by a carrier. Charter-parties and Bills of Lading are contracts of afreightment by ship.

AGENT: One appointed or authorised, by another, to act on his behalf. The latter is called the "principal". In commercial law, agent is appointed to bring the principal in legal relationship with third parties.

AGGREGATION: Adding together the demand of several buyers for same or similar goods or services in order to increase purchasing power and obtain the most advantageous conditions.
See also: Bulk Buying, Economies of Scale

AGREEMENT: An affirmation of mutual understanding or as consent between two or more parties.
See also: Order, Procurement Contract

ALL-OR-NONE BID: A bid / an offer submitted for a number of different goods or services in which the bidder stipulates that the bid / offer is valid only if the contract is awarded for all items included in his bid / offer.

ANALYSIS OF BIDS / OFFERS: The tabulation and evaluation of bids / offers submitted by bidders and to reduce these to a comparable basis so as to facilitate comparison and enable the procuring entity to select the best bid / offer.
See also: Bid Evaluation, Life-cycle Costing, Tabulation of Bids / Offers

APPROPRIATE TECHNOLOGY: Technology deemed to meet specific requirements of, and operating conditions in, a particular country or location.

ARBITRATION: A method of settling a dispute between the parties involved in a contract by referring it to one or more neutral persons, selected by the parties, for a decision.

ARRIVAL NOTICE: An intimation sent by the carrier to the consignee advising of the arrival of shipment.

ASSESSOR: A person who is appointed or designated to estimate the value of goods for the purpose of apportioning the sum payable in the settlement of an insurance or any other claim.

ASSIGNMENT: Refers to transfer of a right on or a title to goods or know how to another party. For example, title to goods may be transferred by assignment on a Bill of Lading by the original consignee (referred to as the assignor), to another, the assignee.

AVERAGE GENERAL: Partial loss deliberately incurred by a captain of a ship to prevent total loss and apportioned amongst interested parties in proportion to their interest in the saved property. For recognition as General Average, such loss must have been: (a) incurred intentionally; (b) should have been absolutely necessary for the preservation of the ship and some or all cargo; and (c) not as a result of negligence of any one of the interested parties.
See also: Average Particular

AVERAGE PARTICULAR: A partial loss, not deliberately incurred, through damage to ship and / or cargo. Such a loss, unlike a general average loss, is borne by the owner of the ship or of goods or else by the insurance company if insured.
See also: Average General

AWARD: The action taken by the procuring entity, after examining and comparing the bids / offers received, through which it: (i) selects the bid / offer that is determined to be substantially responsive to the bidding documents and is the most advantageous (i.e., the best evaluated bid with respect to the evaluation grid set up); and (ii) officially notifies the bidders of the decision as to the award of the contract. It is the most important stage of the procurement cycle, since it accomplishes its main objective, that is, selection of the bidder which is to carry out the works or services or provision of the goods that were the object of the procurement. In effect, the award completes the contract; the bid / offer made by the bidder is accepted by the procuring entity in making the award.

AWARD AUTHORITY: A person with authority to award a contract or approve a contract modification concerning the procurement of goods, services or works, in accordance with the levels of authority set in the public procurement Law.


BARTER: Trade effected through exchanging one kind of goods for another, without involving money or any financial instrument of exchange.

BASIC AGREEMENT: An agreement between a procuring entity and a supplier setting down some of the contract clauses that shall be applicable to future procurements over a specified period of time (or till such time as either party seeks renegotiations or annulment of the agreement). Particular procurements are covered by the execution of a specific contract which incorporates, besides other relevant and agreed clauses, those already in the basic agreement. In the context of longterm contracting such basic agreements are sometimes referred to as frame contracts. Basic agreements are often used for recurrent provision of material or services for the same or similar purposes in order to secure a more economic procurement procedure.
See also: Blanket Order, Rate Contract

BID: A tender / an offer, proposal or price quotation given by a bidder, in response to an invitation or request for the provision of goods, works or services.
See also: Offer

See also: Securities

BID DEPOSIT: A specified sum of money which a bidder is asked to deposit with the procuring entity as a guarantee that the bidder will, if selected, sign the contract as per his bid / offer. A bidder who fails to sign the contract forfeits the amount of the deposit.

BIDDER: A person who may participate in a procurement proceeding for purposes of submitting a bid.
See also: Candidate

BIDDING: Any formal and competitive procurement procedure through which bids / offers are requested, received, and evaluated for the procurement of goods, works, and services, and as a consequence of which an award is made to the bidder who presented the lowest evaluated bid / offer.

BID EVALUATION: Analysis of all bids / offers received by the procuring entity to appraise and assess the most advantageous and competitive bid / offer.
See also: Analysis of Bids / Offers, Life-cycle Costing, Tabulation of Bids / Offers

BID FORM: A letter signed by the Bidder (seller) confirming that he will maintain his offer prices valid for a described period of time and in case that he is awarded the contract that he will conform to the conditions of the bidding documents. A model Bid Form is usually provided with the bidding documents.

BID OPENING: In procurement through competitive bids / offers the opening and reading of bids / offers, conducted at the time and place specified in the bidding documents, and in the presence of anyone who wishes to attend and is allowed to do so according to the provisions of the Public Procurement Law.

BILL OF ENTRY: A detailed form or statement filled by an importer giving information on the nature and value of goods being imported for submission to the customs authorities before goods are cleared for entry into the country.
See also: Customs Duties, Customs Tariff, Import Duties

BILL OF EXCHANGE: An unconditional order in writing addressed by one person or company to another, signed by the one giving it, requiring the person or company to whom it is addressed to pay, on demand or at a fixed or determinable future time a certain sum in money to order or to bearer.

BILL OF LADING (BOL): A document which is an acknowledgement and a receipt, issued by a master of the ship as agent of the owner, for cargo received on board for shipment. Although not a contract of carriage in itself it serves as evidence of the same. Salient points incorporated in a bill of lading are: (a) the name of the shipper; (b) ship's name: (c) full description of cargo (unless it is bulk cargo) including markings, packing numbers, etc.; and (d) port of embarkation and of destination. A bill of lading is prepared in sets, usually of three originals. One copy is retained by the master of the ship, another by the shipper (forwarding agent) and the third is sent to the consignee enabling him to take bill of lading.
See also: Waybill

BILL OF QUANTITIES: A description and a quantitative estimate of all materials, and / or other supplies which will be required for a proposed construction project or production of equipment (usually custom designed). Contracts are sometimes concluded on the basis of actual costs and an agreed margin when the procuring entity may seek a bill of quantity to estimate the likely cost before concluding the contract and later to make final payments when the project is completed and quantities could be exactly measured or counted when taking over works or goods.

BLANKET ORDER: Sometimes referred to as a "master contract" for reducing the need to enter into fresh contracts for a number of orders. It provides for theprocuring entity to make supplies over a certain period of time and at predetermined prices on the basis of a formula for revising prices.
See also: Basic Agreement, Rate Contract

BLUEPRINT: Detailed design and specifications indicated by a drawing, of the required product.

BONDED WAREHOUSE: Place owned by persons approved by an appropriate government authority and who have given guarantees or bonds for the strict observance of revenue and / or import control laws. Such warehouses are used for the storage and custody of import merchandise, till customs are satisfied that the goods have been imported with the permission of the relevant government authority (e.g. are covered by a proper import licence) and / or the duties are paid or the goods are being reshipped without entry. In many developing countries with strict import regulations in force, security and supervision over movements is provided by government.
See also: Clearance of Goods, In Bond

BRAND NAME: A name or trade mark normally registered by which one producer distinguishes his product from those of similar products by other producers in the same industry. A brand name identifies both the product and the producer of the product.
See also: Brand Name or Equal, Trademark

BRAND NAME OR EQUAL: A requisition by the user which indicates that his need will be met by a particular (named) brand or products of other producers which have the same physical, chemical, metallurgical and / or other characteristics and will be able to satisfy the required need as effectively and efficiently. In bidding documents the same phrase is used to describe the product requirement precisely so that prospective bidders know that their goods have to be similar in all respects to the named brand product. The purchaser can and often does require proof of equivalence. This is done to increase competition so that the producer of the particular brand does not exploit his monopoly position.
See also: Brand Name, Trademark

BREACH OF CONTRACT: A failure of the supplier or the procuring entity without a legally acceptable defensible excuse to carry out his part of the duties and obligations as implied by the terms and conditions of a contract.
See also: Default

BUFFER STOCK: A certain quantity of a material held in stock to meet any unforeseen supply delays or disruptions of scheduled deliveries, increase in prices and / or unexpected up-surge in demand.

BULK BUYING: System of aggregating total requirements (generally of all users) of a product or service for a single purchase order or a series of orders for large quantities which would not have been possible if demand was met on a fragmented basis. Bulk buying may be advantageous for getting favourable terms from bidders as well as in effecting other economies.
See also: Economies of Scale

BUY BACK: A counter-trade arrangement whereby a supplier of plant, equipment and / or technology agrees the goods to be produced with the help of these facilities. It is also referred to as COMPENSATION TRADE

See also: Contracting Authority, Procuring Entity

BUYER'S MARKET: A "buyer's market" is said to exist when supply exceeds demand so that goods can easily be secured and when the procuring entity can exert some pressure on prices and acquire economies in purchase.

BUYER'S OPTION: The right of a procuring entity to modify within a specified period of time any one or more of the terms of contract as agreed in advance (e.g. to increase or decrease the quantity indicated in a purchase contract by a specified percentage). Buyer's option may be open on other terms and conditions in , the contract, if so provided (e.g. port of discharge ) delivery lot size or time, etc.
See also: Change Order, Contract Modification


CANDIDATE: A physical or legal person invited to take part in public procurement or seeking to be so invited.
See also: Bidder

See also: Consist, Manifest

CARRIER: A person or a firm who contracts to carry goods by any method of transport.

