Glossary of Common Procurement Terms


ACCEPTANCE The act of accepting by an authorized representative; an indication of a willingness to pay; the assumption of a legal obligation by a party to the terms and conditions of a contract.

ACQUISITION The act of acquiring goods and services (including construction) for the use of a governmental activity through purchase, rent, or lease. Includes the establishment of needs, description of requirements, selection of procurement method, selection of sources, solicitation of procurement, solicitation for offers, award of contract, financing, contraction administration, and related functions.

ADDENDUM An addition or supplement to a document; e.g., items or information added to a procurement document.

ADVERTISE To make a public announcement of the intention to purchase goods, services or construction with the intention of increasing the response and enlarging the competition. The announcement must conform to the legal requirements imposed by established laws, rules, policies and procedures to inform the public.

AGREEMENT A duly executed and legally binding contract; the act of agreeing.

ALP Authority for Local Purchase: granted by the commissioner of Administration to an individual who has successfully completed all requirements established by the Materials Management Division.

ALTERNATE RESPONSE A substitute response; an intentional substantive variation to a basic provision or clause of a solicitation by a vendor.

AMENDMENT/CHANGE ORDER A written modification to a contract or purchase order or other agreements.

APPROPRIATION Sum of money from public funds set aside for a specific purpose.

ARO After Receipt of Order.


BEST VALUE A result intended in the acquisition of all goods and services. Price must be one of the evaluation criteria when acquiring goods and services. Other evaluation criteria may include, but are not limited to environmental considerations, quality, and vendor performance.

BILL OF LADING A written receipt or contract, given by a carrier, showing a list of goods delivered to it for transportation. The straight bill of lading is a contract which provides for direct shipment to a consignee. The order bill of lading is negotiable; it enables a shipper to collect for a shipment before it reaches its destination (this is done by sending the original bill of lading with a draft drawn on the consignee through a bank). When the consignee receives the lading indicating that payment has been made, the lading will be surrendered to the carrier’s agent, and the carrier will then ship the goods to the consignee, and the bill of lading will be surrendered to the carrier. Note: Shippers frequently consign shipments to themselves on order bills of lading so that delivery is made only upon the shipper’s order; the person or firm to be notified upon arrival of the shipment at destination must be designated.

BLANKET ORDER A contract under which a vendor agrees to provide goods or services on a purchase-on-demand basis. The contract generally establishes prices, terms, conditions and the period covered (no quantities are specified); shipments are to be made as required by the purchaser.

“BRAND NAME OR EQUAL” SPECIFICATION A specification that uses one or more manufacturers brand names or catalog numbers to describe the standards of quality, performance and other characteristics needed to meet the requirements of a solicitation and provide for the submission of equivalent products.

BROKER A business that carries no inventory and that has no written ongoing agreement with any manufacturer or manufacturer’s authorized distributor to sell the products of the manufacturer.

BUSINESS A contractor, subcontractor, supplier, consultant, or provider of technical, administrative, or physical services organized as a sole proprietorship, partnership, association, corporation, or other entity formed for the purpose of doing business for profit.


COMMODITY A transportable article of trade or commerce that can be bartered or sold.

COMMODITY/SERVICE CONTRACT Previously referred to as “M-contracts.” Since the inception of MAPS, the contract number is a six-digit number assigned by the computer system. An “M” number is no longer assigned for these types of contracts.

COMPREHENSIVE PROCUREMENT GUIDELINES (CPG) Designates items that must contain recycled content when purchased by federal, state, and local agencies, or by contractors using appropriated federal funds, when these agencies spend more than $10,000 a year on any of the designated items. For example, if a state agency spends more than $10,000 a year on copy paper, and part of that money is from appropriated federal funds, then that state agency must follow the EPS guidelines and buy 30 percent post-consumer recycled paper. (Section 6002 of the Resource Conservation and Recovery Act [RCRA] and Presidential Executive Order 13101.)

CONSIDERATION Something of value given or done as recompense that is exchanged by two parties; that which binds a contract.

CONTRACT Any written instrument or electronic document containing the elements of offer, acceptance, and consideration to which an agency is a party.

