Chapter 16. Glossary

Accountability

The obligation to:

 a. Demonstrate that work has been conducted in accordance with agreed rules and standards;

 b. Report fairly and accurately on performance results vis-à-vis mandated roles and/or plans.

Acquisition Plan

The work plan regulating the acquisition activities over the course of a year.

Acquisition Process

The steps necessary to acquire goods and services, inter alia, through identification and development of requirements, planning, budgeting, conducting solicitations, obtaining approvals, entering into contract negotiations and carrying out contract fulfilment.

Administrative Instruction (AI)*

An administrative instrument used by the UN to establish instructions, procedures, and business process maps for implementation of superior United Nations legislation applicable to the UN.

Award Review Board (ARB)

The Award Review Board is a UN administrative board which independently reviews complaints by unsuccessful bidders who challenge contracts awards made by the UN.

Audit Trail

Clear and concise documentation in a suitable format, normally a written log, describing the actions and decisions taken throughout the handling of a case, thereby enabling a reviewer of the case to establish that it has been handled in accordance with the applicable regulations, rules and procedures.

Authorized Official

An individual who has been delegated procurement authority and who is overall responsible for the procurement function of an entity, either at Headquarters or other locations. This may be a head of the entity or head of a department.

Award

The authorization given by an Authorized Official following Review Committees recommendation or by a Procurement Approving Authority, as applicable, to establish a commitment.

Bank Guarantee for Advance Payment

An unconditional and on-demand bank guarantee from the contractor to the UN for advance payment enabling the contractor to commence works. Such advances arrive at first interim payment.

Bank Guarantee for Performance

A bank guarantee obtained from the contractor to protect the UN from non-performance by the contractor of its contractual obligations. It is a promise from a bank that it will pay the UN the amount of the guarantee if the contractor fails to perform any of the terms, provisions, or conditions of the contract.

Best Value for Money

The optimization of total cost of ownership and quality needed to meet the user’s requirements, while taking into consideration potential risk factors and resources available.

Best and Final Offer (BAFO)*

A negotiation tool that can be used during the final evaluation phase of the procurement process.

Bid/Proposal/Offer

 a. An offer in response to a method of solicitation;

 b. A response to a solicitation from a vendor or supplier

Bid Security (Bid Bond)

A security from a supplier securing obligations, resulting from a Submission with the intention to avoid (i) the withdrawal or modification of an offer after the deadline for submission of such documents, (ii) failure to sign the contract or failure to provide the required security for the performance of the contract after an offer has been accepted, or (iii) failure to comply with any other conditions precedent to signing the contract specified in the solicitation documents.

Bidder/Proposer/Offeror

An entity that submits an offer in response to a solicitation. Normally, the term ‘bidder’ is used to refer to the entity responding to an EOI, RFI, ITB, RFQ, or RFP.

Bid Protest/Procurement Challenge

A post-award complaint against the methods employed or decisions made by the UN in a process leading to the award of a contract.

Bill of Lading

A carrier’s contract and receipt for goods; it agrees to transport from one place to another and to deliver to a designated recipient (consignee).

Blanket Purchase Order (BPO) *

BPOs are typically issued at the local level to satisfy straightforward, low-value, and recurring operational requirements of a support nature.

Business Partner (BP)

A person or an organization that has a business interest with the UN. A BP can be a commercial vendor that supplies goods and/or services to the UN but also a UN agency, Member or staff members, etc.

Call-Off Orders/Purchase Orders

Orders against an established long-term agreement.

Cartel

A small group of competing producers/suppliers of a good or a service who agree to regulate the production, price, and/or marketing in an effort to control or manipulate the market.

Catalogue

An organized list of goods or services specifying the description, price, unit of measure, and other attributes. A catalogue may be available as a document or in an electronic format.

Certifying Officer (CO)

See Financial Rule 105.5. The CO is the UN official responsible for managing the utilization of resources, in accordance with the purposes for which those resources were approved and the principles of efficiency, effectiveness and the Financial Regulations and Rules. CO review the requests issued by the Requisitioner, ensure that the technical specifications are generic and that funds are available for the procurement.

Certifying authority and responsibility are assigned on a personal basis and cannot be delegated. A CO cannot exercise the approving function under Financial Rule 105.6.

Closing Date

The deadline for all bid/proposal submissions.

Collaborative Procurement/Common Procurement

A procurement arrangement in which several UN organizations combine their efforts to undertake procurement in cooperation or share the outcome of a procurement process, thereby achieving benefits for the group in its entirety. The objective of collaborative procurement is to achieve reduced price or better service through economies of scale and to reduce inefficiency and duplication across the UN organizations.

Commitment

The anticipated or contingent liability against funds allocated for the current or future year(s).

Competitive Bidding

A procurement method in which offers from competing suppliers are invited by open advertisement and provided with the scope, specifications, and terms and conditions of the proposed contract, as well as the criteria by which the offers will be evaluated. The objectives of competitive bidding are to obtain goods or services at the lowest cost or best value through open and fair competition.