CARRIAGE AND INSURANCE PAID TO (CIP): INCOTERM, defines that the supplier has the same obligations as under CPT but with the addition that the supplier has to procure cargo insurance against the procuring entity's risk of loss of or damage to the goods during the carriage. The supplier contracts for insurance and pays the insurance premium. The procuring entity should note that under the CIP term the supplier is only required to obtain insurance on minimum coverage. The CIP term requires the supplier to clear the goods
See also: Incoterms

CARRIAGE PAID TO (CPT): INCOTERM, defines that the supplier pays the freight for the carriage of the goods to the named destination. The risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered to the carrier, is transferred from the supplier to the procuring entity when the goods have been delivered into the custody of the carrier. The CPT term requires the supplier to clear the goods for export.This term may be used for any mode of transport including multimodal transport.
See also: Incoterms

CARTEL: An organisation or group of organisations which colludes to determine the quantities and / or prices of goods or services to be provided by each of its members.

CASH AGAINST DOCUMENTS (CAD): INCOTERMS, means that the documents which will enable a consignee to get delivery of his goods (such as a bill of lading) are handed over to him only when he has paid for the goods. In international trade, when the contract stipulates that payment be made before goods are released, the commercial practice is to send the bill of lading and / or other documents to a bank (located in the consignee's country) with instructions to release the documents only when payment has been made.
See also: Incoterms

CASH DISCOUNT: Reduction, usually expressed as a percentage, of the price of a product, or to the amount of a bill, if payment is made in cash or promptly or within a specified period of time.
See also: Discount, Quantity Discount, List Price, Price Discrimination, Rebate, Trade Discount

CASH ON DELIVERY (COD): The expression stipulates that payment is to be made before delivery of goods. In other words the carrier will not release goods unless there is evidence that payment has been effected or else the payment is made to the carrier at the time of delivery (e.g. to the post office when collecting the consignment).
See also: Advance Payment, Cash With Order, Payment, Progress Payment

CASH WITH ORDER: Refers to a purchase agreement which requires that payment be remitted along with procuring entity order (100% advance payment). Very often the advance payment is secured by a bond.
See also: Advance Payment, Cash on Delivery, Payment, Progress Payment

See also: Cost And Freight

CERTIFICATE OF COMPLIANCE: Supplier's written certification that goods being supplied are in conformity with those specified in the contract.

CERTIFICATE OF CONFORMITY: A document attesting that a product or a service is in conformity with specific standards or technical specifications.

CERTIFICATE OF DAMAGE: A printed document issued by dock companies in regard to goods found to be in a damaged condition on being unloaded from a ship.

CERTIFICATE OF INSPECTION: A testimony on the findings of an authorised inspection agency on the quality of the goods based on the specification laid down in the respective contract document.
See also: Characteristics, Certificate of Quality, Design Specification, Express Warranty, Inspection, Provisioning, Self-certification, Specification, Technical Specification, Terms of Reference

CERTIFICATE OF ORIGIN: A document indicating thecountry of origin of goods being imported. It is usually issued by exporting countries, official authorities or by other agencies (e.g. chambers of commerce) designated by the governments.

CERTIFICATE OF QUALITY: A certificate issued by a supplier to the effect that the goods being supplied conform to the quality specifications agreed to in the contract. The certificate forms part of the invoice and other documents sent by the supplier to the procuring entity.
See also: Characteristics, Certificate of Inspection, Design Specification, Express Warranty, Inspection, Provisioning, Self-certification, Specification, Technical Specification, Terms of Reference

CERTIFICATION BODY: An independent and impartial body, governmental or non-governmental, possessing the necessary competence and reliability to operate a certification system, and in which the interests of all parties concerned with the functioning of the system are represented.
See also: Quality Certification

CHANGE ORDER: A written request by the procuring entity or the supplier indicating changes in his requirements compared to those specified in the contract. May involve renegotiation of the contract except when the contract contains a change clause that provides for options in regard to scope of work, quantity or quality of goods or delivery schedule.
See also: Buyer's Option, Contract Modification

CHARACTERISTICS: A performance quality characteristic of a material or product as to its physical, chemical or metallurgical property or performance index that is measurable or at least observable.
See also: Certificate of Inspection, Certificate of Quality, Design Specification, Express Warranty, Inspection, Provisioning, Self-certification, Specification, Technical Specification, Terms of Reference

CHARTER: Is the mercantile lease of hire of a carrier such as vessel, aircraft, etc., for carriage of cargo on terms and conditions specified in an agreement (called charter-party when an ocean going vessel is involved).

CHARTEREE: One who leases a ship or a part of its cargo space for transporting goods. The charterer may himself be the owner of the goods or he may be an intermediary, a broker between the ship-owner and the owner of the cargo.

CHARTER PARTY: A written contract whereby a shipowner agrees to hire his ship (or aircraft) to a charterer (the hirer) for payment of an agreed sum of money. The charterer may enter into such a contract: (a) either to transport all or a part of his cargo from one and the crew for a definite period, or (c) the ship, without the crew, for a definite period (bare boat charter

See also: Cost Insurance And Freight

See also: Carriage And Insurance Paid To

CIRCULARS: Circulars means circulars or guidelines issued by the PPU under the provisions of article of the Law

COST INSURANCE AND FREIGHT (CIF): INCOTERM, defines that the supplier has the same obligations as under CFR but with the addition that he has to procure marine insurance against the procuring entity risk of loss of or damage to the goods during the carriage. The supplier contracts for insurance and pays the insurance premium. The procuring entity should note that under the CIF term the supplier is only required to obtain insurance on minimum coverage. The CIF term requires the supplier to clear the goods for export. This term can only be used for sea and inland waterway transport. When the ship's rail serves no practical purposes such as in the case of roll-on / roll-off or container traffic, the CIP term is more appropriate to use.
See also: Incoterms

CLASSIFICATION CLAUSE: A clause in a cargo insurance contract which lays down the minimum class of vessel required to carry the insured goods. Use of a vessel below the specified class entails additional premium towards insurance

CLEAN BILL OF LADING: Is that bill of lading which does not carry any remarks as to indicate that goods received were not in apparent good order and endorsement to this effect on the bill of lading.
See also: Bill of Lading, BOL, Waybill

CLEARANCE OF GOODS: The procedures involved in clearing the goods received from abroad through customs.
See also: Bonded Warehouse, In Bond

COERCIVE PRACTICE: defines harming or threatening to harm, directly or indirectly, persons or their property to influence their participation in the procurement process or affect the execution of a contract.

COLLUSIVE PRACTICE: defines a scheme or arrangement between two or more bidders, with or without the knowledge of the Purchaser, designed to establish bid prices at artificial, non-competitive levels.

COLLUSIVE BIDS / OFFERS: Bids / offers by two or more bidders who have joined together to circumvent the intention of the procuring entity to secure competitiveness by submitting bids / offers the terms and conditions of which are decided (and are therefore known to each) jointly even when these are submitted separately.
See also: Competitive Bidding

COMMON-USE ITEMS: Material that is often used by a number of users and fulfils certain standards set up. The term is generally used in the context of government procurement of such items as stationery, vehicles, typewriters, and other office equipment, machines or accessories.

COMMODITY EXCHANGE: Specialised markets in which titles to ownership of commodities are freely traded. Physical exchange of commodities in general does not take place, although samples of these may be examined. Many of the well organised exchanges now provide for both spot as well as futures trading. Bids / offers for these commodities might not show prices but only the percentage of the surplus asked for by the bidders on top of the market price fixed on the day the contract comes into effect.
See also: Futures, Spot Purchase

See also: Buy Back

COMPATIBILITY: The suitability of products or systems to be used together under specified conditions to fulfil the relevant requirements without causing unacceptable interactions.

COMPETITIVE BIDDING: If responsive bids were received by the procuring entity in response to an invitation to bid in cases of open tender (open to everyone) or restricted tender (open to a selected number of bidders) and where there is no evidence that the bidders have had a secret understanding.
See also: Collusive Bids / Offers, Bid, Offer

COMPOSITE PRICE INDEX: Weighted average of the price indexes for major inputs entering into the composition of a finished item of procurement. Sometimes incorporated and made use of in a contract as a basis for price revision.
See also: Price Revision

CONCEALED DAMAGE: Damage which is not apparent at the time of delivery and is discovered only after a package has been opened and the contents examined.

CONCEALED DISCOUNT: A discount not in the form of a straight percentage deduction on list price but in some other form with the same effect on the net price, e.g. 90 days credit (i.e, payment to be made after 90 days of delivery).
See also: Cash Discount, Quantity Discount, Trade Discount

CONFIRMED LETTER OF CREDIT: A letter of credit in which the bank guarantees payment to the beneficiary after all conditions mentioned therein are fulfilled.
See also: Letter of Credit, L/C, List Price, Price Discrimination, Rebate

CONFLICT OF INTEREST: A situation where personal or business interests of a party could affect the outcomes of a business transaction through the non- declaration of that interest. For example bidders should never be involved in the preparation of bidding documents or evaluation of the same tender.

CONSIGNEE: A person or a firm in whose name the goods are shipped by the supplier. The consignee may be the procuring entity of the goods, an agent of the supplier (if the goods are intended to be stocked for eventual sale), etc. The consignee referred to in a bill of lading is, therefore, entitled to take delivery of goods on arrival.
See also: Consignor

CONSIGNOR: The supplier who ships the goods to be delivered to the party named by him on the bill of lading.
See also: Consignee

CONSIGNMENT: Goods shipped to a consignee in terms of a sales contract or for future sale or other purpose (in the latter case the title remaining with the shipper / consignor.)