CONTRACT ADMINISTRATION The management of all actions after the award of a contract that must be taken to assure compliance with the contract; e.g., timely delivery, acceptance, payment, closing contract, etc.

CONTRACTOR A person who agrees to furnish goods or services for a certain price; may be a prime contractor or subcontractor.

COOPERATIVE PURCHASING The combining of requirements of two or more governmental units to obtain the benefits of volume purchases and/or reduction in administrative expenses.

COOPERATIVE PURCHASING VENTURE (CPV) A joint purchasing program designed by the State of Minnesota where governmental units obtain the benefits of volume purchasing and/or reduction in administrative expenses by participating in the program and purchasing from existing State of Minnesota commodity contracts.


DEALER, JOBBER OR DISTRIBUTOR A business that maintains a store, warehouse, or other establishment in which a line or lines of products are kept in inventory and are sold to the public on a wholesale or retail basis.

DEBARMENT The disqualification of a person to receive invitations for bids or requests for proposals, or the award of a contract by a government body, for a specified time commensurate with the seriousness of the offense, the failure, or the inadequacy of performance.

DEFAULT Failure by a party to a contract to comply with contractual requirements.

DELIVERY The formal handing over of property; the transfer of possession, such as by carrier to purchaser.

DEMURRAGE The detention of a ship, railroad, car or truck beyond a specified time for loading/unloading; the payment required and made for the delay.

DESIGN SPECIFICATION A specification setting forth the required characteristics to be considered for award of contract, including sufficient detail to show how the product is to be manufactured.

DESTINATION The place to which a shipment is consigned.

DOCUMENT TYPE MAPS Procurement uses document type to differentiate among different functions for a requisition, solicitation, contract, or order. The document type is a field to be entered on those screens that are for requisition solicitation, contract, or order.

DROP SHIPMENT Merchandise which is shipped by a manufacturer directly to a customer in response to the seller who collects orders but does not maintain an inventory.


ECONOMICALLY DISADVANTAGED AREA BUSINESS (ED) Small business eligible for certification as socially disadvantaged business or economically disadvantaged area business: A small business entity with its principal place of business in Minnesota organized for profit, including an individual, partnership, corporation, joint venture, association, or cooperative that is 51 percent owned and is operationally controlled on a day-to-day basis by citizens of the United States. The areas of economic disadvantage are determined by the US Department of Labor.

EMERGENCY ACQUISITION A threat to public health, welfare, or safety that threatens the functioning of government, the protection of property or the health or safety of people.

ENERGY STAR A federal standard applied to office equipment for the purpose of rating the energy efficiency of the equipment. Energy Star computers, monitors, and printers save energy by powering down and going to “sleep” when not in use, resulting in a reduction in electrical bills and pollution levels.

ENVIRONMENTALLY PREFERABLE PRODUCT (EPP) A product or service that has a lesser or reduced impact on human health and the environment when compared with competing products or services that serve the same purpose. Such products or services may include, but are not limited to those which contain recycled content, minimize waste, conserve energy or water, and reduce the amount of toxics either disposed of or consumed.

EQUAL OR APPROVED EQUAL Used to indicate that an item may be substituted for a required item if it is equal in quality, performance and other characteristics.

ESCALATION CLAUSE A contract provision which permits the adjustment of contract prices by an amount or percent if certain specified contingencies occur, such as changes in the vendor’s raw material or labor costs.

EVALUATION OF RESPONSES The examination of responses after opening to determine the vendor’s responsibility, responsiveness to requirements, and other characteristics of the solicitation relating to the award.


FISCAL YEAR The 12 months between one annual settlement of financial accounts and the next; a term used for budgeting, etc. The fiscal year for the U.S. Government is October 1 to September 30; the fiscal year for the State of Minnesota is July 1 to June 30.

FIXED ASSETS State property that is in one of four categories: 1.all non-expendable property having a normal life expectancy of more than two years and a value of $2,000 or more. 2.all semi-expendable property established by the owning agency’s policy as fixed assets: any item having a normal life expectancy of more than two years and a value of less than $2,000. 3.all firearms, regardless of their value. 4.all sensitive items, as established by the agency policy.

