The Complete Dictionary of Commissioning and Procurement
This factsheet contains a list of the key terms involved in procurement and commissioning processes with
accompanying definitions. It also includes a range of relevant terms related to; measuring and quantifying
impact, negotiation and financial management that will be of use when entering into procurement and
commissioning procedures.
Terms
Definitions
Aggregation
The rules which decide when the value of one contract must be combined with one or more other
contracts. The total value of the aggregated contract may then trigger EU procurement Thresholds.
Best Value
The optimum combination of whole life costs and quality to meet the user’s requirements
Commissioning
• Commissioning is the cycle of assessing the needs of people, currently and for the future, designing
and then securing an appropriate service
• The process by which public bodies decide how to spend their money to get the best possible
services for people. Involves anticipating future needs and expectations rather reacting to present
demand. [NCVO amended]
Compact
The voluntary and community sector’s written agreement with the government (or local public bodies)
which has undertakings on both sides, shared principles and values such as recognising the sector's
independence, and mechanisms for making it work. [NCVO].
Contestability
Making a market efficient by increasing the potential for new entrants to the market.
Contract
Legally binding agreements between (in this case) a government body and a TSO to provide services on
behalf of the public body. A contract will specify the services to be provided and what the contractor is
to be paid for providing them. It will also include provisions, in greater or lesser detail, setting out the legal
obligations which each of the parties accepts in order to fulfil the purposes of the contract.(NCVO).
E - Auctions
e – Auction An online exercise in which suppliers compete against each other to lower the tender price.
Sometimes known as a ‘reverse auction’. Can be used by the purchaser to establish the market price.
e- Marketplace An internet based facility that enables trade between one or more purchasing
organisations and a variety of suppliers.
e-Tendering ending requests for information and prices to suppliers and receiving the tender responses
from suppliers using Internet technology. [NCVO].
Expression of
Interest (EOI)
A first stage in a tendering process. Prospective tenderers express interest in the way described in the
advertisement. This results in the tender documents being sent to the prospective tenderer. The EOI
may require prospective tenderers to submit a summary of the proposed activities and an indication of
cost. Not as stringent or detailed as a PQQ. [NCVO].
Full Cost
Recovery (FCR)
Full cost recovery means recovering or funding the full costs of delivering a project or service.
In addition to the costs directly associated with the project, such as staff and equipment, projects will also
draw on the rest of the organisation. For example, adequate finance, human resources, management,
and IT systems, are also integral components of any project or service. The full cost of any project
therefore includes an element of each type of overhead cost, which should be allocated on a
comprehensive, robust, and defensible basis.
FCR is therefore the process of costing activities to include the appropriate share of organisational
overhead.
A joint initiative to strengthen support services for the third sector
The ACEVO Commissioning Support Service
Terms
Definitions
Grant
A grant is a non-repayable sum of money given to a Third Sector Organisation (TSO) often by
government, foundations or individuals. Grants are usually given to fund a specific project, which the TSO
may well be required to monitor and report on it in terms of delivery of outputs and appropriateness of
spending.
Individual Budgets
Sometimes called personal budgets. The process by which a service beneficiary gets control of how and
on which specific provider the budget affecting the service(s) they receive is spent.
Intelligent
Commissioning
The House of Commons Public Administration Committee defined intelligent commissioning as
commissioning “based on knowledge of potential providers and desired outcomes, based on user needs.
Intelligent commissioners should be able to make judgements such as whether contracts or grants are
the right way to fund a service, how important price should be in determining who wins a contract, and
whether there is scope for innovative methods of delivery”.
Invitation to Tender The ITT is a collection of documents that contracting authorities send to potential bidders, with
information about the service requirements and its terms and conditions. It should provide clear and
(ITT)
comprehensive information on the services being procured, including the scope of the service and the
impact of any obligations such as TUPE on price.
EU rules require the ITT to include contract award criteria, contract notice periods, and the deadlines
for the procedure, as well as where bidders can contact for further information.
Local Area
Agreement
The LAA lays out the 35 optional national indicators and the 17 statutory ones which will be used by
central government to performance manage a local authority.
M.E.A.T
M.E.AT, which stands for Most Economically Advantageous Tender allows the commissioner to assess
tenders on criteria other than cheapest price, allowing for
National Indicators
The National Indicators are a set of 198 headline indicators developed as a result of the Comprehensive
Spending Review that Central Government uses to performance manage Local Government.
OJEU
Official Journal of the European Union. It carries calls to tender above the CPD threshold from all EU
Member states, the EEA countries and from the USA and Australia under the WTO agreement. Average
contents of a single issue of the OJEU are in the region of 3-4,000 calls for tender. OJEU can viewed
online at Tenders Electronic Daily http://ted.europa.eu/ [NCVO]
Part A Services
Part A services are those services which, when above Procurement Thresholds, must be tendered for in
full accordance with EU rules.