CONSIST: A complete (itemised) list (one for each wagon) of goods carried by a train; consist is similar to a manifest for goods shipped by a vessel
See also: Manifest

CONSTRUCTION TOTAL LOSS: A claim of a total loss on a marine insurance policy either because: (a) the property has been lost and recovery is unlikely; or (b ) an actual total loss appears to be unavoidable; or (c) expenses involved in preventing an actual total loss would exceed the saved value of the property. To establish a claim for constructive total loss the assured must give a notice of abandonment to the underwriters
See also: Abandonment

CONSULAR INVOICE: An invoice (or a prescribed form) made out by the shipper in the presence of a consular representative of the importer's country and / or to be attested by him giving information as to consignor consignee, value description, etc., of a shipment being imported. The object is to ensure that goods are not banned and also facilitate imposition of import duties.

CONSULTANTS SERVICES: Activities of a professional, intellectual, and advisory nature that do not lead to a measurable physical output. Provision of materials and goods or works shall be an exception to this rule, except when the works are of an informational nature. They include design, supervision, training, auditing software development, expert proposals and advice, and similar technical or professional services material.

CONTAINER: A generic term used to describe any form of pack or receptacle containing goods, liquid or solid. However, in the context of marine transportation of goods it refers to special or specific type of steel receptacle. For facilitating their use universally, the International Organisation for Standardisation (ISO) has laid down their dimensional standards.

CONTENT NOTE: A statement attached to a package, listing the items enclosed in that particular package.

See also: Procurement Contract

CONTRACT, COST-PLUS-A-PERCENTAGE-OF-COST: A contract in which a fee is set at a specified percentage of the suppliers actual cost of accomplishing the work.

CONTRACT, COST-PLUS-A-FIXED-FEE: A contract which provides reimbursement of cost of materials used in fabrication of equipment and / or construction of plant and / or specific costs of services (for example travel costs) on an actual basis plus a fixed (amount) fee for the supplier, the fee bearing no relationship to the cost of materials or services.

CONTRACT, COST-PLUS-INCENTIVE-FEE: A cost reimbursement type of contract for a construction of a turnkey project where the suppliers fee is linked to the actual costs in relation to the estimated or the target cost so that there is an incentive for the supplier for cost reduction.

CONTRACT DOCUMENTS: Is a set of documents that are derived from contract and now convey the meaning of the agreement between the procuring entity and the supplier in such a way as to minimise misunderstanding. They could include: (a) the instrument of the contract - the actual document signed by both parties; (b) general conditions of contract; (c) special conditions of contract; (d) specifications / terms of reference / drawings / bills of quantities / time tables / schedules of rates / terms of delivery / etc.; (e) copies of any relevant meeting minutes or letters which have been exchanged; (f) curricula vitae of staff selected to carry out the activities; and (g) specimen of bonds.

CONTRACT, FIR / FIXED PRICE: A contract that provides for a fixed price not subject to any adjustment on account of cost increases that a supplier may experience in the course of execution of the contract.

CONTRACT, FIXED-PRICE WITH REVISION: Is a variation of a fixed-price type of contract which provides for the upward or downward changes in prices of specified materials and / or of labour costs.

CONTRACTING AUTHORITY: The legal entity requesting and buying goods, works or services through contracts and -in most cases- in return pay for these.
See also: Procuring Entity

CONTRACT MODIFICATION: Any change in the provisionof any one or more of the terms and conditions of a contract, proposed by one party and carried out with the agreement of the other party. Legally a modification in a contract amounts to agreeing to a new contract unless the intended modifications are provided for in the contract, e.g. plus / minus option on quantities, lot sizes, etc.
See also: Buyer's Option, Change Order

CONTRACTOR: A person under contract with a procuring entity to supply, according to the context, goods, works or services.
See also: Prime Contractor, Subcontractor

CONTRACT PERIOD: An arrangement for the supply of goods or services established for a fixed period of time.

PRIME CONTRACTOR: In a large project contract involving supply of materials, machinery, equipment, construction works etc. a procuring entity may prefer to appoint a prime contractor who may sub-contract parts of supplies, or fabrication of machinery to other subcontractors, with overall responsibility of project execution remaining with the prime contractor.
See also: Contractor, Subcontractor

CONTRACT SCHEDULING: Is a systems approach to help monitor contract implementation particularly useful for contracts for large projects where different activities have to be carried out in a sequence within a time frame and where delay in the completion of one segment of project is likely to delay the execution of the whole project.
See also: Expedite, Follow-up

CORRUPT PRACTICE: defines the offering, giving, receiving, or soliciting, directly or indirectly, of anything of value to influence the action of a public official in the procurement process or in contract execution.

COST AND FREIGHT (CFR): INCOTERM, defines that the supplier must pay the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered on board the vessel, is transferred from the supplier to the procuring entity when the goods pass the ship's rail in the port of shipment. The CFR term requires the supplier to clear the goods for export. This term can only be used for sea and inland waterway transport. When the ship's rail serves no practical purpose, such as in the case of roll-on / roll-off or container traffic the CPT term is more appropriate to use.
See also: Incoterms

COST ESTIMATE: A cost estimate prepared by the technical and commercial departments of the procuring entity for goods, works or services which provides a bench mark or a basis for evaluation and / or negotiations when bids / offers are received from bidders. It also serves as an instrument of project planning and budgeting.

COUNTER OFFER: Is the acceptance of a bidder's offer by the procuring entity but with modification in one or more terms and conditions of offer. In legal terms it amounts to a new proposal to the bidder which will be construed as contract only if he accepts the revised proposal of the procuring entity without any qualifications.
See also: Acceptance of Bid / Offer

COUNTER-TRADE: A trade arrangement in which import obligations are generally cleared in goods without the use of monetary and banking instruments of exchange in whole or part of the transaction.

CURRENCY: means the Somali Schilling (SOS)

See also: Clearance of Goods

CUSTOMS DUTIES: Taxes levied upon goods on entry into (import, duties) or exit from (export duties) the country.
See also: Bill of Entry, Customs Tariff, Import Duties

CUSTOMS TARIFF: Schedules or rates of customs duties laid down for different goods imported or exported from the country. Schedules of duties for imports and exports are usually issued separately or as two sections in the same document.
See also: Bill of Entry, Customs Duties, Import Duties


See also: Delivered At Frontier

DELIVERED AT FRONTIER (DAF): INCOTERM, defines that the supplier fulfils his obligation to deliver when the goods have been made available and cleared for export, at the named point and place at the frontier, but before the customs border of the adjoining country. The term frontier may be used for any frontier including that of the country of export. Therefore, it is of vital importance that the frontier in question be defined precisely by always naming the point and place in the term. The term is primarily intended to be used when goods are to be carried by rail or road, but it may be used for any mode of transport.
See also: Incoterms

DANGEROUS / HAZARDOUS GOODS: Any cargo which under normal conditions of transportation can pose toxics, unduly magnetised, biological and radiological, and substances associated therewith.

DECLARED VALUATION: Is the valuation placed on a consignment of goods before being delivered to a carrier.

DEAD STORAGE: Goods stored which are not likely to be used for a long period of time.

See also: Delivered Duty Unpaid

DELIVERED DUTY UNPAID (DDU): INCOTERM, defines that supplier fulfils his obligation to deliver when the goods have been made available at the named place in the country of importation. The supplier has to bear the costs and risks involved in bringing the goods thereto (excluding duties, taxes and other official charges payable upon importation as well as the costs and risks of carrying out customs formalities). The procuring entity has to pay any additional costs and to bear any risks caused by his failure to clear the goods for import in time. If the parties wish the supplier to carry out customs formalities and bear the costs and risks resulting thereof, this has to be made clear by adding words to this effect. If the parties wish to include in the supplier's obligations some of the costs payable upon importation of the goods (such as value added tax (VAT)), this should be made clear by adding words to this effect: Delivered duty unpaid, VAT paid, [name place of destination]. This term may be used irrespective of the mode of transport.
See also: Incoterms

See also: Delivered Duty Paid

DEFAULT: Failure of a supplier or a procuring entity to comply with any one or more of the terms and conditions of a contract.
See also: Breach of Contract

DEFICIENT MATERIAL: Material found to be not conforming to the specifications as to design and quality and, therefore, not fit for the intended use.
See also: Technical Specification

DELIVERED DUTY PAID (DDP): INCOTERM, defines that the supplier fulfils his obligation to deliver when the goods have been made available at the named place in the country of importation. The supplier has to bear the risks and costs, including duties, taxes and other charges of delivering the goods thereto, cleared for importation. Whilst the EXW term represents the minimum obligation for the supplier; DDP represents the maximum obligation. This term should not be used if the supplier is unable directly or indirectly to obtain the import licence. If the parties wish the procuring entity to clear the goods for importation and to pay the duty, the term DDU should be used. If the parties wish to exclude from the supplier's obligations some of the costs payable upon importation of the goods (such as value added tax (VAT)), this should be made clear by adding words to this effect: Delivered duty paid, VAT unpaid [name place of destination]. This term may be used irrespective of the mode of transport.
See also: Incoterms

See also: Delivered Ex Ship

DELIVERED EX SHIP (DES): INCOTERM, defines that the supplier fulfils his obligation to deliver when the goods have been made available to the procuring entity on board the ship uncleared for import at the named port of destination. The supplier has to bear all the costs and risks involved in bringing the goods to the named purchase contract as to delivery schedule and methods of transportation.
See also: Delivery Schedule, Incoterms

DEMURRAGE: Is a penalty imposed by a vessel owner or carrier on a consignee / consignor for delays in loading / unloading of cargo beyond the time specified in the charter-party. Demurrage charges may be also claimed for storage or use of shippers owned containers beyond a specified period.
See also: Detention, Free Time, Lay Days

See also: Delivered Ex Quay

DELIVERED EX QUAY (DEQ): INCOTERM, defines that the supplier fulfils his obligation to deliver when he has made the goods available to the procuring entity on the quay (wharf) at the named port of destination, cleared for importation. The supplier has to bear all risks and costs including duties, taxes and other charges of delivering the goods thereto. This term should not be used if the supplier is unable directly or indirectly to obtain the import licence. If the parties wish the procuring entity to clear the goods for importation and pay the duty the words duty unpaid should be used instead of duty paid. If the parties wish to exclude from the supplier's obligations some of the costs payable upon importation of the goods (such as value added tax (VAT)), this should be made clear by adding words to this effect: Delivered ex quay, VAT unpaid [name port of destination]. This term can only be used for sea or inland waterway transport.
See also: Incoterms

DELIVERY SCHEDULE: The date and / or the rate of delivery of the goods or works or services by the supplier to the procuring entity as incorporated in a contract.
See also: Delivery Terms, Incoterms

DELIVERY TERMS: Conditions as specified in a sale / purchase contract as to delivery schedule and methods of transportation. see also: Delivery schedule, Incoterms

DESIGN SPECIFICATION: Specifications which indicate the essential characteristics which a product to be fabricated and supplied should possess. These have to be as detailed as possible, illustrated with drawings where necessary so as to enable the bidders to know precisely what the procuring entity needs are and what he wants. On the other side they should leave enough room for a competition between the makes of several bidders to secure as much competition (also quality competition) as possible.
See also: Certificate of Inspection, Inspection, Specification, Technical Specification

DESTINATION: The port or place to which goods are shipped for delivery.