FORMAL SOLICITATION A solicitation which requires a sealed response.

FREIGHT DEFINITIONS See PDF File of Shipping Terms.


GOODS All types of personal property including commodities, materials, supplies, and equipment.


HAZARDOUS WASTE Any waste (solid, liquid, or gas) which because of its quantity, concentration, or chemical, physical, or infectious characteristics pose a substantial present or potential hazard to human health or the environment when improperly treated, stored, transported, or disposed of.


INFORMAL SOLICITATION A solicitation which does not require a sealed response.

INSURANCE A contract between an insurance company and a person or group which provides for a money payment in case of covered loss, accident or death.

INVOICE A list of goods or services sent to a purchaser showing information including prices, quantities and shipping charges for payment.


JOINT VENTURE The temporary association of two or more businesses to secure and fulfill a procurement bid award.


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LABOR SURPLUS AREA A civil jurisdiction designated by the U.S. Department of Labor, usually updated annually in the late fall. Used as one of the criteria for designating economically disadvantaged (ED) vendors.

LEAD TIME The time that it would take a supplier to delivery goods after receipt of order.

LEASE A contract conveying from one entity to another the use of real or personal property for a designated period of time in return for payment or other consideration.

LESS-THAN-TRUCKLOAD (LTL) A quantity of freight less than the amount necessary to constitute a truckload.

LESSEE One to whom a lease is granted.

LESSOR One who grants a lease.

LIFE CYCLE COSTING A procurement evaluation technique which determines the total cost of acquisition, operation, maintaining and disposal of the items acquired; the lowest ownership cost during the time the item is in use.

LINE ITEM An item of supply or service specified in a solicitation for which the vendor must specify a separate price.

LIQUIDATED DAMAGES A specific sum of money, agreed to as part of a contract to be paid by one party to the other in the event of a breach of contract in lieu of actual damages, unless otherwise provided by law.

LIST PRICE The price of an article published in a catalog, advertisement or printed list from which discounts, if any, may be subtracted.

LOWEST RESPONSIBLE VENDOR The vendor with the lowest price whose past performance, reputation and financial capability is deemed acceptable.


MANDATORY Required by the order stipulated, e.g., a specification or a specific description that may not be waived.

MAPS The Minnesota Accounting and Procurement System. Quite often MAPS or AGPS is referred to when speaking of the Procurement side of the system and GFS is referred to when speaking of the accounting side.

MANUFACTURER A business that makes or processes raw materials into a finished product.

MARKET The aggregate forces (including economics) at work in trade and commerce in a specific service or commodity. To sell, analyze, advertise, package, etc.

MATERIAL VARIANCE/MATERIAL DEVIATION A variance or deviation in a response from specifications of conditions that allows a responder a substantial advantage or benefit not enjoyed by all other responders or that gives the state something significantly different from what the state requested in the solicitation document.

MATERIALS MANAGEMENT Embraces all functions of acquisition, standards, quality control and surplus property management.

MODEL PROCUREMENT CODE (MPC) A publication approved by the American Bar Association which sets forth procurement statutory principles and policy guidelines for managing and controlling the procurement of supplies, services and construction for public purposes; administrative and judicial remedies for the resolution of controversies relating to public contracts; and a set of ethical standards governing public and private participants in the procurement process.

MULTIPLE AWARD Contracts awarded to more than one supplier for comparable supplies and services. Awards are made for the same generic types of items at various prices.


NAICS (NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM) CODE [FORMERLY KNOWN AS SIC (STANDARD INDUSTRIAL CLASSIFICATION) CODE] Classification of business established by type of activity for the purpose of facilitating the collection, tabulation, presentation, and analysis of data collected by various agencies of the United States government, state agencies, trade associations, and private research organizations for promoting uniformity and comparability in the presentation of statistical data relating to those establishments and their fields of endeavor.

NAPM National Association of Purchasing Management. A nonprofit educational and technical organization of purchasing and materials management personnel and buying agencies from the public and private sectors.