Part B Services
Those services included in an Appendix, or "Part B" to the Directive 2004/18/EC and the Public
Contracts Regulations 2006. In procuring these services, which include health education and social care,
purchasers are not required to comply with all of the regulatory requirements.[NCVO]
Personalisation
The process by which beneficiaries are being given control over the public services they receive
PQQ – Pre
Qualification
Questionnaire
A document that enables the buyer to create a short list of potential providers by obtaining sufficient
information to evaluate the suitability of potential suppliers in terms of; - economic and financial standing,
technical/professional ability and capacity and legal status. This forms the basis of the selection stage of
the tendering process..
Preferred Partners
Identified through the strategic decision for collaboration with a group or enterprise to ensure the
development of a service proposal in the light of local priorities and needs.
Prime Contractor
A body which wins and manages the delivery of a contract for public service delivery. This may involve
sub-contracting many of the practical aspects of service delivery to other third parties including SME’s
and Third Sector Organisations.
Procurement
Processes
Open - A tendering process in which the selection stage is followed almost immediately by the
award stage in order to identify a single contractor to deliver the supplies or services specified.
Sometimes both the selection stage and award stage are combined into a single phase.[NCVO]
Restricted - A tendering process which uses the selection stage to set up a select list or framework of
providers.The list may then be used for a defined period of up to eight years to invite tenders or request
quotes as specific services as required.[NCVO].
The ACEVO Commissioning Support Service
Terms
Definitions
Procurement
Processes
Competitive Dialogue - A new tendering procedure which can be used for complex contracts
where the final specification is yet to be decided. The process uses the selection stage to identify a
number of tenderers, each of whom will be invited to contribute their ideas towards the final
specification. This is the "Dialogue" phase. When the specification has been decided then the
Procurement Officers must declare the dialogue complete. Those tenderers identified during the
selection stage are then invited to compete for the contract in the "Competitive" phase [NCVO].
Procurement
• Procurement is the specific aspects of the commissioning cycle that focus on the process of buying
services, from initial advertising through to appropriate contract arrangements.
• The purchase of goods and/or services by publicly funded bodies at the best possible total price, in
the right quantity and quality, at the right time generally via a contract.The functions of procurement
are a) ensuring legal compliance; b) purchasing supplies or services; c) entering into contracts.
Procurement must be kept separated from Commissioning. [NCVO].
Procurement
Thresholds
The monetary values for contracts at which EU procurement Rules apply.
Service Level
Agreements
Service level agreements (SLAs) are agreements or contracts with suppliers that define the service
they must provide and the level of service to be delivered, and which also set out responsibilities and
priorities.
SLAs themselves are contractual obligations and are often built into a contract - in the form of one or
more clauses or as an entire section. SLAs can be used in any supplier contract where a business'
ability to meet its customer requirements is dependent on the supplier. (Business Link)
Social Clauses
Clauses that require the contracted organisation to demonstrate that they can deliver social benefits
and outcomes while carrying out other work that is the primary purpose of the contract. [e.g.
environmental, training or employment outcomes].
Standing Orders
The Standing Orders are a specific document containing the rules and procudures which an
individual public body will be compliant with and how it will conduct its business. This will include
finacial rules, employment rules and procurement activities.
State Aid
EU law on state aid aims to prevent member states from unfairly distorting competition within the
EU, except in certain permitted circumstances. A prohibited state aid exists if all of the following four
criteria apply to the proposed programme:
• It is granted by the state or through state resources
• It favours certain undertakings or the production of certain goods
• It distorts or threatens to distort competition
• It has the potential to affect trade with the EU [NCVO]
Sub-Contract
The process by which the body delvering who holds the main contract with the public body agrees
for an (often smaller) organisation to deliver a specific activity that is part of the wider contract.
TUPE
The Transfer of Undertakings (Protection of Employment) Regulations 1981.The purpose of TUPE is
to preserve continuity of employment and to safeguard employment rights of all employees whose
employment transfers to a new employer as a result of a relevant transfer.[NCVO].
Value for money
The optimum combination of whole life cost and quality (or fitness for purpose) to meet the user’s
requirement. In other words, getting the best possible outcome from any given level of input. This
does not mean ‘cheapest’. [HM Treasury].
Whole Life Costs
The full cost to an organisation of a solution to a requirement over the full period that the
requirement will exist. Whole life costs will take into account running costs such as energy usage,
maintenance requirements, staff training needs, and disposal costs such as recycling, as well as the
initial purchase price.The life span of the product will also need to be considered. [NCVO].
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3
Key negotiation terms
Term
Definition
Best Alternative To a In negotiation theory, the best alternative to a negotiated agreement or BATNA is the course of
action that will be taken by a party if the current negotiations fail and an agreement cannot be
Negotiated
Agreement (BATNA) reached.
Broker
A broker is a party that mediates between a buyer and a seller. A broker who also acts as a seller or as
a buyer becomes a principal party to the deal. Distinguish agent: one who acts on behalf of a principal.