DESTINATION INSPECTION: Inspection by the procuring entity or his agents of goods on receipt at destination to assess whether the goods conform to the specifications laid down in the purchase contract.

DETENTION: An owner of a vessel which is delayed beyond the period specified for demurrage in a charterparty can claim unlimited damages for any further delays called detention.
See also: Demurrage

DEVELOPMENT COSTS: Supplier's expenses in development of a design or a prototype to help the procuring entity (contracting authority) decide whether the product conforming to this would meet his intended use. As part of a two-stage tendering procedure, these costs will not be reimbursed by the procuring entity.

DIRECT CONTRACTING: Selection of a supplier without obtaining bids / offers from bidders. Used for small purchase values or in case of extreme urgency.
See also: Single-source Procurement, Direct Procurement

DIRECT PROCUREMENT: A procurement procedure where required goods, services or works are obtained by the procuring entity without any competition through a contract with a supplier, directly selected. International procurement refers to direct contracting for the same procedure.
See also: Single-source Procurement, Direct Contracting

DISCOUNT: Price deduction granted by the supplier to the procuring entity, usually when certain stipulated conditions are met by the procuring entity such as prompt payment, bulk order quantity, etc. Discounts are also granted by a supplier on nominal list prices which may vary from one procuring entity to another because of order size, payment terms, relationship or as an element of marketing strategy of the supplier.
See also: Cash Discount, Quantity Discount, Concealed Discount, List Price, Price Discrimination, Rebate, Trade Discount

DISCREPANCY REPORT: The report indicating that the delivered goods were unsatisfactory for any reason or that the goods (their number, packages, etc.) did not correspond with those indicated in various shipping documents (e.g. the invoice).

See also: Letter of Credit, L/C

DRAFT CONTRACT: A contract specimen filled in and signed by the bidder and submitted to the procuring entity as part of his bid.
See also: Bid, Offer


EARNEST MONEY: A sum of money given by one contracting party to another on entering into the contract, to be forfeited by the giver if he fails to carry out his obligations under the contract.
See also: Performance Security

ECONOMIC ANALYSIS: In purchasing, it refers to economic evaluation of offers, particularly in case of capital equipment of high value, where different bidders may offer different payment and / or financing terms with an impact on the total cost of acquisition. Also refers to evaluation of when and how much to buy taking into account the level of inventories, the likely demand, ordering and holding costs as well as the present and the likely international market situation.

ECONOMIC ORDER QUANTITY (EOQ): That order quantity which gives lowest total variable costs, including both costs of procurement and of stock holding.
See also: Inventory Control

ECONOMIES OF SCALE: A concept that, when procuring goods or services, examines the effect of combining like requirements to increase the scale of procurement thereby providing greater leverage in achieving maximum value for money when getting bids / offers from bidders.
See also: Aggregation, Bulk Buying, Forward Purchasing

ELIGIBILITY: Special requirements set up for bidders. If not met these will not be allowed to bid or their bids / offers already submitted will be rejected. Requirements can be the nationality of the bidder, presentation of a specific business license etc.

EMERGENCY PURCHASE: Procurement necessitated to meet a requirement which could not be anticipated and provided for in advance by the procuring entity; e.g. break-down of equipment and replacement of a part, natural disasters

ENQUIRY: An invitation from a procuring entity to bidders to submit their price quotes and other terms and conditions for supply of a product (or products) as specified.

See also: Goods

See also: Price Revision

EXPEDITE: Action taken, or to be taken, to ensure that the work (of fabrication, construction, etc.) is proceeding according to schedule and that the supplier will be able to deliver the product or complete the project as per delivery or completion date mentioned in the contract. In large-scale projects where activities are interdependent and certain activities have to precede others, delays by one contractor or subcontractor can disrupt the implementation schedule of the project. Expediting in such cases is of special importance.
See also: Contract Scheduling, Follow-up

EXPENDABLE MATERIAL: Items that are consumed in use and that do not ordinarily retain their original features during the period of use (e.g. paper, fertilisers. etc.).
See also: Non Expendable Material

EXPRESSION OF INTEREST: A note received from a bidder, usually in response to a public advertisement invitation to bid or prequalification, for the supply of specific goods, works or services.

EXPRESS WARRANTY: A written affirmation by a supplier to a procuring entity that the goods are of the same quality and the requisite performance standard as in the contract. An express warranty does not exclude implied warranty.
See also: Certificate of Quality, Self-certification, Technical Specification

EX WORKS (EXW): INCOTERM defines that the supplier fulfils his obligation to deliver when he has made the goods available at his premises (i.e. works, factory, warehouse, etc.) to the procuring entity. In particular, he is not responsible for loading the goods on the vehicle provided by the procuring entity or for clearing the goods for export, unless otherwise agreed. The procuring entity bears all costs and risks involved in taking the goods from the supplier's premises to the desired destination. This term thus represents the minimum obligation for the supplier. This term should not be used when the procuring entity cannot carry out directly or indirectly the export formalities. In such circumstances, the FCA term should be used.
See also: Incoterms


FINAL ACCEPTANCE: The procuring entity grants technical acceptance upon expiry of the guarantee period provided the supplier has met all his obligations For items replaced, repaired or modified, the guarantee period shall be prolonged by a period equal to that during which they are unavailable
See also: Acceptance of Goods, Provisional Acceptance

FIRM BID / OFFER: A definite price proposal, as differentiated from an estimated cost bid / offer. It binds the bidder for the validit2y time of his bid / offer.
See also: Bid

FIRST GRADE AWARD AUTHORITY: Is a Minister of other Head of a procuring entity having the award authority indicated in the Public Procurement Law Annex A.

FLOATING POLICY: Is a cargo insurance policy similar to an open cover. It is issued with a sum insured to cover a number of consignments on a running basis. As and when a consignment is made and declared the valuation in the policy is reduced by the value of the goods until the value of the policy is exhausted.
See also: Open Policy

FOLLOW-UP: In procurement, to monitor the implementation of the contract and to take necessary action if warranted.
See also: Contract Scheduling, Expedite

FORCE MAJEURE: An expression which implies circumstances beyond one's control the occurrence, accidents caused by unforeseeable circumstances, natural catastrophes which could not have been prevented or avoided, including government decrees, edicts, strikes, etc., of which can be pleaded as a legal excuse for non-fulfilment of contract. No one can be held liable for damage to or loss of goods due to force majeure.

FORWARDER: A person or a firm engaged in the business of collecting goods, arranging for their transportation from the factory or warehouse for delivery at the port of shipment, arranging for customs clearance and booking freight for shipment to the port of destination as the agent of the supplier or the procuring entity (depending on the terms of contract).

FORWARD PURCHASING: Purchasing of quantities in excess of immediate requirements, a procurement strategy which may be adopted when indications are that the supplies in the international market may become short and / or when prices are expected to rise sharply.
See also: Economies of Scale

See also: Basic Agreement, Blanket Order, Rate Contract

FRANCHISE: A percentage shown in a cargo policy which has to be attained before a partial loss claim becomes admissible for payment. Once the franchise is attained the claim is paid in full.

FRAUDULENT PRACTICE: Defines a misrepresentation or omission of facts in order to influence a procurement process or the execution of a contract.

FREE ALONGSIDE SHIP (FAS): INCOTERM, defines that the supplier fulfils his obligation to deliver when the goods have been placed alongside the vessel on the quay or in lighters at the named port of shipment. This defines that the procuring entity has to bear all costs and risks of loss of or damage to the goods from that moment. The FAS term requires the procuring entity to clear the goods for export. It should not be used when the procuring entity cannot carry out directly or indirectly the export formalities. This term can only be used for sea or inland waterway transport.
See also: Incoterms

FREE CARRIER (FCA): INCOTERM, defines that the supplier fulfils his obligation to deliver when he has handed over the goods, cleared for export, into the charge of the carrier named by the procuring entity at the named place or point. If no precise point is indicated by the procuring entity, the supplier may choose within the place or range stipulated where the carrier shall take the goods into his charge. When, according to commercial practice, the supplier's assistance is required in making the contract with the carrier (such as in rail or air transport) the supplier may act at the procuring entity's risk and expense. This term may be used for any mode of transport, including the supplier to deliver the cargo to a person, e.g. a freight forwarder who is not a carrier, the supplier is deemed to have fulfilled his obligation to deliver the goods when they are in the custody of that person. Transport terminal defines a railway terminal, a freight station, a container terminal or yard, a multi-purpose cargo terminal or any similar receiving point.
See also: Incoterms

FREE TIME: The period allowed loading or unloading transportation equipment before demurrage or storage charges begin to accrue.
See also: Demurrage, Detention, Lay Days

FREIGHT ABANDONMENT: A term in a hull policy (an insurance policy on the ship and not the cargo) whereby the underwriter waives his right to freight earned or to be earned by a ship that is the subject of a total loss claim.
See also: Abandonment

FREIGHT AT DESTINATION: A provision in a contract of afreightment implying that the freight charges will be paid by the consignee upon the arrival of goods at the specified destination.