Contract

In the context of UN procurement, a contract is a written, legally-binding agreement between the organization and a supplier that establishes the terms and conditions, including the rights and obligations of the organization and the supplier. A contract may take many different forms (e.g. agreement, purchase order, memorandum of understanding, letters of assist).

Contract Administration

All actions undertaken after the award of a contract relating to the administrative aspects of the contract, such as contract amendment, contract closure, record retention, maintenance of the contract file, handling disputes or claims, and handling of security instruments (e.g. performance security).

Contract Management

The ongoing monitoring and management of the supplier’s performance regarding the promised goods or services, as well as assuring compliance with all other terms and conditions of a contract, such as a price and discounts. It includes managing the relationship between the supplier, the procuring unit, the requisitioner, and/or the end-user, as well as feedback to the supplier regarding its performance if necessary.

Contract Modification

Any written change in the terms of the contract. Contract modifications only become effective when executed in writing by both parties through a contract amendment.

Contractor

Any party to a procurement contract with the organization. A contractor may take various forms, including an individual person, a company (whether privately or publicly held), a partnership, or a government agency.

Cost Estimate

An approximate calculation of charges or costs to supply goods and/or services.

Default

A failure by a contracting party to meet one or more of its obligations under the contract.

Delegation of Authority (DOA)*

The written instruments stating the conditions, procedures, and terms for a delegate to exercise authority in the respective area.

Delivery Time

The time taken to deliver goods from the date of order to the time when the supplier makes the goods available to the buyer at the agreed place as per the delivery terms.

Disposal

The process of removing something from a location, typically the removal of scrap, surplus, excess, obsolete and waste items from an organization’s premises.

E-tendering

Electronic procurement that occurs when the activities of the purchasing process are conducted electronically, typically over the Internet, to shorten the cycle time and lower the transaction costs of the acquisition process.

Exigency

An exceptional, compelling, and emergent need or situation of force majeure, not resulting from poor planning or management or from concerns over the availability of funds, that will lead to serious damage, loss, or injury to property or persons, if not addressed immediately.

Expression of Interest (EOI)*

A response to a Request for Expression of Interest (REOI) expressing interest in participating in a solicitation.

Incoterms

Incoterms rules are standardized and widely-recognized trade terms, prepared by the International Chamber of Commerce (ICC), to be included in contracts for the sale of goods and to provide standard contractual provisions that clarify the costs, risks, and responsibilities of the parties to the contract, particularly in relation to the shipment and delivery of the goods from sellers to buyers. Refer to the ICC website (www.iccwbo.org) for more information about these terms and their definitions, which are copyrighted by the ICC.

Internal Control

A process carried out by the UN’s management and other personnel, designed to provide reasonable assurance regarding robust risk management and the achievement of objectives and goals. This process aims to increase the effectiveness and efficiency of operations, the reliability of financial reporting, and compliance with applicable laws and regulations.

Invitation to Bid (ITB)*

A formal method of solicitation where prospective suppliers are requested to submit a bid for the provision of goods or services. An ITB is normally used when the requirements are clearly and completely specified and the basis for the award is the lowest cost.

Invoice

Supplier’s demand for payment setting out the amount for payment by the buyer with respect to goods delivered or services rendered.

Lease

A contract whereby, in return for a payment or series of payments, the lessor conveys to the lessee the right to use an asset for an agreed-upon period of time. There are two types of

leases, namely, (i) a finance lease, which transfers substantially all risks and rewards incident to ownership of an asset while the title may or may not be eventually transferred, and (ii) an operating lease, which is a lease other than a finance lease.

Legal Obligation

An obligation that derives from:

1. A contract (through its explicit or implicit terms);
2. Legislation;/or
3. Other operation of law.

Liability

Any obligation incurred as a result of law, rule, or agreement; being legally obliged and responsible; a debt or an obligation to another party.

Life Cycle Cost/Whole Life Cost/Total Cost of Ownership

The sum of all recurring and one-time (non-recurring) costs over the full life span or specified period of a good, service, structure, or system. It includes purchase price, installation cost, operating costs, maintenance and upgrade costs, and remaining residual or salvage value at the end of ownership or its useful life.

Logistics

The process of planning, implementing and controlling the efficient, cost-effective flow and storage of goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.

Long-Term Agreement (LTA)*

A written agreement between an organization of the United Nations system and a supplier that is established for a defined period of time for specific goods or services at prescribed prices or pricing provisions.

Offer/Submission

A generic term for bids, quotations, and proposals received from a supplier in response to solicitation documents.

Price Escalation

The practice of having a mechanism to increase unit prices throughout the contract life that should reflect inflation, usually on large contracts in areas with significant inflation.

Procurement

The acquisition by purchase or lease of goods, services, real property, and works.