A ‘brokerage’ or a ‘brokerage firm’ is a business that acts as a broker.
Condition
A condition is something that is granted in relation to a concession.
Least Acceptable
Outcome
Also known as ‘walk away’ point or ‘exit point’ from a negotiation. The point at which the terms being
offered by the other party do not offer an outcome that can in any way be accepted by the negotiating
party, and they must walk away from the table. This is most likely to be a question of whether the
price covers the cost of service delivery, but could also include whether a third sector organisation
wants to be seen to deliver a service with a low level of quality or benefit for beneficiaries.
Most Desirable
Outcome (MDO)
Best possible outcome from a negotiation
Negotiation
Negotiation is the process through which two or more parties seek to achieve an agreement in their
mutual interest, or for their mutual benefit. This usually means a provision of goods of services, to an
agreed specification and terms and conditions, in exchange for money.
Unique Selling Point
(USP)
• The Unique Selling Point (also Unique Selling Proposition) is a marketing concept that was first
proposed as a theory to explain a pattern among successful advertising campaigns of the early
1940s. It states that such campaigns made unique propositions to the customer and that this
convinced them to switch brands.
• The proposition must be one that the competition either cannot, or does not, offer. It must be
unique—either a uniqueness of the brand or a claim not otherwise made in that particular field of
advertising.
Targets, monitoring and evaluation terms*
Term
Definition
Aims
The particular changes or differences the organisation or project plans to bring about.
Evaluation
Involves using monitoring and other information to judge the performance of an organisation or project.
Evaluation can be done externally or internally.
Impact
Broader or longer-term effects of an organisation’s or project’s activities, outputs and outcomes.
Indicator
Well-defined and specific pieces of information that show how well an organisation or project is
performing. For example: outcome indicators are used to assess whether expected outcomes have
occurred; and output indicators are used to assess whether outputs have been delivered. Indicators can
be qualitative or quantitative.
Monitoring
The routine, systematic collection and recording of information about a project mainly for the purpose
of checking its progress against its plans.
Objectives
The activities an organisation or project plans to carry out in order to achieve its aims.
Outcomes
The changes, benefits, learning or other effects that happen as a result of services and activities provided
by an organisation.
Outputs
The activities, services and products provided by an organisation.
Quality
The extent to which a product or service satisfies the expectations of stakeholders. Quality is about
aiming for excellence in various aspects of the organisation – how it is run, the goods it creates and the
services it delivers.
* These definitions have been supplied by Charities Evaluation Services -www.ces-vol.org.uk
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4
Key financial terms
Term
Definition
Assets:
Things of financial value owned by the organisation. Anything owned by the company having a
monetary value. For example - ‘fixed’ assets like buildings, plant and machinery, vehicles (not
classed as assets if rented rather than owned). Assets may potentially include intangibles like
trade marks/brand names, and 'current' assets, such as stock, debtors and cash.
Feasibility
Facts, factors and figures relating to the practicality of making certain things happen (can it be
done – as opposed to ‘should it be done’ – please see viability).
Financial standing
The term is the widest one for the general description of an organisations reputation – upon
which others will make judgements. It is the concept of trustworthiness and is based on an
organisations credit history; past performance, ability to access loans and provide financial
references.
Liabilities
Things of financial valued owed by the organisation. It is a general term for what the business
owes. Liabilities are the combination of long-term loans of the type used to finance the business
and short-term debts or money owing as a result of trading activities to date.
Prudence
Overestimating costs, liabilities and risks, while at the same time underestimating income, assets
and opportunities; a standard procedure to ensure good management of risk.
Reserves
The accumulated and retained difference between profits and losses year on year since the
company's formation.
Restricted fund
These are funds that are restricted for a specific purpose. The purpose can be specific or quite
broad, eg., in the case of grants or donations from a charity; or a particular project with agreed
terms outputs such as to meet the criteria of the award or grant.The source of restricted funds
can be from government, foundations and trusts, grant-awarding bodies, philanthropic
organisations, private donations, etc. The practical implication is that restricted funds are ringfenced and cannot be used for any other purpose, which may also entail specific reporting and
timescales, with which the organisation using the funds must comply. One of the more famous
examples of misuse of restricted funds was when Maxwell spent Mirror Group pension funds on
Mirror Group development.
Viability
Facts, factors and figures relating to whether it is worthwhile to make certain things happen
(should it be done – as opposed to ‘can it be done’ – please see feasibility).
Variable cost
A cost which varies with sales or operational volumes, eg materials, fuel, and resources.
Working capital
Current assets less current liabilities, representing the required investment, continually circulating,
to finance stock, debtors, and work in progress.
ACEVO Commissioning Support Helpline
Contact us for advice and support on procurement and commissioning issues:
E: [email protected]
T: 0207 280 4937
www.acevo.org.uk/commissioning
The ACEVO Commissioning Support Service