See also: Forwarder

See also: Free on Board

FREE ON BOARD (FOB): INCOTERM, defines that the supplier fulfils his obligation to deliver when the goods have passed over the ship's rail at the named port of shipment. This defines that the procuring entity has to bear all costs and risks of loss of or damage to the goods from that point. The FOB term requires the supplier to clear the goods for export. This term can only be used for sea or inland waterway transport. When the ship's rail serves no practical purpose, such

FUNGIBLE GOODS: Goods of which any one unit is similar to other units or where the qualities marketed by various producers are treated as equivalent or nearly similar, e.g. grains.

FUTURES: Contracts for the sale and purchase of commodities (or securities, currencies, etc.) for future delivery. In futures trading commodities are not intended to be delivered physically (although this is not ruled out); instead, price differences are settled. Thus, if a supplier had agreed to deliver x tons of copper to the buyer at US$900 per ton after 90 days and the actual price after that period is US$800, the buyer pays to the supplier a difference of US$100 per ton.
See also: Commodity Exchange, Hedging, Spot Purchase


See also: Average General

GOODS: Objects of every kind and description including raw materials, products and equipment, and objects in solid, liquid or gaseous form, and electricity, and encompasses services incidental to the provision of the goods if the value of those incidental services does not exceed that of the goods themselves.

GROSS WEIGHT: Is the weight of a package / article, in aconsignment, including that of its container and other packaging material.
See also: Net Weight, Tare Weight

GUARANTEE: Is a surety by which one person undertakes to be answerable to another for the performance of some act by a third person. Usually guarantees are issued by banks. Guarantee is also used as synonymous for warranty.


HEDGING: Is a purchase made by a procuring entity to protect itself against the effect of price fluctuations over which it has no control and over which it does not to take an equal but opposite position on the futures market to the physical metal's delivery position.
See also: Commodity Exchange, Futures, Spot Purchase


IDENTICAL BID: An offer from a bidder in response to an invitation to bid which is similar in all respects to another submitted by another bidder.

IF UNSOLD: A conditional offer made by a bidder to supply the goods if these are not sold elsewhere between the time of the bid / offer is made and the award of the contract.

IMPORT DUTIES: Taxes imposed by governments on imports of goods from abroad. The duties are levied to (a) raise revenues and / or to (b) provide protection to domestic industry.
See also: Bill of Entry, Customs Duties, Customs Tariff

IMPORT LICENCE: A permit granted, usually by a designated government authority, authorising the holder to import the particular article indicated in the / permit. The permit may also indicate the quantity and or the value limit of import and at times the country or the geographical region / monetary area from which imports may be made.
See also: Licensing

IMPORT RESTRICTIONS: Direct regulation of the quantity or types of goods imported into a country, largely through licences or quotas.

IN BOND: Goods on which import duty has not been paid are held in warehouses supervised by customs officials till such time the duty is paid or goods are reexported, or otherwise dealt with as directed by the authorities.
See also: Bonded Warehouse, Clearance of Goods, Waybill

INCOTERMS: A set of trade terms for which precise definitions have been set down by the International contract, clearly indicate the rights and obligations of the procuring entity and the supplier.

See also: Blanket Order, Basic Agreement, Rate Contract

INDEMNITY: An undertaking which affords protection against loss or damage. Cargo insurance is an indemnity in as much as in the event of loss or damage the insurance company indemnifies (makes good) the loss to the consignees or consignor.

INELIGIBLE BIDDER: A bidder who may have been disqualified to bid / offer for anyone of such reasons as: unsatisfactory past performance, attempts at influencing the awards, or else inability to meet the pre-qualification standards for inclusion in the list of approved bidders (holding the requested business license, nationality, etc.).

INITIATION AUTHORITY: The entity or person with authority to initiate procurement proceedings, in accordance with the levels of authority prescribed inthe Public Procurement Law.

INSPECTION: A survey carried out by a procuring entity or his agent to determine whether the goods or services conform to the specifications respectively the terms of reference laid down in the contract. This inspection may be carried out while goods are in the process of manufacture, before shipment or after shipment as well as throughout the implementation of a project. It includes the process of measuring, examining, testing, gauging or otherwise comparing activities and results with applicable requirements as specified in the contract.
See also: Certificate of Inspection, Design Specification, Provisioning, Specification, Terms of Reference

INSPECTION LOT-SAMPLING: Where the number of items is large and 100% inspection time consuming, inspection is carried out by taking a sample from a lot and accepting or rejecting the lot depending on the number of detectives in the sample being less or greater than the acceptable number. For services a similar activity can be carried out focusing on milestones identified for the particular project.
See also: Acceptable Quality Level, AQL, Quality Control

INSURED VALUE: Is the monetary value of the insured property as shown in the policy plus insurance charges. To cover renewed acquisition and other costs involved with the loss of material often 110% of the value is insured as a standard international practise.

INTELLECTUAL PROPERTY: Property of a non- physical nature capable of being transferred from one party to another.

INTERCHANGE-ABILITY: The suitability of a product(s) to be used in place of another product(s) to fulfil the relevant requirements. The functional aspect of interchange-ability is called functional interchangeability, and the dimensional aspect, dimensional interchange-ability.

INTERNATIONAL COMPETITIVE BIDDING (ICB): A procurement procedure where bidding is open to all local or international legal entities interested to submit a bid.

INVENTORY: A complete list or statement of the stock of all raw materials, parts, components, work-in-progress and / or finished goods in possession of an organisation at a point of time. For stock control purposes, particularly of raw materials, an enumeration of goods received, issues effected and balance at hand is done on a day to day basis or at periodical intervals, as part of efficient inventory and stores management. For balance sheet purposes the usual approach is to take stock of inventories and evaluate them at the end of an accounting year. However, the practice of a perpetual inventory system, indicating day to day changes is now being used more and more for better financial control.
See also: Stock, Warehouse

INVENTORY CARRYING COSTS: Monetary cost of holding stocks. These consist of: (a) interest on blocked capital; (b) cost of handling the material; (c) storage or warehousing costs; (d) premium on insurance (for theft, fire, etc.); (e) deterioration; and (f) obsolescence.

INVENTORY CONTROL: A functional aspect of inventory management, which seeks to ensure that stocks of raw materials, parts and components, are at an optimal level, that is neither too low in relation to expected usage, nor too high as to increase avoidable holding costs.
See also: Economic Order Quantity, EOQ, Order Point Control, Reorder Point Stock


JOINT BID: A bid / offer submitted by a group of companies and / or individuals which have formed a grouping (consortium) to bid for and (if awarded) implement a specific project. One lead company has to represent and act on behalf of all other members of the consortium towards the procuring entity. Nevertheless each member of the consortium remains jointly and severally liable for the fulfilment of the tender respectively the implementation of the contract.

JURISDICTION: The legal power to administer and enforce the law, the exercising of this power, the region within this power is valid or in which a person has authority.

SHELF LIFE: The period of time during which an item, having a limited storage life, is considered to be ready for use.


KNOCKED DOWN (CKD): Articles procured as parts and in unassembled form and referred to as in knocked down condition.


LANDED PRICE: A price including the cost of the goods, transportation, insurance and other cost incidental to delivery to the location specified by the purchaser. It also includes import duty where applicable.

LATE BID: A bid / offer received after the closing time and date indicated in the bidding documents issued. A late bid shall always be returned unopened to the bidder.

LATENT DEFECT: A defect in a product that is normally difficult to notice visually or through ordinary and reasonable inspection and which becomes apparent in the course of its use.

LAY DAYS: The number of days during which a vessel may load or unload without involving demurrage or dispatch. The days may be counted as running days (including weekends and other holidays), as workingdays (excluding Sundays and other holidays), or as weather working days, the days on which weather permits to proceed with loading / unloading.
See also: Free Time, Demurrage, Detention

LEAD TIME: The period of time from date of placing the order with a supplier to the date by which the goods are delivered by him and received by the procuring entity. In inventory management, one has to allow for reasonable lead time (based on experience) so that orders are placed well ahead of requirements, providing for the delivery time as well as the time for haulage of the goods to the procuring entitys warehouse, so as to avoid the possibility of a stock out.
See also: Administrative Lead Time

LETTER OF CREDIT (L/C): An order from a banker (or other person) at one place to his agent abroad (a foreign bank) authorising him to pay a given sum to the person or company named therein. Commercial letters of credit are extensively used as means of overseas payments. This requires the procuring entity to request his banker to open a letter of credit for a specified amount favouring the supplier and negotiable by a supplier's bank in his country. The procuring entity indicates in the application of credit to the opening bank the conditions which should be fulfilled by the supplier (e.g. submission of bill of lading and other documentation) and upon the fulfilment of which only should the negotiating bank release the money.
See also: Confirmed Letter of Credit

LETTER OF INDEMNITY: A letter issued by the supplier to the effect that he will be responsible for losses or damage arising from any faulty packaging.

LETTER OF INTENT: A preliminary quasi- contractual arrangement by letter customarily used in circumstances where the goods, works or services, quantities, price and delivery dates are known, but where principal contract provisions may require additional time-consuming negotiations. A letter of intent is used to enter into interim agreement, pending a definite contract so as to permit the start of services, construction, production, or delivery of supplies or materials.

LIEN: A right by which one person, usually a creditor, has to retain possession (property) of the goods of another until such times as the owner of the goods does not clear the liabilities. A common instance of a lien is the right of a carrier to retain possession of the goods and not deliver these until his charges are paid.

