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DICTIONARY OF

CONTRACTING TERMS

Date: Author:
06.07.2010 Lyndon Dacuan

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Knowing and understanding the most commonly


used terms in government contracting and the
B2G market is a must when selling to the
government. It affects everything from your
government RFP to your teaming agreements to
your relationship with key government officials.

We hope you find the following government-


terminology dictionary helpful. For more insight
into government terms, see our list of government
acronyms.

Government Terms Used in


Contracting
Jump to: A B C D E F G H I J K L M N O P Q R S T U
VW

Government Terms - A

A&E aka A/E: Professional services of an


architectural or engineering nature, as defined by
state law (if applicable), that are required to be
performed or approved by a person licensed,
registered, or certified to provide such services.

Abstract Of Title: An outline history of the


ownership of a parcel of land dating from the
original grant, with changes in title and with a
statement of all mortgages, liens, encumbrances,
etc., affecting the property.

Acceptance Test: A test conducted by a


purchaser (or his or her agent) to determine if the
material, devices, or equipment delivered
conforms to the purchase contract specifications
or the product supplied by the vendor.

Acquisition: Process of purchasing goods and


services (including construction) for the use of a
governmental activity through purchase, rent, or
lease. Includes the establishment of needs,
description of requirements, selection of
procurement method, selection of sources,
solicitation of procurement, solicitation for offers,
award of contract, financing, contraction
administration, and related functions.

Addenda: Supplements to the bid or proposal


form as originally issued, covering additions,
corrections, or changes in the bidding conditions
for the advertised work. Addenda are issued to
prospective bidders prior to the date set for
opening of proposals.

Additive Alternate: An alternate bid resulting


in an addition to the same bidder's base bid. Same
as alternate bid.

Advertisement for Bids: The published public


notice soliciting bids for a construction or other
public project. Most frequently used to conform to
legal requirements pertaining to projects to be
constructed under public authority, and usually
published in newspapers of general circulation in
those districts from which the public funds are
derived.

Affirmative Action Program: A contractor's


program that complies with Federal, state or local
regulations to assure equal opportunity in
employment to minorities and women.

Agency: An administrative branch of


government.

AIA: American Institute of Architects.

Alternate Bid: The amount stated in the bid to


be added to or deducted from the amount of the
base bid if the corresponding change in project
scope or alternate materials and/or methods of
construction is accepted.

Amendment: A change to a solicitation before


contract award (also see modification below,
which occurs after contract award).

Appeal: Action taken by a bidder, offeror (actual


or prospective) or vendor to seek a hearing before
a disinterested person or panel or in an
appropriate circuit court challenging a decision.
(See Protest below.)

Application for Payment: A contractor's


written request for payment of an amount due for
completed portions of the work; may include, in
the contract to provide, materials delivered and
suitably stored pending their incorporation into
the work.

Appraisal: An evaluation or estimate of the


market or other value, cost, utility, or other
attribute of land or other facilities.

Appropriation: Money from public funds set


aside for a specific purpose.

Approved: Materials, devices, or construction


accepted by a purchasing authority, due to tests or
investigations conducted by it or by an agency
satisfactory to the authority, or because of
accepted principles or tests by national authorities
or technical or scientific organizations.

Approved Equal: Materials, equipment, or


method approved by the buying agency or
authority for use in the work as being acceptable
as an equivalent in essential attributes to the
material, equipment, or method specified in the
contract document.

Arbitration: The resolution of disputes by one or


more neutral persons, as a substitute for judicial
proceedings; may be invoked only by agreement
of the parties to the dispute, but such agreement
may be arrived at before there is an actual dispute,
for example, through a clause in a contract.

Architect: A person trained and experienced in


the design of buildings and coordination and
supervision of all aspects of the construction of
buildings.

Architect-Engineer: An individual or firm


offering professional service as both architect and
engineer.

Architect's Approval: The architect's written or


imprinted acknowledgment that materials,
equipment, or methods of construction are
acceptable for use in the work.

Architect's Scale: A scale/ruler having


graduations along its edges so that scale drawings
can be measured directly in feet.

Army Corps of Engineers (COE): The Corps of


Engineers is an agency of the U.S. Army that
provides comprehensive
engineering/construction, management and
technical support to the Department of Defense,
other agencies, and state and local governments.

Attorney-In-Fact: A person authorized to act for


or in behalf of another person or organization, to
the extent prescribed in a written instrument
known as a power of attorney.

