Glossary
Speak the language.
Understand the bid.
Procurement terms in plain English. Use the solicitation’s own definitions where they differ.
Addendum
- A formal change to a solicitation issued by the buyer after it is published. It can change dates, quantities, specifications or forms, and bidders are usually required to acknowledge every addendum in their bid.
Award
- The buyer's decision to give the contract to a specific bidder. Depending on the agency, an award may need approval from a board or council before it becomes final.
Best and final offer
- A last, revised offer the buyer may request from the bidders still in the running after evaluation or negotiation. It is common in negotiated procurements such as requests for proposal; rules vary by agency.
Bid bond
- A surety bond submitted with a bid that assures the buyer the bidder will sign the contract and provide any required bonds if awarded. It is often sized as a percentage of the bid amount set by the solicitation.
Bid opening
- The scheduled time when the buyer opens the bids received, often in public. For sealed bids the bidder names and prices are typically read aloud or posted.
Bid tabulation
- A summary sheet listing each bidder and their prices, usually line by line. Many agencies publish it after the bid opening, and it is a useful source for pricing future bids.
Bid/no-bid
- The internal decision on whether a solicitation is worth pursuing. It weighs fit, requirements, competition, timing, risk and the effort needed to respond.
Bonding capacity
- The total amount of bonded work a surety is willing to back for a company, both per project and in total. It limits how large or how many bonded jobs a company can take on at once.
Buyer
- The public agency or the purchasing officer who issues a solicitation and manages the procurement. The buyer is usually the only official contact for questions while the solicitation is open.
CAGE code
- A five-character identifier assigned to companies that do business with the federal government. It is issued as part of registering in SAM.gov.
Capability statement
- A short document, often one or two pages, that summarizes what a company does, its codes, certifications, past performance and contact details. Buyers and prime contractors use it to size up a vendor quickly.
Certificate of insurance
- A document from an insurer or agent showing a company's insurance coverage, limits and dates. Solicitations often require specific coverage and may require the buyer to be named as an additional insured.
Compliance matrix
- A table that lists every requirement in a solicitation and shows where and how the response meets it. It helps the bidder avoid missing items and helps evaluators find answers.
Cooperative contract
- A contract awarded by one public agency or purchasing group that other eligible agencies may also buy from. It can save buyers the time of running their own solicitation.
DBE/MBE/WBE
- Certifications for disadvantaged, minority-owned and woman-owned business enterprises. Some contracts set participation goals for these firms; rules vary by agency and funding source.
Debriefing
- A meeting or written explanation from the buyer about how a bid was evaluated, usually after award. It is one of the best ways to learn why a bid lost and how to improve.
Digital signature
- An electronic signature applied to a document, often with identity checks and a record of when it was signed. Whether a digital signature is accepted depends on the solicitation.
Evaluation criteria
- The factors, and often the weights, the buyer will use to score responses, such as price, approach, experience and past performance. They are usually stated in the solicitation.
Incumbent
- The company that currently holds the contract being re-bid. Incumbents know the work well, but they are not always the winner.
Invitation for bid
- A solicitation where the award usually goes to the lowest-priced bidder who is both responsive and responsible. It is common for construction and well-defined goods.
Letter of intent
- A document that states a party plans to take an action, such as a buyer intending to award or a subcontractor intending to work with a prime. Its legal weight depends on its wording.
Line item
- One priced row on a bid form, usually with a description, quantity, unit and price. Bid forms may have a handful of line items or hundreds.
Liquidated damages
- A set amount the contractor owes for each day the work runs past the contract deadline. The amount is stated in the contract ahead of time.
Local preference
- A rule that gives some advantage to bidders based in a certain city, county or state, such as a price allowance. Rules vary by agency.
Lump sum
- A single total price for all the work described, rather than a price per unit. The bidder carries the risk if the work costs more than expected.
NAICS code
- A six-digit North American Industry Classification System code that describes a type of business. Buyers use it to classify solicitations and to decide which size standards apply.
NIGP code
- A commodity and service code used by many state and local buyers to classify what they purchase. Vendors pick codes when registering so they get matching bid notices.
Notary
- A public official who verifies the identity of a signer and witnesses the signature. Some bid forms, such as affidavits, must be notarized.
Notice of award
- A written notice telling the winning bidder the contract has been awarded to them. It usually lists the next steps, such as signing the contract and providing bonds and insurance.