NASPO National Association of State Purchasing Officials. An organization of state procurement representatives for the purpose of promoting efficient and effective public purchasing policies and procedures at the state level. NASPO is an affiliate of the Control of State Governments (CSG).

NEGOTIATION Requests for proposals are sometimes used as a starting point for negotiations to establish a contract. RFPs generally include more than just price considerations. This method is especially applicable when dealing with a single source manufacturer.

NET PRICE Price after all discounts, rebates, etc., have been allowed.

NIGP National Institute of Governmental Purchasing. A nonprofit, educational and technical assistance corporation of public purchasing agencies and activities at the federal, state and local levels of government.

NO BID A response to a solicitation for bids stating that respondent does not wish to submit an offer. It usually operates as a procedure consideration to prevent suspension from the vendors list for failure to submit a response.


OPEN MARKET REQUISITION (OMR) The requisition document type used in MAPS Procurement to request the purchase of a non-contract item when the requested item’s estimated cost exceeds the authority for purchase level of the buyer. An OMR conveys the request for purchase to the person with the authority to purchase. The resulting order type is most often the Purchase Order Requisition (POR).

OPTION TO EXTEND/RENEW A provision (or exercise of a provision) which allows a continuance of the contract for an additional time according to permissible contractual conditions.

OSHA The Occupational Safety and Health Administration. Created by the OSHA Act.


PACKING LIST A document which itemizes in detail the contents of a particular package or shipment.

PARTIAL PAYMENT The payment authorized in a contract upon delivery of one or more units called for under the contract or upon completion of one or more distinct items of service called for thereunder.

PER DIEM By the day.

PERFORMANCE BOND A contract of guarantee, executed subsequent to award by a successful vendor to protect the buyer from loss due to the vendor’s inability to complete the contract as agreed.

PERFORMANCE SPECIFICATION A specification setting forth performance requirements determined necessary for the item involved to perform and last as required.

PLANT-MATTER BASED OR BIO-BASED PRODUCT A product derived from renewable resources, including fiber crops, such as kenaf; chemical extracts from oilseeds, nuts, fruits and vegetables (such as corn and soybeans); agricultural residues, such as wheat straw and corn stover; and wood wastes generated from processing and manufacturing operations. These products stand in contrast to those made from fossil fuels (such as petroleum) and other less renewable resources (such as virgin timber).

POINT OF ORIGIN (shipping point) The location where a shipment is received by a transportation line from the shipper.

POLITICAL SUBDIVISION A subdivision of a state which has been delegated certain functions of local government. Can include counties, cities, towns, villages, hamlets, boroughs and parishes.

POST-CONSUMER MATERIAL A finished material which would normally be disposed of as a solid waste after its life cycle as a consumer item is completed. Does not include manufacturing or converting wastes. This refers to material collected for recycling from office buildings, homes, retail stores, etc.

PRE-CONSUMER MATERIAL Material or by-products generated after the manufacture of a product but before the product reaches the consumer, such as damaged or obsolete products. Pre-consumer material does not include mill and manufacturing trim, scrap, or broken material which is generated at a manufacturing site and commonly reused on-site in the same or another manufacturing process.

PREFERENCE An advantage in consideration for award for a contract granted to a vendor by reason of the vendor’s residence, business location, or business classifications (e.g., minority, small business).

PREPAID A term denoting that transportation charges have been or are to be paid at the point of shipment.

PREQUALIFICATION OF VENDORS The screening of potential vendors in which such factors as financial capability, reputation and management are considered when developing a list of qualified vendors. See Vendors List, Qualified Vendor/Responsible Vendor.

PRICE The amount of money that will purchase a definite weight or other measure of a commodity.

PRICE AGREEMENT A contractual agreement in which a purchaser contracts with a vendor to provide the purchaser’s requirements at a predetermined price. Usually involves a minimum number of units, orders placed directly with the vendor by the purchase, and limited duration of the contract. See Blanket Order and Requirements Contract.

PRICE FIXING Agreement among competing vendors to sell at the same price.

PROCUREMENT The combined functions of purchasing, inventory control, traffic and transportation, receiving, inspection, store keeping, and salvage and disposal operations.