Authority having Jurisdiction: A federal,


state, or local entity having statutory authority. In
many instances, the delegated agent assumes the
role of the authority having jurisdiction.

Authorization to Proceed (ATP): Official


authority for the contractor to begin work.
Usually issued by the procuring contracting
officer.

Award: Any mechanism, signed by a contracting


officer, providing government funds or other
resources to an offeror that permits expenditure
of such government funds or use of such
government resources.

Award Package: Materials sent to the lowest


responsible bidder after bid letting. The awards
package may include: representations and
certifications regarding information on human
rights/certificate of compliance, certificate of
current worker's compensation insurance form,
copies of the authorized signature forms,
withholding affidavit, request to sublet forms, and
month-end trucking reports. Some items may
need to be returned before the bid award is
approved. (Return to top)

Government Terms - B

B2G: This acronym stands for "Business To


Government" and identifies the government as the
sales target of a given company or division.
Alternative to B2B (selling to other businesses) or
B2C (selling to consumers).

Base Bid: The amount of money stated in the bid


as the sum for which the bidder offers to perform
the work, not including that work for which
alternate bids are also submitted.

Base Bid Specifications: The specifications


listing or describing only those materials,
equipment, and methods of construction upon
which the base bid must be predicated, exclusive
of any alternate bids.

Base Services: The services performed by an


architect during the following five phases of a
project: schematic design, design development,
construction documents, bidding or negotiation,
and contract administration.

Best and Final Offer (BAFO): For negotiated


procurements, a contractor's final offer following
the conclusion of discussions/negotiations.

Best Value: The overall "best" solution that is


achieved by the ordering activity selecting the
lowest overall price offered depending on the
circumstances of the buy (e.g., the relative
importance of cost or price, special features, the
amount of performance risk, urgency, trade-in
considerations, warranty, maintenance
availability, etc.; i.e., all terms and conditions
considered).

Bid: An offer to perform the work described in a


contract at a specified cost. A complete and
properly signed proposal to do the work.
Competition for a job based on lowest cost to do
the work. Government bids are generally cost-
specific, based on the cost of labor, materials,
profit, and overhead. Bids are normally not
negotiated and cannot be changed once accepted
by the owner. Bids are time sensitive and are
generally good for 30 to 60 days after the bid
opening.

Bid Bond: An insurance agreement in which a


third party agrees to be liable to pay a certain
amount of money in the event a selected bidder
fails to accept the contract as bid.

Bid Date: The date established by the owner or


the architect for the receipt of bids.

Bid Documents: The advertisement or invitation


to bid, instructions to bidders, the bid form, and
the proposed contract documents including any
addenda issued prior to receipt of bids.

Bid Forms: A form furnished to a bidder to be


filled out, signed, and submitted as his/her bid.

Bid Guarantee: Same as bid security.

Bid Letting: Same as bid opening.

Bid Opening: The opening and tabulation of bids


submitted by the prescribed bid time and in
conformity with the prearranged procedures.

Bid Price: The sum stated in the bid for which the
bidder offers to perform the work.

Bid Security: The deposit of cash, certified check,


cashier's check, bank draft, money order, or bid
bond submitted with a bid and serving to
guarantee to the owner that the bidder, if awarded
the contract, will execute the contract in
accordance with the bidding requirements and
the contract documents.

Bid Set: A package of data that identifies the


article to be purchased, the quantity and delivery,
and includes designs, specifications, quality
requirements and general conditions that will
govern the contract resulting from acceptance of a
bid.

Bid Time: The date and hour established by the


owner for the receipt of bids.

Bidder: One who submits a bid for a prime


contract with the owner, as distinct from a sub-
bidder who submits a bid to a prime bidder. A
bidder is not a contractor on a specific project until
a contract exists between him and the owner.

Bidders' Conference: A meeting to discuss with


potential bidders the technical, operational and
performance specifications, and/or the full extent
of financial, security and other contractual
obligations related to a bid solicitation.(see Pre-Bid
Conference below).

Bidders Results: List of bidders and their


respective job-total bid amounts.

Bidding Period: The calendar period beginning


at the time of issuance of bidding requirements
and contract documents and ending at the
prescribed bid time.

Bidding Requirements: Those documents


providing information and establishing
procedures and conditions for the submission of
bids. They consist of the notice to bidders or
advertisement for bids, instructions to bidders,
invitation to bid, and sample forms.