LIFE-CYCLE COSTING: A procurement technique forevaluation of bids / offers that considers, besides acquisition costs (price), other cost elements of maintenance, operating, etc., in evaluating different supply bids / offers to compare and to select the one with the lowest total cost for the entire period over which the product is expected to be in use.
See also: Analysis of Bids / Offers, Tabulation of Bids / Offers, Bid Evaluation

LINER TERMS: Terms of affreightment under which loading and discharging expenses will be to the ship owners account. Liner terms are commonly applied by liner carriers.

LIQUIDATED DAMAGES: Damages that become due to one of the parties to a contract when the other party fails to fulfil his contractual obligations, that is, there is a breach of contract on his part. Liquidated damages are usually specified in the contract itself and need not be related to an actual loss.
See also: Penalty Clause

LICENSING: The word is used in many different contexts. Essentially it means a document giving right to a person or a firm which it would not otherwise have. In business it may mean a legal arrangement transferring the rights to manufacture, or to market, a product or service rights to another. Such an arrangement is usually formalised by a document. There might be a consideration, perhaps in the form of a regular fee, or of a commission or royalty. In many countries, licensing is used as a method of deciding who should sell what.
See also: Import Licence

LIST PRICE: The prices published in a catalogue or any similar publication by a producer (or trader) from time to time. Often list prices are indicative prices on which discounts are offered.
See also: Cash Discount, Concealed Discount, Discount, Price Discrimination, Quantity Discount, Rebate, Trade Discount

LOCATION CLAUSE: A clause in a cargo insurance contract which limits insurance cover for a loss at any place prior to loading on to the vessel. This means that the value of the assured cargo in any one location can be higher than the stated limit and it will continue to be insured for that higher value but if it is damaged by, say a fire in a warehouse, the claim will extend only up to the stated limit.


MANDATORY STANDARD: A standard of which the application has been made mandatory by a regulation.
See also: Standard, Standardisation, Variety Control

MANIFEST: A detailed list of cargo being carried on board by a carrier (e.g. vessel or aircraft), including quantity, identifying marks, consignor and consignee of each item. This is made or signed by the captain of the vessel or aircraft. A copy is handed over to the customs. Copies of the manifest are also sent to the ship's agents at ports of call.
See also: Consist

MARGINAL COSTING: The extra cost of increasing production by one unit. It includes only the variable costs (direct costs) and no element of fixed costs (overheads).

MARKET ANALYSIS: Information required to make an assessment of market conditions such as demand and supply conditions, prices, discounts, etc., to enable a procuring entity to make the right purchase decision. Besides information through formal channels or a survey it also includes information through informal channels such as agents, other buyers, etc.
See also: Sourcing

MARKET LEADER: Brand and / or product with the largest market share. Often refers to the company producing and marketing the brand / product concerned.
See also: Price Leadership

MARKING: Applications of indications on a product or on a package primarily for the purpose of identifying marks, marks of conformity, characteristics of the product, etc. Marking may also be applied to equipment employed in transferring a product to the user; for example, dispensers such as petrol pumps.

MARK OF CONFORMITY: A mark attesting that a product or a service is in conformity with specific standard or technical specifications.

See also: Goods

MATERIAL DEFICIENCY: Any deficiency (such as physical, chemical, electrical or functional) noted in material that is attributed to non-conformance to contract specifications. Substandard workmanship is considered to fall within this definition.
See also: Non-conformance, Technical Specification

MULTIPLE AWARD: The award of separate contracts to two or more bidders for the same product where a single bidder does not offer to supply the entire quantity required or where the procuring entity wants to split a demanded quantity as part of his long-term purchasing strategy.
See also: Multiple Source Buying

MULTIPLE SOURCE BUYING: A purchasing strategy by a procuring entity to diversify sources of supply, reducehis dependence on one or few suppliers and to increase competition.
See also: Multiple Award


NEGOTIABLE INSTRUMENT: A document of title to goods / property which on transfer (affected through delivery with or without endorsement) passes the legal right to goods / property named therein to the transferee.

NEGOTIATION: The term refers to the bargaining process between a procuring entity and a bidder each advancing his arguments in trying to get the best contract terms from his viewpoint. It is allowed only in specific procurement methods.

NET PRICE: Final price after all adjustments have been made for all discounts and rebates.

NET WEIGHT: The weight of the contents of a package / container / wagon net of packaging material and / or tare weight.
See also: Gross Weight, Tare Weight

NETWORK ANALYSIS: Breaking down a complex project into a series of activities, arranging these with precedence ordering, putting against each of the activities the estimated completion time and depicting the sequence on a diagram to facilitate the identification of inter-relationships and critical areas of activity a delay in any one of which is likely to delay the implementation of the project. It is a technique of contract monitoring and administration.

NON-CONFORMANCE: The failure of services and / or material supplied by a supplier to conform to Technical specification or terms of reference and / or specifications as incorporated in the contract.
See also: Material Deficiency

NON-CONSULTANCY SERVICES: means any object of procurement other than goods, works and consultants services.

NON EXPENDABLE MATERIAL: Items that are not consumed in use and that ordinarily retain their original features and characteristics during the period of use (e.g. typewriters, micro-computers, vehicles, etc.).
See also: Expendable Material

NON-RECURRING DEMAND: A request made by a user (department) on a one-time basis for a special purpose or use.
See also: Recurring Demand

NON-RESPONSIVE BID: A bid / offer made by a bidder which does not conform to the essential requirements of the tender.
See also: Responsive Bid


OFFER: An offer defines the terms upon which the supplier is willing to be bound, which normally include price, date of delivery, payment terms and a description of the goods or services to be supplied.
See also: Bid, Offeree, Offeror

OFFEREE: A person (a buyer) to whom a supply offer is made.
See also: Bid, Offer, Offeror

OFFEROR: A supplier who makes a bid or an offer in response to a purchase or an invitation to bid.
See also: Bid, Offer, Offeree

OPEN COVER: Standard arrangement by an exporter with his marine insurer, whereby all his shipments are automatically insured. By agreement, whereas the assured is obliged to inform the insurer of all his shipments the latter insures all those shipments. The arrangement may be cancelled by a notice period as provided for in the policy.

OPEN POLICY: A cargo insurance policy designed to cover all consignments forwarded by the assured subject to a limit in any one vessel and, usually, a time limit during which declarations must attach. Unlike the floating policy it does not have an aggregate limit, but the underwriter can invoke a cancellation clause if he wishes to withdraw cover.
See also: Floating Policy

OPEN TENDER: The procurement method in which any contractor may submit a bid concerning the procurement of his interest, in compliance with the specifications set forth in the bidding documents, to the relevant authority.

ORDER: A will often documented in writing with the expression to buy with instructions, issued to a supplie r for material and / or services to be made available at specified price and time. Orders can be issued without any reference to a tender / offer.
See also: Agreement, Procurement Contract

ORDERING COSTS: Cost of placing an order.

ORDER POINT CONTROL: A method of inventory control which relies on defining a minimum stock level which when reached must trigger off procurement action of re-ordering.
See also: Inventory Control, Reorder Point Stock

ORIGINAL EQUIPMENT MANUFACTURER (OEM): Producer who procures goods and / or services and incorporates these (a component part) into a product, which he is manufacturing for sale without any changes in the goods procured.


PACKING LIST: A statement which lists in detail the contents of a particular package. It is also called PACKING NOTE.

PATENT: A right or an authority granted by a designated government agency to an inventor to have a sole right of making, using or selling his invention for a specified period.
See also: Patent Infringement, Propriety Article

PATENT INFRINGEMENT: Unauthorised use by a manufacturer of a product or process invented by someone else and over which the latter has a patent right. The procuring entity, to protect himself against patent infringement by a supplier, usually has an appropriate clause inserted to this effect in the purchase contract.
See also: Patent

PAYMENT: The contractually agreed equivalent to the goods, works and / or services supplied by the supplier, provided by the procuring entity usually in terms of money. Payment can be done in stages: advance payment, progress payments, final payment; upon evidence (presentation of vouchers) or as a lump sum or on the basis of an agreed rate per unit multiplied with the number of units justified.
See also: Advance Payment, Cash on Delivery, COD, Cash With Order, Progress Payment, Terms of Payment

PENALTY CLAUSE: A clause in a contract specifying the sum to be paid by the defaulting party to the other if the contract is not fulfilled. The sum is usually an estimate of the loss likely to be suffered by the party as a result of default.
See also: Liquidated Damages

PERFORMANCE SECURITY: A guarantee (bank guarantee or bond) executed by a seller / contractor as security towards the performance and fulfilment of the contract within the terms and conditions agreed upon. Such guarantee can be issued as a bank guarantee or bond.
See also: Earnest Money

PERSON: A natural or legal person including companies, firms, and the like.

PRE-QUALIFICATION: The process described in the Final Procurement, Disposal, and Concession Manual Chapter 4, Section 4.3

PRE-AWARD SURVEY: A physical survey undertaken to make an evaluation of a bidder technical, financial and managerial capability to perform the contract (i.e.. ability to supply the goods) before it is awarded, sometimes referred to as vendor survey. For service contracts bidder's references can be asked for or interviews with the key personnel proposed can be held.

PRECLUSIVE SPECIFICATION: Specifications which are so restrictive as to limit or exclude

PHASED DELIVERIES: Scheduling shipments of material or supplies at specific intervals of time as per contract terms. competition.

PREPAID FREIGHT: Means that transportation charges have been or are to be paid at the point of shipment and not at the destination.

