Header

  Close Menu

Main Content

Purchasing Terms and Definitions

The following terms are commonly associated with purchasing or procurement activities.

A   B  C  D  E  F  G  H  I  J  K  L  M  N  O  P  Q  R  S  T  U  V  W  X  Y  Z

 

B

Best Value – Typically this term is used for Invitation for Bids in procurement code and procurement rules. For RFPs the term “advantageous” is used. In procurement code defines advantageous as a judgmental assessment of what is in the state’s best interest.

Bid Opening – The formal process in which sealed bids are opened, usually in the presence of one or more witnesses, at the time and place specified in the Invitation for Bid. Bid openings are public events at which the names of the bidders responding to a bid solicitation and prices of the bidders are read aloud and recorded. The written record is available for public inspection upon request.

Bidder – A person or business that responds to a solicitation or has completed the bidder registration process in order to receive notice of solicitations released from the Indiana Department of Administration (IDOA) Procurement Division.

Buyer - See Procurement Agent

C

Contract Support Division - Performs all functions that pertain to contract administration, management of information, and bid opening functions.

Cooperative Agreement – Combining two or more governmental purchasing units to a purchasing agreement to receive a better advantage of volume purchases and reduce administrative expenses.

D

Drug-free Workplace – Mandated by Executive Order 90-5, this requires all vendors doing more than $25,000 worth of business with the State to maintain a drug-free workplace.

E

Equipment - Any article, except small tools, which has an extended period of service expectancy (minimum of 12 months).

F

Foreign Corporation - an entity chartered or incorporated in a state other than Indiana.

Free on Board Destination (FOB Destination) - Is a transportation term that indicates that the price for goods includes delivery at the Seller’s expense to a specified point and no further. The FOB term is used with an identified physical location to determine

  1. the responsibility and basis for payment of freight charges, and
  2. the point at which title for the shipment passes from Seller to Buyer.

G

Good(s) – Items purchased or available for purchase other than real property or services. Defined under the Utility Consumer Counsel as a transportable article of trade or commerce that can be bartered or sold. Associated words/concepts: noun, assets, durables, items, materials, stock, supplies, things for sale. Any item of merchandise, raw materials or finished goods; inventoriable items or assets of any kind, including supplies and items in the process of production.

I

Indiana Veteran Owned Small Business (IVOSB) - Per IC 5-22-14-3.5:

  • (1) has:
    • (A) a current verification as a veteran owned small business concern under 38 CFR 74, et seq., by the Center of Veterans Enterprise of the United States Department of Veterans Affairs; or
    • (B) a current certification as a veteran owned small business by the Indiana department of administration;
  • (2) is owned and controlled by one (1) or more veterans or, in the case of a corporation, have at least fifty-one percent (51%) of the corporation's stock owned by one (1) or more veterans; and
  • (3) has its principal place of business located in Indiana.

Invitation to Bid (ITB) – A formal, competitive solicitation method (sometimes also referred to as a Sealed Bid) inviting suppliers to submit a bid based on the solicitation requirements. ITBs are advertised publicly, followed by an official opening conducted at a specified date and time once bidding has concluded. The responses are evaluated and awarded to the responsive, responsible bidder with the lowest price. When using this method, cost and adherence to specifications are major considerations in awarding a contract or purchase order.

L

Lowest Responsible Bidder – A qualified bidder with the lowest or best bid price, and whose business and financial capabilities, past performance, and reputation meet the required standards.

M

Materials - Also called supplies or parts. Expandable commodities which are consumed within a relatively short period of time, or which are converted in the process of construction or manufacture or which form a minor part of equipment.

Minority Group - Per IC 4-13-16.5-1(a) (i) means: (1) Blacks; (2) American Indians; (3) Hispanics;(4) Asian Americans; and (5) other similar minority groups.

Minority Business Enterprise (MBE) - An individual, partnership, corporation, limited liability company, or joint venture of any kind that is owned and controlled by one or more persons who are: (a) United States Citizens and (b) Members of a minority group.  “Owned and controlled” means having: (a) Ownership of at least 51% of the enterprise including corporate stock of a corporation; (b) control over the management and active in the day to day operations of the business; and (c) an interest in the capital, assets, and profits and losses of the business proportionate to the percentage of ownership. “Minority group” means: (a) Blacks; (b) American Indians; (c) Hispanics; (d) Asian Americans; and (e) other similar minority groups, as defined by 13 CFR 124.103.

N

Non-Collusion Certification - A certification that the vendor has not participated in any efforts to fix prices or has any improper contact with any State employees or other vendor in the marketplace.

Non-responsive – This is the term used when a bid submission does not meet the requirements set forth in the solicitation.

O

Out-of-State Corporations - see Foreign Corporation

P

Personal Services Contracts - Contracts for personal services rendered either by employees of the State, or by professional consultants employed on a temporary basis.

Procurement – The act of buying, purchasing, renting, leasing, or otherwise acquiring any goods or services, and all functions that pertain to obtaining goods or services, including the description of requirements, selection and solicitation of sources, preparation and award of a contract, and all phases of contract administration.

Procurement Agent - A person authorized to develop purchase requests, specifications, prepare solicitations, and manage the purchase of goods and services on behalf of a State agency, facility or institution.

Procurement Division - Buys, purchases, rents, leases, or otherwise acquires any supplies of service.  Performs all functions that pertain to the obtaining of any supply or service, including: description of requirements, selection or solicitation of sources, preparation and award of contracts and purchase orders.

Procurement Rules – Rules are the practical interpretation of how to follow procurement code.

Public Works Division - Prepares and supervises the preparation of contract documents for constructions.  Advertise bids, process contract awards, approve or reject estimates and contract changes.

