Aggregation

September 5, 2013

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

August 24, 2017

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...

Auction

September 6, 2013

An auction is a process for buying goods and services where bids are required.

Award

September 6, 2013

On the completion of a successful tender an award is made to the winning supplier.

Bid

September 6, 2013

A bid is a price offered by a participant in an auction.

Bid-Rigging

September 6, 2013

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...

Call off

September 6, 2013

Individual contracts can be awarded within the context of a framework agreement.

Cartel

September 6, 2013

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

September 6, 2013

Is a means used to deter cartels from forming (by creating unfavourable conditions for example).

Collusion

September 6, 2013

Occurs when rival companies collaborate for mutual benefit (often to set pricing at an artificially high level).

Combinatorial Auction

September 6, 2013

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

September 6, 2013

These are discounts that result from suppliers bundling lots into favourable packages upon which they then offer appealing discounts.

Compliance

September 6, 2013

In public sector procurement it is important that those procuring goods and services to ensure the process complies with relevant EU legislation.

Computational Challenges

September 6, 2013

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

September 6, 2013

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

September 6, 2013

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

September 6, 2013

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

September 6, 2013

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...

Discount

September 6, 2013

Offer to reduce quoted prices if certain criteria are met.

Diseconomies of Scope

September 6, 2013

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...

Duopoly

September 6, 2013

A form of oligopoly where a single market consists of two (dominant) participants.

Early Adopters

September 6, 2013

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

September 6, 2013

As volumes grow fixed costs get spread over a greater number (of say units) and hence the unit costs tends to fall.

Efficiency

September 6, 2013

Processes are efficient when a minimum amount of effort is used, and a minimum amount of waste is produced.

Electronic Auction (e-auction)

September 6, 2013

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

September 6, 2013

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

September 6, 2013

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

September 6, 2013

Is a UK government programme designed to facilitate SME’s and larger businesses selling into the public sector.

Game Theory

September 6, 2013

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...

Good

September 6, 2013

Anything (including a service) that requires a bid price.

Inefficiency

September 6, 2013

The opposite of efficiency i.e. where processes are wasteful or are not optimised.

Invitation to Tender (ITT)

September 6, 2013

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

September 6, 2013

A single unit or item - will typically appear in one cell in a spreadsheet. A basic unit.

Lot

September 6, 2013

Part of an auction that is allocated to a single winning bidder. Lots are comprised of one or more goods.

Market (Intelligence) Survey

September 6, 2013

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

September 6, 2013

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...

OJEU Notice

September 6, 2013

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

September 6, 2013

An oligopoly refers to an industry structure dominated by a small number of participants (suppliers).

Package Bidding

September 6, 2013

Package bidding occurs when suppliers bundle lots into attractive packages, where they will then usually offer preferential discounts.

Price Fixing

September 6, 2013

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

September 6, 2013

A list of all the items a purchaser is looking to procure from suppliers. It often takes the form of an Excel spreadsheet.

Procurement Software

September 6, 2013

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

September 6, 2013

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)

September 6, 2013

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)

September 6, 2013

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

September 6, 2013

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

September 6, 2013

Providing something (not tangible) for someone i.e. equivalent to a good (but not material).

SME Access

September 6, 2013

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)

September 6, 2013

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

September 6, 2013

A group of products or services being procured. These could range from vehicle fleet to public transport.

Supplier

September 6, 2013

Someone supplying goods or services. In the context of procurement they will be bidding on what is being procured.

Supply side constraints

September 6, 2013

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

September 6, 2013

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

September 6, 2013

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

September 6, 2013

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’s curse

September 6, 2013

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...