Procurement Approving Authority

A Procurement Official who has been formally delegated authority for procurement (DOA) and will be referred to as a Procurement Approving Authority, up to their level of delegated authority.

Procurement Authority

The delegation from the Secretary-General to Heads of Entity and other appropriate officials to perform procurement functions.

Procurement Official

Procurement staff dedicated for procuring goods and services, with proper training, knowledge, and experience, or administrative staff with the appropriate procurement expertise, training, and qualification, if approved by the ASG, OSCM.

Procuring Agent

Another UN Secretariat entity that may be assigned by the USG, DOS in consultation with USG, DMSPC and the head of

entity, to undertake procurement on the entity’s behalf if the

entity does not have sufficient procurement capacity.

Product

The use of the word ‘product’ in the context of this manual is

used to cover goods, works, and services.

Proposal

An offer in response to an RFP.

Purchase Order (PO)*

A type of contract that documents the purchase of goods and/or services.

Quotation

An offer in response to a Request For Quotation. However, if it is in response to an enquiry, it is simply a statement of price and availability.

Request for Expression of Interest (REOI)*

An advertisement to identify suppliers that wish to participate in a forthcoming solicitation (see also ‘expression of interest (EOI)’).

Request for Information (RFI)*

An instrument to conduct a market survey in order to obtain information from the market that can be used to identify potential vendors, as well as available or potential solutions for fulfilling identified needs that may also include information on cost and delivery time.

Request for Proposal (RFP)*

A formal method of solicitation where prospective suppliers are requested to submit a proposal for the provision of goods, works, or services, based on the specifications, statement of work (SOW), or terms of reference (TOR) included in the solicitation documents. An RFP is normally used in cases where the requirements are complex and/or cannot be clearly or completely specified, where detailed technical evaluations are to be performed, and/or where pricing or cost may not be the sole basis of the award.

Request for Quotation (RFQ)*

An informal method of solicitation whereby suppliers are requested to submit a quotation for the provision of goods or services. An RFQ is normally used for standard, off-the-shelf items where the value of the procurement falls below the established threshold for formal methods of solicitation.

Requisition/Shopping Cart

A written or computerized request from an internal user/customer for the fulfilment or procurement of goods, services, or works.

Requisitioner

A UN staff initiating a purchase requisition (i.e., a request for goods, works or services).

Review Committees*

HCC and LCCs are committees (committees on contracts) to review procurement processes, thus verifying whether procurement has been undertaken in accordance with established procedures and in line with the Financial Regulations and Rules.

Sealed Offer

An offer that has been submitted in a sealed envelope to prevent its contents from being revealed or known before the deadline for the submission and opening of all offers.

Security Instruments

Financial instruments that are intended to provide the UN with security against expenses and losses that result from a failure by a supplier to perform its obligations. They are intended to

ensure that funding is available to compensate the UN for such failure and are not intended as a punishment. The main security instruments are (i) bid security and (ii) performance security. Security can take the form of bank guarantees, surety bonds, standby letters of credit, and cheques on which a bank is primarily liable.

Segregation of Duties

An internal control mechanism used to assure that no single individual or organizational unit is given responsibility for more than one related function.

Solicitation

Generic term for a request to vendors to offer a quotation, bid, or proposal.

Solicitation Documents

Documents issued by the UN to describe procurement requirements and to invite vendors to submit a bid, quotation, or proposal.

Solicitation Method

The method used to solicit offers from vendors. ITB, RFP, RFQ, and LVAs are methods of solicitation.

Source Selection Plan (SSP)*

The SSP describes critical components of the procurement process and provides justification for the decision in order to achieve Best Value for Money. It provides an objective approach to the methodology of selecting the best source to fulfil the established need.

Sourcing

The process of identifying suitable suppliers that could provide the required products or services for the acquiring organization.

Specifications

A description of the technical requirements for a material, product, or service. Specifications usually refer to the defined requirements for materials or products but can also relate to the requirements for services (terms of reference (TOR)).

Standardization

The process of agreeing on a standard specification for a specific product or line of products. This is usually conducted to achieve economies of scale, compatibility with other products, facilitation of operation, maintenance and repair of already purchased goods, etc. Standardization could result in sole or limited source situations; this should be a consideration in the decision for standardization.

Statement of Award

A written record of the basis on which an award was made.

Statement of Work (SOW)*

Requirement specifications for work assignments outlining the specific services a contractor is expected to perform, generally indicating the type, level, and quality of service, as well as the time schedule required.

Submission

Along with ‘offer’, this is a generic term for bids, quotations, and proposals received from a supplier in response to solicitation documents.

Supplier/Vendor

An entity that potentially or actually provides goods or other products (including intellectual property), services, and/or works to the organization. For the purpose of this manual, the terms ‘supplier’ and ‘vendor’ are considered equivalent and used interchangeably.