Our continuing glossary of procurement terminology is intended to explain some of the jargon used around procurement. This time we go from Letter of intent to Outputs, taking in OJEU, Limitation of liability and Liquidated damages.

You can find the previous entries here – parts 1 | 2 | 3 | 4.

Letter of intent (LOI)

Due to common commercial pressures, works often begin before a formal contract can be finalised. In these instances, a letter of intent is drafted to a contractor for some peace of mind. As it is rare that the letter features any form of binding obligation, the contract should be completed as soon as is possible to minimise risks for both parties.

Life-cycle costing

An approach to assessing cost alternatives which factors in all incurred costs over the life of a product or service. Calculations used in employing this method of selection should be clear and justifiable.

Light-touch regime

A new regime affording some flexibility to contracting authorities in the advertisement and award of specific service contracts of value greater than €750,000. This largely replaces the previous Part B Services regime.

Limitation of liability

A contract clause that specifies the level of financial compensation one party would be liable for in the event of failing to provide contracted services to the other. It provides a cap on risk so ‘consequential‘ costs are not also incurred.

Liquidated damages

A contractually-agreed sum (in a Limitation of Liability clause, for example) that would be payable in damages in the event of a breach of contract.

Liquidated and ascertained damages

See Liquidated Damages.

Lot

A category of goods or services sought within a procurement process. Used when a single procurement process seeks to source different suppliers for constituent parts.

Maximum price

The specified and agreed total contract sum that the contractor’s payments will not exceed. Contractors are liable for resulting costs above this threshold. Often used in Target Cost Incentive Fee arrangements.

Method statements

A document, often required as part of a tender response, outlining the proposed process to complete works. Method statements are often accompanied by risk assessments to highlight potential dangers involved with carrying out works, and to specify safety measures to be taken.

Mini-competition

Where the detail of the issued tender has proved insufficient to select a contractor within a framework agreement, a mini-competition may be used to determine to whom the contract is awarded.

Most economically-advantageous tender (MEAT)

The tender response best meeting the procuring party’s requirements, including cost and quality.

Needs assessment

The process by which a requirement – and level of requirement – for goods or services is analysed and evidenced against potential risks.

Negotiated procedure

A tender procedure that uses a Pre-Qualification Questionnaire, but then allows negotiation with tenderers before awarding the contract. Only used in certain circumstances of urgency or high degree of technical complexity.

Negotiated procedure without notice

A negotiated tender procedure where the purchasing body does not place an advertisement in the OJEU, as they are intending to negotiate a contract with a specific (usually specialist) supplier. Only used in rare circumstances.

Objectives and key results

The overall (immeasurable) aim, and the strategic goals by which achievement of the overall aim is measured.

Offer

A response to a purchasing body suggesting ability to deliver required goods or services.

Offer and acceptance

General terms for a contractor’s response to a tender request and a purchasing body’s agreement to proceed. More specific terms should be used when formalising contracts.

Official Journal

See European Union’s Official Journal (or OJEU)

Office of Government Commerce (OGC)

The Office of Government Commerce was a UK government office supporting procurement and acquisition of public sector organisations. It has largely been replaced by the Crown Commercial Service.

OJEU

See European Union’s Official Journal (or OJEU)

OJEU notice

An advertisement in the European Union’s Official Journal for notification that a contracting authority is to procure goods or services.

Open procedure

A procurement process in which all interested suppliers are invited to submit a tender response. Usually used where the market place (and therefore number of potential suppliers) is clearly defined.

Outcomes

The changes that occur as a result of a project or organisation’s activities. These might be positive, negative, long-term, short-term, intended or unintended.

Outputs

The deliverables of a project or organisation’s activities.