Aggregation
Aggregation refers to an approach to procurement where the procuring party looks to aggregate goods and services (perhaps collaborating with other parties) so as to seek a better...
Artificial Intelligence
John McCarthy of Stanford answered this in detail and we provide a summary of questions and answers that help define what is meant by artificial intelligence. Q. What...
Bid-Rigging
It is a fraudulent form of bidding where a number of parties collude by agreeing on a winner (rather than letting the market determine the winner). Other parties...
Cartel
It is an explicit agreement amongst firms that would otherwise be in competition. It typically occurs in market structures where duopolies or oligopolies are prevalent.
Cartel deterrence
Is a means used to deter cartels from forming (by creating unfavourable conditions for example).
Collusion
Occurs when rival companies collaborate for mutual benefit (often to set pricing at an artificially high level).
Combinatorial Auction
This occurs when the suppliers bundle packages of lots together into favourable combinations i.e. perhaps contiguous lots on geographical tenders. As a result of them packaging lots favourably...
Combinatorial Discounting
These are discounts that result from suppliers bundling lots into favourable packages upon which they then offer appealing discounts.
Common Procurement Vocabulary (CPV) Codes
This is a standardisation of vocabulary for public sector procurement professionals to ensure a single classification system exists for use in procurement contracts.
Compliance
In public sector procurement it is important that those procuring goods and services to ensure the process complies with relevant EU legislation.
Computational Challenges
One implication of inviting more expressive bidding from suppliers is that computing a winning outcome can be difficult (particularly in the case where there are multiple participants offering...
Conditional Discounting
These are discounts offered by bidders conditional on certain events occurring i.e. if I win more than 2 Lots I will offer a 10% discount.
Contiguous Lots
These are adjacent or adjoining lots i.e. neighbouring lots. It is likely that some suppliers would award discounts based on the resultant savings from winning contiguous (geographical) lots.
Debrief Reports
These are simple feedback reports sent to unsuccessful applicants. The purpose of them is to enable the suppliers to understand more about their application so they can be...
Disaggregation
This is the opposite to aggregation. It occurs when the good or service being procured is broken down into small lots (rather than being aggregated into one large...
Diseconomies of Scope
If a supplier secures contracts for items or services that offer no mutual cost efficiences and in fact increase costs for the provision of both on average then...
Early Adopters
Early adopters are people who embrace new concepts and technologies and are willing to test them. It is important for breakthrough technologies to identify early adopters as they...
Economies of Scale
As volumes grow fixed costs get spread over a greater number (of say units) and hence the unit costs tends to fall.
Efficiency
Processes are efficient when a minimum amount of effort is used, and a minimum amount of waste is produced.
Electronic Auction (e-auction)
An electronic auction is an online marketplace where suppliers and bidders can engage. There are different types, of which a reverse auction is the most common in procurement....
Expressive Bid Process
Expressive bid processes form an essential element of best practice in sourcing projects. When suppliers are invited to describe economies of scale or scope across bundles of Lots...
Framework
It is an agreement with a range of suppliers setting out the terms and conditions (incl pricing) under which purchases can be made throughout the lifetime of the...
G-Cloud
Is a UK government programme designed to facilitate SME’s and larger businesses selling into the public sector.
Game Theory
Game theory is the science of strategic interaction. By modelling payoffs for multiple players in a game, the notion of a Nash equilibrium is the solution concept used...
Government Procurement Service (GPS)
The role of GPS is to provide procurement savings to the UK government and wider public sector.
Invitation to Tender (ITT)
An invitation to tender is also known as a ‘call for bid’s’, and it is an invitation to the market to bid on the procurement of goods or...
Line Items
A single unit or item - will typically appear in one cell in a spreadsheet. A basic unit.
Lot
Part of an auction that is allocated to a single winning bidder. Lots are comprised of one or more goods.
Market (Intelligence) Survey
Gathering marketing information in advance of a procurement exercise so as to understand the landscape, and so as to assess where economies may lie. This should then feed...
Monopoly
A market dominated by a single supplier of a good or service who has the ability to set (a high) price. The lack of competition invariably means that...
Most Economically Advantageous Tender (MEAT)
Used to include non-cost based criteria to determine winning outcome.
Official Journal of the European Union (OJEU)
The Official Journal of the European Union is the gazette of record for the European Union.
OJEU Notice
It is a standard form that needs to be used when the purchase of goods or services fall above a certain threshold, resulting in the need for it...
Oligopoly
An oligopoly refers to an industry structure dominated by a small number of participants (suppliers).
Package Bidding
Package bidding occurs when suppliers bundle lots into attractive packages, where they will then usually offer preferential discounts.
Pre Qualification Questionnaire (PQQ)
It is a form used to assess suitably qualified candidates for the supply of a good or service. The questionnaire can cover a range of areas from staff...
Price Fixing
This can occur when cartels have formed. Participants collude (rather than compete) and a typical outcome is a scenario when prices are set at an artificial level.
Price Schedule
A list of all the items a purchaser is looking to procure from suppliers. It often takes the form of an Excel spreadsheet.
Prior Information Notice (PIN)
It is a notice setting out a contracting authorities intention to procure goods or services in the near future (typically within 12 months).
Procurement Software
Software that helps those procuring goods and services to do so efficiently. Typical procurement software applications include everything from document management to marketing.
Procurement Software
Software that helps those procuring goods and services to do so efficiently. Typical procurement software applications include everything from document management to marketing.
Request for Proposal (RFP)
A request for proposal is a document sent to prospective suppliers outlining that a procurement process is about to commence, and requesting suppliers to bid.
Request for Tender (RFT)
A request for tender is a formal invitation to suppliers to bid on certain goods and services that are being procured (most typically in a public sector context).
Sealed Bid Format
This is a form of auction where participants submit an informed bid without having the opportunity to see what others are bidding, or without having the option to...
Service
Providing something (not tangible) for someone i.e. equivalent to a good (but not material).
SME Access
Governments around the world are keen to promote SME access which means small and medium enterprises participating in procurement events. The reasons to encourage SME access are varied,...
Software as a Service (SaaS)
This is where software is provided as a service i.e. it is licenced for a fee which correlates to ownership. Access is essentially being rented so compensation equates...
Spend Category
A group of products or services being procured. These could range from vehicle fleet to public transport.
Supplier
Someone supplying goods or services. In the context of procurement they will be bidding on what is being procured.
Supply side constraints
These occur when a supplier bidding on a combination of lots specifies certain constraints they may have. In this instance they may bid aggressively on all lots but...
Tacit Collusion
Occurs when no explicit collusion takes place, but rather the market participants behave in a ‘predictable’ manner such that other participants can read the signs and react/ behave...
Tender
A tender is a formal exercise of obtaining sealed bids for goods or services where the value is unknown, and where the specification can be non standard or...
Tender Document
The document outlining what is being procured, by when and in what quantities. It is typically sent to prospective suppliers at the start of the procurement process.
Winner Determination
Analysing all the bid and discounts to work out the best winning combination for the purchaser.
Winner’s curse
This occurs when the winner of an auction bids too aggressively and the winning price is uneconomic. It is synonymous in e-auctions where there is transparency an emotional...