Notice to proceed
- A written notice from the buyer that work may start. Contract time is often counted from this date.
Past performance
- A record of similar work a company has completed, with details such as client, value, dates and results. Many solicitations score it as part of the evaluation.
Payment bond
- A surety bond that assures subcontractors and suppliers on a public project will be paid. It is commonly required on public construction contracts.
Performance bond
- A surety bond that assures the buyer the contractor will complete the work as the contract requires. If the contractor fails, the surety steps in up to the bond amount.
Piggyback
- When an agency buys from a contract another agency already awarded, instead of running its own solicitation. Whether this is allowed depends on the contract terms and the buying agency's rules.
Pre-bid conference
- A meeting the buyer holds before bids are due to explain the project and answer questions, sometimes with a site visit. Attendance may be mandatory, and missing a mandatory one can disqualify a bidder.
Prevailing wage
- Minimum wage and benefit rates that must be paid to workers on certain public projects, set by trade and location. Rules vary by agency and state.
Protest
- A formal challenge by a bidder to a solicitation or an award decision. Protests have strict deadlines and procedures that vary by agency.
Q&A period
- The window when bidders may submit written questions to the buyer. Answers are usually shared with all bidders, often in an addendum.
Re-bid / re-issue
- When a buyer issues a solicitation again, either because an existing contract is ending or because an earlier solicitation was canceled. A re-issued solicitation may have changed terms.
Reference
- A past client who agrees to speak about a company's work. Solicitations often ask for several references with current contact details.
Request for information
- A notice a buyer uses to learn about the market before buying. It is not a request for a binding offer, but responding can help shape a future solicitation.
Request for proposal
- A solicitation where the buyer evaluates proposals on several factors, such as approach, experience and price, not price alone. Negotiation may be allowed.
Request for quotation
- A solicitation for price quotes, usually for smaller or simpler purchases. The process is often faster and less formal than a full bid.
Responsible bidder
- A bidder the buyer judges able to perform the contract, considering factors such as experience, finances, licenses and record. A low bid can be rejected if the bidder is not found responsible.
Responsive
- A bid that meets all the material requirements of the solicitation, such as required forms, signatures and acknowledged addenda. A bid that is not responsive can be rejected regardless of price.
Retainage
- A portion of each payment the buyer holds back until the work is complete and accepted. The amount and release terms are set in the contract.
SAM registration
- Registration in SAM.gov, the federal system for entities that want to do business with the federal government. It is generally required before a federal award and must be renewed each year.
Scope of work
- The part of a solicitation that describes the work to be done, including tasks, deliverables and schedule. It is the basis for pricing and planning a bid.
Sealed bid
- A bid kept closed until the official bid opening so no bidder sees another's price. It may be delivered on paper in a sealed envelope or uploaded to a secure portal.
Set-aside
- A solicitation, or part of one, reserved for a certain type of business, such as small, veteran-owned or woman-owned. Eligibility rules vary by agency.
Small business
- A business that falls under a size standard, often based on employees or revenue for its industry code. Small businesses may qualify for set-asides and other programs.
Sole source
- A purchase made from one supplier without competition, usually because only that supplier can meet the need. Agencies typically must justify and often publish sole-source purchases.
Solicitation
- The documents a buyer publishes to request bids, quotes or proposals. It includes the scope, instructions, forms, terms and due date.
Specifications
- The detailed technical requirements for the goods or work, such as materials, standards and performance. Bids that do not meet the specifications may be rejected.
Term contract
- A contract that covers supplies or services over a set period, often with optional renewal years. Orders are placed as needed during the term.
Unique entity ID
- A twelve-character identifier assigned in SAM.gov to each registered entity. It is used to identify a company across federal awards.
Unit price
- The price for one unit of an item, such as one ton, one hour or one each. The buyer multiplies unit prices by quantities to compare bids.
UNSPSC code
- A code from the United Nations Standard Products and Services Code, a global system for classifying goods and services. Some buyers use it in place of, or alongside, other commodity codes.
W-9
- An IRS form a business uses to give its legal name and taxpayer identification number to a payer. Buyers usually ask for it before they can pay a vendor.
Wet signature
- A signature made by hand in ink on paper. Some solicitations still require wet signatures on certain forms.