Understanding basic terms commonly used in procurement procedures

A formal invitation to bid for the supply of goods, services, or works.

ITT: An Invitation To Tender (ITT) is the main part of the tender process and is either available to all interested parties or (if there is a Pre-Qualification Questionnaire (PQQ) or Supplier Questionnaire (SQ)) to those suppliers who passed through the initial stage. This is where the buyer outlines what their requirements are and their specification. 

Request for Proposal (RFP): A document issued to potential suppliers, outlining the requirements and criteria for a particular procurement, and inviting them to submit proposals.

Request for Quotation (RFQ): A document used to solicit competitive bids from suppliers for standard products or services.

Request for Information (RFI): A process for gathering information from potential suppliers of a particular good or service. Specific questions are asked by the buyer to further their understanding of the area.

Prior Information Notice (PIN): A published notice which sets out a contracting authority’s purchasing intentions. It does not oblige the contracting authority to proceed with a procurement process, but informs the market that they can expect a procurement to be commenced within the next 12 months.

SQ or PQQ: Often the first stage of the process, a Pre-Qualification Questionnaire (PQQ) or Supplier Questionnaire (SQ) is used as an initial filtering mechanism for bidders prior to releasing the bid documents. Questions are asked about finances, insurance, policies in place and other background information. These tend to be more complex depending on the size and value of the contract.

Supplier: An organisation or individual that provides goods or services in response to a procurement opportunity.

Procurement Officer: An individual responsible for managing the procurement process, including issuing tenders, evaluating bids, and awarding contracts.

Expression of Interest (EOI): A preliminary document submitted by potential suppliers to indicate their interest in participating in a procurement process. EOIs typically provide basic information about the supplier's qualifications and capabilities.

Supplier Engagement: The process of interacting with suppliers to build relationships, gather information, and collaborate on procurement activities. This may include meetings, workshops, or other communication channels to foster dialogue and understanding between the procuring organisation and suppliers.

Soft Market Testing: A process used to gather information from potential suppliers or the market in general to assess feasibility, gauge interest, and inform procurement decisions before formally launching a tender or request for proposal. Soft market testing can help refine requirements, understand market trends, and identify potential suppliers.

Evaluation Criteria: The standards or benchmarks used to assess and compare bids or proposals submitted by suppliers.

Framework Agreement: A long-term agreement between a procuring organisation and one or more suppliers, establishing terms and conditions for future procurements.

Dynamic Purchasing System (DPS): A procurement tool used by public sector organisations in the UK to procure commonly used goods, services, or works from a pool of pre-qualified suppliers. A DPS is similar to a framework agreement but allows for new suppliers to join at any time during its duration, providing flexibility and encouraging competition. Suppliers are typically pre-qualified through an initial selection process, and contracting authorities can then invite tenders or quotes from the pool of approved suppliers as needed.

Social Value: Suppliers may be requested (usually for larger tenders) to outline social value, or the positive legacy which can be created through the performance of a contract. This could be social activities that promote a particular community group; environmental benefits such as reducing community waste or pollution; or economic benefits such as offering employment, apprenticeships or training to disadvantaged or excluded groups.

Procurement Cycle: The series of steps involved in the procurement process, from identifying needs to contract award and implementation.

Contract Management: The process of overseeing and administering contracts to ensure that both parties fulfil their obligations and achieve the desired outcomes.

Compliance: Adherence to relevant laws, regulations, and policies throughout the procurement process.

Best Value: The optimal combination of quality, price, and other factors considered when selecting a supplier.

Due Diligence: The process of conducting thorough research and assessment of suppliers to verify their capabilities, financial stability, and compliance with requirements.

Procurement Strategy: A plan outlining the objectives, priorities, and approach for sourcing goods and services to meet organisational needs.

Procurement Framework: Policies, procedures, and guidelines governing the procurement activities of an organisation.