Bill of Lading: A written receipt or contract,


given by a carrier, showing a list of goods
delivered to it for transportation. The straight bill
of lading is a contract that provides for direct
shipment to a consignee. The order bill of lading is
negotiable; it enables a shipper to collect for a
shipment before it reaches its destination (this is
done by sending the original bill of lading with a
draft drawn on the consignee through a bank).
When the consignee receives the lading indicating
that payment has been made, the lading will be
surrendered to the carrier's agent, and the carrier
will then ship the goods to the consignee, and the
bill of lading will be surrendered to the carrier.

Blanket Purchase Order (BPO): Also called a


Blanket Purchase Agreement. An arrangement
under which a purchaser contracts with a vendor
to provide the purchaser's requirements for an
item(s) or a service, on an as-required and over-
the-counter basis. Properly prepared, such an
arrangement sets a limit on the period of time it is
valid and the maximum amount of money that
may be spent at one time or within a specified
period and specifically identifies these persons
authorized to accept goods.

Bona Fide Bid: A bid submitted in good faith,


complete and in prescribed form that meets the
conditions of the bidding requirements and is
properly signed by someone legally authorized to
sign such bid.

Bond: A financial guarantee by a surety company


that work will be completed as described in a
contract.

Bonding Capacity: An indication of a


contractor's credit rating.

Bonus and Penalty Clause: A provision in a


contract for payment of a bonus to the contractor
for completing the work prior to a stipulated date,
and a charge against the contractor for failure to
complete the work by such stipulated date.

Boundary Survey: A mathematically closed


diagram of the completed peripheral boundary of
a site, reflecting dimensions, compass bearings and
angles.

Brand Name Specification: A purchase


description that identifies a product by its brand
name and model or part number, or other
appropriate terminology by which the product is
offered for sale.

Broker: A person or firm that acts as an


intermediary between a buyer and seller, usually
charging a commission for "value added."

Brownfields: Abandoned, idled, or underused


industrial and commercial facilities where
expansion or redevelopment is complicated by
real or perceived environmental contamination.

Building Code: A collection of rules and


regulations adopted by authorities having
appropriate jurisdiction to control the design and
construction of buildings, alteration, and repair,
quality of materials, use and occupancy, and
related factors of buildings within their
jurisdiction.

Building Inspector: A member of a building


department, usually of a municipality, who
inspects construction to determine if it conforms
to both the requirements of the building code and
the approved plans.

Building Permit: A written authorization to an


applicant for a specific project allowing him to
proceed with construction; granted by the
authorized agency, a tribe or a local municipality
having jurisdiction after plans have been filed and
reviewed.

Building Rehabilitation: The returning of a


building to a useful state by repair, alteration, and
modification.

Building (Historic) Restoration: The accurate


reestablishment of the form and details of a
building, its artifacts, and the site on which it is
located, usually as it appeared at a particular time.

Building Restriction: Any one of a number of


restrictions, imposed on the construction of a
building or the use of land. Also known as
restrictive covenant.

Building Services: The utilities and services


supplied and distributed within a building
generally related to the building environment.

Bundling: Consolidating two or more


requirements for supplies or services, previously
provided or performed under separate smaller
contracts, into a solicitation for a single contract
that is likely to be unsuitable for award to a small-
business concern.

Buyer: A professional purchaser aka purchasing


agent, procurement specialist etc. Government
buyers typically specialize in a given group of
materials or services and are responsible for
market analysis, purchase planning, and
coordination with users. (Return to top)

Government Terms - C

CAGE Code: The Commercial and Government


Entity (CAGE) code is a five-character ID number
used extensively within the Federal government
and administered by Defense Logistics
Information Service (DLIS).

Capital: 1. Assets less liabilities, representing the


ownership interest in a business; 2. A stock of
accumulated goods, especially at a specified time
and in contrast to income received during a
specified time period; 3. Accumulated goods
devoted to the production of goods; 4.
Accumulated possessions calculated to bring
income.

Capital Equipment: An article of non-


expendable (tangible) personal property having a
useful life of more than one year and an
acquisition cost of $5,000 or greater per unit. Items
that cost less than $5,000 or have a useful life of
less than one year are considered materials and
supplies.

Cartage: A charge made for the hauling and


transferring of goods, usually on a local basis and
short haul in nature.

Cash Allowance: An amount established in the


contract documents for inclusion in the contract
sum to cover the cost of prescribed items not
specified in detail, with provision that variations
between such amount and the finally determined
cost of the prescribed items will be reflected in
change orders adjusting the contract sum.

Cash on Delivery (C.O.D.): Cash payment for


purchases on delivery.