PROPRIETARY The only items that can perform a function and satisfy a need. This should not be confused with “single source.” An item can be proprietary and yet available from more than one source. For example, if you need a camera lens for a Nikon camera, the only lens that will fit is a Nikon lens, thus, this lens is “proprietary.” However, the Nikon lens is available from more than one source, thus, it is not single source.

PUBLIC PURCHASING The process of obtaining goods and services for public purpose following procedures implemented to protect public funds from being expended extravagantly or capriciously.

PURCHASE MANUAL A document that stipulates rules and prescribes procedures for purchasing with suppliers and other departments.

PURCHASE ORDER The signed written acceptance of the offer from the vendor. A purchase order serves as the legal and binding contract between both parties.


QUALIFIED VENDOR/RESPONSIBLE VENDOR A vendor determined by a buying organization to meet minimum set standards of business competence, reputation, financial ability and product quality for placement on the vendor list.

QUALIFIED PRODUCTS LIST (QPL) A list of products that, because of the length of time required for test and evaluation, are tested in advance of procurement to determine which suppliers comply with the specification requirements. Also referred to as an “approved brands list.”

QUALITY The composite of material attributes, including performance features and characteristic, of a product or service to satisfy a given need.

QUANTITY Amount or number.

QUANTITY DISCOUNT A reduction in the unit price offered for large volume contracts.


RECYCLED CONTENT The portion of a product that is made from materials directed from the waste stream; usually stated as a percentage by weight.

RECYCLED PRODUCT A product that contains the highest amount of post-consumer material practicable, or when post-consumer material is impracticable for a specific type of product, contains substantial amounts of pre-consumer material.

REMANUFACTURED PRODUCT Any product diverted from the supply of discarded materials by refurbishing and marketing said product without substantial change to its original form.

RENT A rental contract giving the right to use real estate or property for a specified time in return for rent or other compensation.

REQUEST FOR BID (RFB) A solicitation in which the terms, conditions, and specifications are described and responses are not subject to negotiation.

REQUEST FOR PROPOSAL (RFP) A solicitation in which it is not advantageous to set forth all the actual, detailed requirements at the time of solicitation and responses are subject to negotiation. Price must be a factor in the award but not the sole factor.

REQUIREMENT Materials, personnel or services needed for a specific period of time.

REQUIREMENTS CONTRACT A form or contract that is used when the total long-term quantity required cannot be definitely fixed, but can be stated as an estimate or within maximum and minimum limits with deliveries on demand.

REQUISITION An internal document that a functional department (stores, maintenance, production, etc.) sends to the purchasing department containing details of materials to meet its needs, replenish stocks or obtain materials for specific jobs or contracts.

RESIDENT VENDOR A person, firm, or corporation authorized to conduct business in the State of Minnesota on the date a solicitation for a contract is first advertised or announced. It includes a foreign corporation duly authorized to engage in business in Minnesota.

RESPONDER One who submits a response to a solicitation document.

RESPONSE The offer received from a vendor in response to a solicitation. A response includes submissions commonly referred to as “offers,” “bids,” “quotes,” or “proposals.”

RESPONSIBLE BIDDER A bidder whose reputation, past performance, and business and financial capabilities are such that the bidder would be judged by an appropriate authority as capable of satisfying an organization’s needs for a specific contract.

RESPONSIVE BIDDER A bidder whose bid does not vary from the specifications and terms set out in the invitation for bids.

RESTRICTIVE SPECIFICATIONS Specifications that unnecessarily limit competition by eliminating items capable of satisfactorily meeting actual needs. See Performance Specification.

REUSED PRODUCT Any product designed to be used many times for the same or other purpose without additional processing other than specific requirements, such as cleaning, painting or minor repairs.

RFP OR RFB CONFERENCE A meeting arranged by a procurement office to help potential bidders understand the requirements of an RFB or an RFP.


SALES TAX A levy on a vendor’s sale by an authorized level of government.

SEALED A method determined by the commissioner to prevent the contents being revealed or known before the deadline for submission of responses.