PRICE DISCRIMINATION: The system, followed by a bidder, of charging different prices to different markets or classes of procuring entities. May be based on procuring entity-supplier relationship, volume of purchases / orders, also as part of sales strategy or any other factor.
See also: Cash Discount, Concealed Discount, Discount, List Price, Quantity Discount, Trade Discount

PRICE LEADERSHIP: The lead taken by a company in setting a new price level. In a market with few bidders, usually the market leader takes the lead in establishing such a price level.
See also: Market Leader

PRICE REVISION: A provision in a contract for prices of products (usually a piece of equipment to be fabricated) or services to be increased or decreased if the costs of materials to be used (or the wages of labour) increase or decrease during the period of delivery. Generally, the contracts incorporate a formula for such price adjustments. A civil construction contract usually links wage costs of unskilled workers to any changes in a minimum wage laws or union wage settlements.
See also: Composite Price Index

PROCUREMENT: The acquisition by any contractual means, including but not limited to purchase, leasing of goods, works or services, and includes but is not limited to any acquisition on which any public funds are utilized

PROCUREMENT CYCLE: A full procurement cycle involves the following stages: (a) identification of needs (b) tendering; (c) contracting; (d) contract execution and monitoring

PROCURING ENTITY: The entity responsible for applying the provisions of the PPL to procurement within the limits of its authority
See also: Buyer, Contracting Authority, Procurement

PROCUREMENT COMMITTEE: A Committee of Directors and Officials appointed by the entity to carry out procurement proceedings as provided in the Law

PROCUREMENT CONTRACT: The written agreement of the parties will, regarding the procurement, of the agreed goods, works or services, on the basis of which rights and obligations of the parties are determined

PROCUREMENT OFFICE: In accordance with the public procurement Law, the unit, boards, person or persons within each procuring entity designated to manage and implement, on an ongoing basis, the procurement of a procuring entity, and having the monetary award authority indicated in the Law

PROCUREMENT POLICY UNIT (PPU): Is the central policy and monitoring unit established pursuant to the Law

PROCUREMENT PROCEEDING: The procurement activities that follow the decision by the initiation authority as mentioned in the PPL Annex A, to conduct a procurement, including any pre-qualification proceedings, and terminates with the completion of the procurement in accordance with the procurement contract.

PROCUREMENT UNIT: The unit designated to manage and implement all procurements of the relevant procuring entity, and having the monetary award authority indicated in the article 91 of PPL.

PROFORMA INVOICE: An invoice prepared by a bidder in advance of a sale to show the form and amount of the invoice which will be rendered to the procuring entity if the sale takes place. Importers often require proforma invoices to support their request to governmental authorities for import permits and for foreign exchange.

PROGRESS PAYMENT: Periodic payments, in advance of delivery or completion of the full contract. Such payments are usually linked, contractually, to different stages in the manufacturing process of a product (equipment) and civil construction or the services rendered.
See also: Advance Payment, Cash on Delivery, COD, Cash With Order, Payment

See also: Bid, Offer, Quotation

PROPRIETY ARTICLE: An article manufactured and sold by a patentee or by his licensee.
See also: Patent

PROVISIONAL ACCEPTANCE: Constitutes technical acceptance, with or without, minor technical reservations of goods and equipment supplied to, or installed on the procuring entity's site. Acceptance should be confirmed by a Certificate of Provisional Acceptance. The date of the provisional acceptance marks the start of the guarantee period and signifies a transfer of property rights from the supplier to the procuring entity.
See also: Acceptance of Goods, Final Acceptance

PROVISIONING: The process of determining the range and quantity of items (such as spares and repair parts, special tools, test equipment and support equipment) required for the maintenance of equipment for specified period of service. It includes the identification of items and arrangements with the supplier for their supplies when needed and / or stocking of these if there are indications that these may not be easily available when required.
See also: Certificate of Inspection, Design Specification, Inspection, Technical Specification

PUBLIC AUTHORITIES: State, regional and local authorities and bodies governed by public law.
See also: Procuring Entity

PUBLIC ENTITY: Any Ministry, Independent Head of departments, State owned enterprises, other budgetary unit or instrument of the State, or a company in which the share of State ownership exceeds 25 percent.

PUBLIC FUNDS: The moneys or other financial assets defined in Art.8 of the Public Finance and Expenditure Management Law, and includes any monetary resources appropriated to procuring entities through budgetary processes, as well as extra budgetary funds including aid grants and credits put at the disposal of procuring entities by foreign donors, and revenues of procuring entities.

PUBLICITY: Is secured by means of procurement notices on business opportunities as well as invitations to bid within the open tender procedure. Publicity can be secured locally and international by selecting corresponding media.

PUBLIC PROCUREMENT LAW (PPL): The law, its amendments and legislations relevant to public procurement.

See also: Contracting Authority


QUALITY: The term covering any and every characteristics property and / or performance of a product or service that can be evaluated to determine whether the product or service meets the specified requirements.

QUALITY ASSURANCE: A planned and systematic pattern of all actions necessary to provide adequate confidence that the product or services will perform satisfactorily. It may consist of the procuring entity satisfying himself that the system of quality control the supplier has instituted is satisfactory by examining or evaluating it, or the procuring entity or his agent undertaking inspection of the product in the process of production or at the pre-shipment or the post-shipment stage respectively monitors the implementation of the services by verifying results.
See also: Acceptable Quality Level, Quality Control

QUALITY CERTIFICATION: Scheme set up by exportingcountries, by law or practice, for certifying specifications. An importer must determine the independence and prove reliability of inspection and certification institutions operating under such systems, which may be government departments or private sector bodies.
See also: Certification Body

QUALITY DEFICIENCY: A defect or a deficiency as a result of which an item is not fit for the intended use or does not perform as expected. This may include deficiencies in the technical requirements of material, drawing and specification requirements. A quality deficiency may be attributable to a deficiency in design, in material or workmanship.

QUALITY CONTROL: A systematic approach to inspection of products(services) during the process of production (rendering) to ensure that the products (results) meet the expected use or performance standards as well as to identify the source of defects in materials used, workmanship, performance, design or technique of production.
See also: Acceptable Quality Level, Quality Assurance

QUANTITY DISCOUNT: A price reduction granted by a bidder linked to the quantity of a proposed purchase.
See also: Cash Discount, Concealed Discount, Discount, Rebate, Trade Discount

QUOTATION: Another term used for bid or offer for small value purchase.
See also: Bid, Offer


RATE CONTRACT: The system of establishing a price for supplies at that price over a specified period of time. It is also sometimes referred to as a running contract.
See also: Basic Agreement, Blanket Order

RATING OF VENDORS: The evaluation and comparison of bidder's performance principally as regards quality, timely delivery and prices.

REBATE: A sum of money abated by the bidder to a procuring entity in consideration of the purchase of a stipulated quantity or value of goods within a stated period.
See also: Cash Discount, Concealed Discount, Discount, Quantity Discount, Trade Discount

RECURRING DEMAND: Procurement request(s) made by a user (department) on the basis of continuing requirements.
See also: Non-recurring Demand

REGISTRATION OF INTEREST: To register all bidders being interested in the tender or prequalification of a specific project. The register compiled is basis for the preparation of a short list and / or invitations to bid.
See also: Pre-qualification, Restricted Tender, Short List

REJECTION ADVICE: A communication by the procuring entity to the supplier notifying him of the rejection of goods supplied or services rendered for non- conformity to quality or breach of any other contractual commitment.

REORDER POINT STOCK: A pre-specified stock quantity level of an item in a store at which requisition action is initiated to avoid stock out.
See also: Order Point Control

REQUEST FOR PROPOSALS (RFP): The document package utilised for procurement of, consultants services using request-for-proposals proceedings, in accordance with the Law, in which the procedures and conditions for submission and evaluation of proposals, and the contractual terms are described.

REQUEST FOR PROPOSALS PROCEEDINGS: Is the procurement method provided by the Public procurement Law, to be utilised for procurement of consultants and other intellectual services.

REQUEST FOR QUOTATIONS (RFQ): The document used to carry out low-value procurement of standard goods or works or non-consultancy services utilizing request-for-quotations proceedings, in accordance with the Law.

REQUEST FOR QUOTATIONS PROCEEDINGS: Is the simplified procurement method, provided by Law, used to carry out low-value procurement of standard goods or routine works or non-consultancy services.

REQUIREMENT: The maximum overall estimated need of a good or service over a specific period of time for purposes of procurement, budgeting and planning.

RESPONSIVE BID: A bid that offers to provide goods,works or services in accordance with the requirements for the procurement of the same as they are described in the bid document, a request for proposals, or request for quotation.
See also: Non-responsive Bid

RESTRICTED TENDER: The procurement method, provided by the public procurement Law, in which the invitation to bid may be extended to a limited number of bidders.
See also: Pre-qualification

See also: Preclusive Specification

REVIEW BOARD: Refers to the three-person Board appointed by the Chairman of the Administrative Review Committee from among the members of the Administrative Review Committee pursuant to the Provisions of article 72.1 & article 72.2 public procurement Law (as amended January, 2009) for the purposes of considering and deciding upon individual applications for review that are brought before the Administrative Review Committee.

RULES: Means the Afghan rules of procedures for public procurement prepared and issued by PPU in accordance with the provisions of PPL.

See also: Rate Contract


SAMPLE: A sample to be furnished by bidders along with their bids / offers to establish the quality of the products being offered.

SECURITIES: The funds in cash or in kind, immovable property, or bank guarantee or any other such instrument that the bidder provides to secure his obligations in the tender proceedings and that the contractor provides in fulfilling its obligations under procurement contract.

SELF-CERTIFICATION: A form of conformity certification in which one or more manufacturers are responsible for conformity certification of their products with no surveillance from any certification body.
See also: Certificate of Quality, Express Warranty, Technical Specification

SERVICES: Means any object of procurement other than goods or works.