Purchase Order - A means of ensuring payment from the State to the vendor.

Purchasing Administrator - See Procurement Agent

Q

Quantity Purchase Agreements (QPAs) - Term contracts for goods and/or services, generally issued for one year with options for renewal.

R

Request for Information (RFI) - A general invitation to suppliers requesting information for a potential future solicitation. RFIs are typically used during the project planning phase where the state cannot clearly identify product requirements, specifications and purchase options. RFIs must clearly indicate that award of a contract will not automatically follow.

Request for Proposal (RFP) – Document used in sealed-bid procurement procedures through which a buyer advises potential bidders of: the statement and statement of work; specifications, schedules or timelines, procured, general criteria used in evaluation procedure, special contractual requirements, technical goals, instructions for preparation of technical, management and cost proposals. RFPs are publically advertised and bidders respond with a detailed proposal, not just a price quote. They provide for negotiations after sealed proposals are opened, and contracts may not necessarily be awarded to the lowest bidder.

Request for Qualifications (RFQ) – A solicitation document requesting submittal of qualifications or specialized expertise in response to the scope of services required. Pricing is not solicited with RFQs. Document issued prior to RFPs typically describing projects in enough detail to let potential bidders determine if they wish to compete and forms the basis for requesting qualifications submissions in a two-phase or prequalification process. Used most often with construction projects.

Request for Quote (RFQ) – An informal solicitation document requesting pricing on small dollar purchases. Associated words/concepts: document used in soliciting price and delivery quotes meeting minimum quality specifications for a specific quantity of goods and/or services. RFQs are usually not advertised publicly, and are used commonly for: standard, off-the-shelf items, items built to known specifications, items required in small quantities or items whose purchase price falls below sealed bidding thresholds. Bidders respond to RFQs with firm quotations, and an award is generally made to the lowest-priced quote.

Responsive Bidder – Responsible bidders whose bids are determined to be in substantial conformance with the conditions, completion or delivery requirements and specifications detailed in the Invitation for Bid, RFP, RFQ, etc.

S

Service(s) – The furnishing of labor by a supplier which may include the delivery of a tangible end product. If services and goods are combined, e.g. copier delivery, the test is whether labor or goods is the primary factor (decide which is incidental to the other). In the case of copier, the labor to deliver the copier is incidental to the copier purchase, making it a goods contract. Associated words/concepts: defines an intangible commodity in the form of human effort, such as labor, skill, expertise or advice.

Services by Contract - All payments made by the State for services rendered under express contract, including labor and materials furnished in the performance of such services, but not including professional and consulting services.

Services other than personal - All payments made for services rendered to the State on which the rate is fixed by law or ordinance.

Small Business - IC 5-22-14-1  Sec. 1. As used in this chapter, "small business" means a business that:

  • (1) is independently owned and operated;
  • (2) is not dominant in its field of operation; and
  • (3) satisfies the criteria:
    • (A) in the rules adopted under section 3 of this chapter; or
    • (B) to be a veteran owned small business concern as specified in section 3.5 of this chapter.

Small Purchase - A purchase under $75,000.00; with the exception of Quantity Purchase Awards.

Sole Source – A procurement method used when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service.

Solicitation(s) – A document requesting submittal of bids or proposals in accordance with the advertised specifications. Associated words/concepts: the act or an instance of requesting or seeking to obtain something. Unlike an offer, a solicitation is not unequivocal offer to enter into a binding agreement.

Special Procurement – Any exception to normal State purchasing procedures as identified in IC 5-22-10.

Statement of Work (SOW) – A detailed description of the work suppliers are to perform. Contractual provisions defining the parties’ respective obligations. Often SOWs cover such terms as inspection and acceptance, quality-assurance requirements, packing and marking, data requirements, and training. Associated words/concepts: generally, there are two types of specifications in SOWs: performance specifications establishing minimum requirements for goods or services and design specifications establishing the methods to be used in meeting those minimum requirements.

Sub-Contractor Commitment Form - A form that is required in all solicitations and contract which lists the MBE/WBE sub-contractors and sub-contracting amounts to be used toward MBE/WBE goal attainment.

U

U.S. Manufactured Certification – A certification indication that at least 50 percent of the costs of a product’s components are mined, produced or manufactured in the United States.

V

Vendor - The supplier of the goods and services which the State purchases.

Veteran -  Per IC 5-22-14-2.5 an individual who:

  • (1) has previously:
    • (A) served on active duty in any branch of the armed forces of the United States or their reserves, in the national guard, or in the Indiana National Guard; and
    • (B) received an honorable discharge from service; or
  • (2) is currently serving in:
    • (A) any branch of the armed forces of the United States or their reserves;
    • (B) the national guard; or
    • (C) the Indiana National Guard.

W

Women’s Business Enterprise (WBE) – Per IC 4-13-16.5-1.3 a business that is one (1) of the following:

  • (1) A sole proprietorship owned and controlled by a woman.
  • (2) A partnership or joint venture owned and controlled by women in which:
    • (A) at least fifty-one percent (51%) of the ownership is held by women; and
    • (B) the management and daily business operations are controlled by at least one (1) of the women who owns the business.
  • (3) A corporation or other entity:
    • (A) whose management and daily business operations are controlled by at least one (1) of the women who owns the business; and
    • (B) that is at least fifty-one percent (51%) owned by women, or if stock is issued, at least fifty-one percent (51%) of the stock is owned by at least one (1) of the women.
  • (4) A qualified women's nonprofit corporation as defined in IC 4-13-16.5-1(g) and IC 4-13-16.5-1(h).

News and FAQs

Top FAQs