SERVICES Unless otherwise indicated, both professional or technical services and service performed under a service contract.

SINGLE SOURCE An acquisition where, after a search, only one supplier is determined to be reasonably available for the required product, service or construction item.

SMALL BUSINESS A designation for certain statutory purposes referring to a firm, corporation or establishment having a small number of employees, low volume of sales, small amount of assets or limited impact on the market.

SOLICITATION The process used to communicate procurement requirements and to request responses from interested vendors. A solicitation may be, but is not limited to a request for bid and request for proposal.

SOURCE REDUCTION PRODUCT A product that results in a net reduction in the generation of waste, and includes durable, reusable and remanufactured products; products with no packaging or reduced packaging.

SPECIFICATION A concise statement of a set of requirements to be satisfied by a product, material or process that indicates whenever appropriate the procedures to determine whether the requirements are satisfied. As far as practicable, it is desirable that the requirements are expressed numerically in terms of appropriate units, together with their limits. A specification may be a standard, a part of a standard, or independent of a standard.

STANDARD An item’s characteristic or set of characteristics generally accepted by the manufacturers and users of the item as a required characteristic for all such items.

STANDARDIZATION The process of defining and applying the conditions necessary to ensure that a given range of requirements can normally be met, with a minimum of variety, in a reproducible and economic manner based on the best current techniques.

SURPLUS PROPERTY Property in excess of the needs of an organization and not required for its foreseeable use. Surplus may be used or new, but it possesses some usefulness for the purpose it was intended or for some other purpose.


TABULATION OF RESPONSES The recording of responses for the purposes of comparison, analysis and record keeping.

TARGETED GROUP BUSINESS (TG) A certified business designated by the commissioner of Administration that is majority owned and operated by a woman, person with disabilities, or a member of a specific minority group who provides goods, products, or services within purchasing categories designated by the commissioner.

TERMS AND CONDITIONS A phrase generally applied to the rules under which all bids must be submitted and the stipulations included in most purchase contracts; often published by the purchasing authorities for the information of all potential vendors.

TITLE The instrument or document whereby ownership of property is established.

TORT A wrongful act, other than a breach of contract, such that the law permits compensation of damages.

TRUCKLOAD (TL) 1. A quantity of freight to which truckload rates apply or a shipment tendered as a truckload. 2. A highway truck or trailer loaded to its carrying capacity. See Less-Than-Truckload.


UNIFORM COMMERCIAL CODE (UCC) A comprehensive modernization of various statutes relating to commercial transactions, including sales, lease, negotiable instruments, bank deposits and collections, funds transfers, letters of credit, bulk sales, documents of title, investment securities and secured transactions. The Minnesota law is found in Minn. Stat. Ch. 336.

UNIT PRICE The price of a selected unit of a good or service (e.g., pound, labor hours, etc.).

UNSUCCESSFUL VENDOR A vendor whose response is not accepted for reasons such as price, quantity, failure to comply with specifications, etc.



An organized effort directed at analyzing the function of systems, products, specifications, standards, practices, and procedures for the purpose of satisfying the required function at the lowest total cost of effective ownership consistent with the requirements for performance, reliability, quality and maintainability.

VENDOR Someone who sells something; a “seller.”

VENDORS LIST A list of names and addresses of suppliers from whom bids, proposals and quotations might be expected. The list, maintained by the purchasing office, should include all suppliers who have expressed interest in doing business with the government.

VIRGIN PRODUCT A product that is made with 100 percent new raw materials and contains no recycled materials.

VOLATILE ORGANIC COMPOUNDS (VOCs) Compounds that evaporate easily at room temperature and often have a sharp smell. They can come from many products, such as office equipment, adhesives, carpeting, upholstery, paints, solvents, and cleaning products. Some VOCs can cause cancer in certain situations, especially when they are concentrated indoors. VOCs also create ozone, a harmful outdoor air pollutant.


WARRANTY The representation, either expressed or implied, that a certain fact regarding the subject matter of a contract is presently true or will be true. Not to be confused with “guarantee,” which means a contract or promise by one person to answer for the performance of another person.


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