SHORT LIST: A list of names and addresses of potential bidders maintained by a procuring entity to whom invitations to bid may be sent. Usually the elaboration of a short list is the objective of a pre- qualification procedure.
See also: Pre-qualification, Registration of Interest, Restricted Tender

SHORT SALE: The sale of a commodity for future delivery which the supplier does not possess but intends to purchase prior to the required delivery date, expecting that the market price will be no higher or will decline during the intervening period.

SINGLE-SOURCE PROCUREMENT: The method of procurement, provided by the public procurement Law, by which the procuring entity awards the procurement contract directly, without holding a competitive proceeding as provided for in the PPL.
See also: Direct Contracting, Direct Procurement

SOLICITATION DOCUMENTS: Means bidding documents, requests for proposals documents, requests for quotations documents and any other document on the basis of which bidders prepare and submit a bid for the supply of goods, works or services.

SOURCING: Act of searching for suitable sources of supply.
See also: Market Analysis

SPECIAL PROCUREMENT COMMISSION (SPC): The Committee established in compliance with the provisions of article 90 of the public procurement Law to conclude major [high-value] procurement contract awards.

SPECIFICATION: A statement of a set of requirements to be satisfied by a product, material or process, indicating, whenever appropriate, the procedures by means of which it may be determined whether the requirements given are satisfied. It will generally include physical, chemical and / or metallurgical properties of a product and / or its design characteristics and / or performance standards. It may also include terminology, testing and test methods, packaging, marking and / or labelling requirements.
See also: Technical Specification

SPOT PURCHASE: Act of purchasing in the spot market (that is at prices ruling on the purchase date) for prompt delivery in contrast to forward purchase made now for future delivery at futures prices.
See also: Commodity Exchange, Futures

STANDARD: Is the result of a particular standardisation effort, approved by a recognised authority. It may take the form of (a) a document containing a set of conditions to be fulfilled; (b) a fundamental unity; or (c) an object for physical comparison.
See also: Mandatory Standard, Standardisation, Variety Control

STANDARDISATION: The process of defining and selecting through an agreement characteristics of products, testing and measuring methods, specification of characteristics of products for defining their quality, regulation of variety, interchange-ability, etc.. Many countries have set-up national standard organisations setting out for a large number of products, the essential requirements which a product should measure up to. The International Organisation for Standardisation (ISO) has been laying down standards for acceptance and adoption of these by member countries. In a tender invitation or enquiry a reference to a national standard or an international standard (or that of any other country) is usually sufficient for suppliers to know precisely what the procuring entity's requirements are. Standardisation is also used in the sense of variety control, i.e., reducing the number of types of products within a definite range to that number which is adequate to meet prevailing needs at a given time.
See also: Mandatory Standard, Standard, Variety Control

See also: Blanket Order

STOCK: The quantity of all raw materials, components, parts, work in progress and finished goods held in store by an enterprise or a government agency.
See also: Inventory, Warehouse

STOWAGE: Charges connected with stowing of goods ina ship.

STRAIGHT BILL OF LADING: A non-negotiable bill of lading which provides that a shipment be delivered direct to the consignee named therein. The delivery of goods is not contingent on surrendering the bill of lading but only on its being produced by the consignee as means of identification.
See also: Bill of Lading, Clean Bill of Lading

SUBCONTRACTOR: A person or a firm who enters into an agreement with a prime (main) contractor and undertakes to perform a part of the prime contractor's obligations with reference to the main contract. In construction and turnkey projects the practice of the procuring entity awarding a contract for the complete job to one (prime) contractor and the latter subcontracting parts to different subcontractors is usual practice. If some of these are defined by the procuring entity, these subcontractors are called nominated subcontractors and the risk of their failure to perform the requested services rests with the supplier.
See also: Prime Contractor

See also: Contractor

SURPLUS STOCK: Material assessed to be in excess of the procurement agency's own requirements and set aside for disposal.


TABULATION OF BIDS / OFFERS: The recording of bids / offers in tabular form to facilitate evaluation.
See also: Analysis of Bids / Offers, Bid Evaluation, Life-cycle Costing

TALLY: A listing of items in a shipment by quantity and description.

TARE WEIGHT: The weight of a container (and other packaging material), vehicle or wagon in which goods are packed or stowed. The net weight of goods is gross weight less tare. Actual tare is determined when each cask / bag / box / wagon, etc., is weighed; average tare when one is weighed and used as a standard; and estimated tare when a fixed percentage is deducedfrom the gross weight.
See also: Net Weight, Gross Weight

TECHNICAL SPECIFICATION: Part of purchase specifications on design, quality and / or performance excluding those on packaging, labelling marking, etc.
See also: Certificate of Inspection, Design Specification, Inspection, Provisioning, Specification, Terms of Reference

See also: Bid, Offer

TENDERER: A legal entity approached by the procuring entity to submit a bid / offer for a specific project.
See also: Bidder, Candidate

See also: Bid Evaluation

See also: Bid Opening

TERMS OF CONTRACT: Stipulations, explicit or implicit, in a contract setting out the obligations and the rights of the contractual parties, as well as other conditions of contract.

TERMS OF REFERENCE (TOR): Scope of work for a service contract equivalent to the specification of goods in a contract for the purchase of goods.
See also: Specification, Technical Specification

TERMS OF PAYMENT: Conditions for payment for goods or services received, as agreed between procuring entity and supplier, such as: Cash against Documents (CAD); Cash on Delivery (COD); Letter of Credit, etc.
See also: Payment

TESTING: A phase of inspection involving the determination, by technical means, of the physical, chemical and / or other properties of items, or compounds thereof, requiring laboratory or other Similar tests.

TOKEN BID: A perfunctory bid / offer submitted by a bidder with no serious intent of being awarded with the contract; often submitted when the bidder wishes only to continue to be kept on the procuring entity's eligibility list, or as a part of a collusive deal with other bidders.

TOLERANCE: The specified permissible variation of the specified value of quantity according to needs.

TRADE DISCOUNT: A percentage deduction from an established price for goods (percentage often varying in accordance with volume of transaction), made by the supplier to others in the distribution chain (stockists, wholesalers, retailers, etc.).
See also: Cash Discount, Concealed Discount, Discount, List Price, Price Discrimination, Quantity Discount, Rebate

TRADEMARK: Any sign, symbol, mark, word, or arrangement of words in the form of a label used by a manufacturer or supplier as identification or symbol of his particular goods, which no other person can legally use without his consent.
See also: Brand Name, Brand Name or Equal

TURNKEY CONTRACT: A contract for plant fabrication, its installation and / or commissioning and / or the associated civil construction.

TURNOVER: In supply management, is the quantity and / or value of stock issued in a given period, usually one year.

TWO-ENVELOPE SYSTEM: The two-envelope system is a tendering option for the selection of the most advantageous bidder. The bidders are ordered to submit their bids / offers in two separate envelopes, both of them sealed and clearly marked. The first envelope contains the technical proposal, the second one the financial proposal.

TWO-STAGE TENDERING: Is the variant of tendering proceedings in which, in accordance with the public procurement Law, the procuring entity holds consultations with bidders in the first stage on the basis of preliminary bidding documents with a view to considering various possible technical and contractual solutions to its procurement need; thereafter, in the second stage, a tendering proceeding is held on the basis of revised bidding documents.


UNITIZATION: The process by which optimum unit loads are planned and analysed.
See also: Unit Load

UNIT LOAD: The optimum quantity of any item or commodity which may be unitized for storage, handling and transportation on a pallet or container of a given type and size.
See also: Unitization


VALUE ANALYSIS: Is a systematic examination and analysis of the cost of each component or constituent part of a product (including raw materials used, finish, packaging, etc.) which can be eliminated without impairing its capacity to satisfy the intended need or use.

VALUED POLICY: An insurance policy which in the event of total loss, pays out the sum insured irrespective of the value of the policy.

VARIETY CONTROL: The selection of the optimum number of sizes, other characteristics or types of a product, required to meet prevailing needs.
See also: Mandatory Standard, Standard, Standardisation

VISUAL INSPECTION: A term generally used to indicate inspection performed without the help of measuring and testing instruments or a laboratory.

VOYAGE CHARTER: A charter-party involving the lease of a ship (with crew) for carriage of a named cargo between specified ports. A variation of this is a consecutive voyage chartering. It involves the performance of the same or different voyages, one after the other, without interruption within one contract of affreightment.


WAREHOUSE: A place of storage for merchandise and commodities. In addition to the service of storage, some warehouses particularly in the vicinity of a port area perform the functions of freight forwarding and / or of distribution agents.
See also: Inventory, Stock

WARRANTY: Used in different contexts as an undertaking, either expressed or implied, by one part to a contract to another. (a) In the context of marine insurance an implied warranty is that the vessel is seaworthy and fit for voyage. A breach of warranty is sufficient for the insurer to avoid payment on damage to, or loss of, the ship. (b) In the context of supply contracts, it is an assurance by the supplier on the workmanship, quality and serviceability of the item (equipment) for a particular period of use / time. In case of defect the item may be repaired or completely replaced, free of charge, by the manufacturer. (c) More generally, an express or implied statement of fact amounting to an assurance of something in a contract. If the obligation is not carried out the contract may not be invalidated but damages can generally be claimed.

WAYBILL: A carrier's document listing goods being carried, showing the point of origin, destination, consignor, consignee and transportation charges.
See also: Bill of Lading, Clean Bill of Lading

See also: Gross Weight, Net Weight, Tare Weight

WITHOUT ENGAGEMENT: A phrase incorporated by a bidder in his quotation indicative of no commitment to accept a contract at the price quoted; a safeguard against prices rising between the time of giving the bid / offer and the contract being placed.

WORKS: All work associated with the construction, reconstruction, demolition, repair or renovation of a building, structure or works, such as site preparation, excavation, erection, building, installation of equipment or materials, decoration and finishing, as well as services incidental to construction such as drilling, mapping, satellite photography, seismic investigations and similar services provided pursuant to the procurement contract, if the value of those services does not exceed that of the construction itself


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