Cash Discount: A form of discount for securing


prompt payment of an account.

Certificate Of Insurance: A memorandum


issued by an authorized representative of an
insurance company stating the types, amounts,
and effective dates of insurance in force for a
designated insured (usually part of the
representations and certifications).

Certificate of Occupancy: A document issued


by governmental authority certifying that all or a
designated portion of a building complies with the
provisions of applicable statutes and regulations,
and permitting occupancy for its designated use.

Certified 8(a) Firm: A firm owned and operated


by socially and economically disadvantaged
individuals and eligible to receive Federal
contracts under the Federal Government's Small
Business Administration's 8(a) Business
Development Program.

Change Order: Unilateral written change order


issued to a contractor to modify contractual
requirements within the general scope of the
contract. Such modifications are limited to
changes to the drawings, designs, specifications,
the method of shipment or packing, or the place of
delivery.

Clerk of the Works: Same as project


representative.

Closed List Of Bidders: Same as invited bidders.

Closed Specifications: Specifications stipulating


;the use of specific products or processes without
provision for substitution. Same as base bid
specifications.

Closeout: The process in which the awarding


agency determines that all applicable
administrative actions and all required work of
the award have been completed by the recipient
and the awarding agency (This is the point where
the bond or other encumbrance will be released.)

Closing Date: The deadline for all bid


submissions.

Code: A legal instrument adopted within a


political jurisdiction that prescribes the minimum
acceptable levels of the design, construction,
installation, and performance of materials,
components, devices, items of equipment, and
appliances used in a building or building system
and/or subsystem.

Code Of Practice: A technical document setting


forth standards of good construction for various
materials and trades

Commercial-Off-The-Shelf (COTS): Refers to


supplies readily available in the commercial
marketplace.

Commodity: A transportable article of trade or


commerce that can be bartered or sold.

Commodity Agreement: Primary source


agreements designated for supply of goods or
services to an agency established because of a
competitive quotation for indefinite quantities
during a period at firm prices or with an
established basis for price changes.

Commodity Manager: The Strategic Sourcing


Manager assigned responsibility on an agency-
wide basis for coordinating standards and
specification development covering specific
commodities or groups of commodities and for
developing, negotiating, and monitoring pool
purchases, commodity agreements, and price
schedules for assigned commodities.

Common Carrier: A common carrier serves all


customers, but carries only the type of freight for
which it is certified. Benefits include the
availability of service to anyone seeking
transportation; the publication of rates; the
provision of service on a schedule; service to
designated points or within a designated area; and
service for a given class(es) of movement and
commodities.

Competition: A procurement strategy where


more than one contractor that is capable of
performing the contract is solicited to submit an
offer for supplies and services. The successful
offeror is selected based on criteria established by
the agency's contracting office and the program
offices for which the work is to be performed.

Competitive Bidding: The offer of vendor bids


by individuals or vendors competing for a
contract, privilege, or right to supply specified
services or goods, over an agency-specific amount
(e.g., $5,000). The amount is determined from
agency to agency.

Competitive Intelligence (CI): Gathering and


analyzing information about customers,
competitors and the marketplace to support
successful business decisions.

Competitive Sealed Bid: A bid submitted in a


sealed envelope to prevent disclosure of its
contents before the deadline set for the receipt of
all bids. Sealed bidding procedures are required on
procurements construction projects exceeding an
agency-specific amount.

Competitive Negotiation: A method for


purchasing goods and services, usually of a highly
complex and technical nature whereby qualified
individuals or vendors are solicited by means of a
Request for Proposals. Negotiations are conducted
with selected offerors, the best proposal, as judged
against criteria contained in the Request for
Proposals, is accepted, and an award is issued.

Completed Operations Insurance: Liability


insurance coverage for injuries to persons or
damage to property occurring after an operation is
completed but attributed to that operation; does
not apply to damage to the completed work itself.

Completion Bond, Construction Bond,


Contract Bond: The guarantee of a bonding
company that a contractor will perform and
deliver the work contracted free of all
encumbrances and liens.

Completion Date: In the contract documents, the


date of substantial completion of the work.

Completion List: Same as inspection list.

Comprehensive General Liability Insurance:


A broad form of liability insurance covering
claims for bodily injury and property damage
which combines under one policy coverage for all
liability exposures on a blanket basis and
automatically covers new and unknown hazards
that may develop; automatically includes
contractual liability coverage for certain types of
contracts.

Conditions of the Bid: Conditions set forth in


the instructions to bidders, the notice to bidders or