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A

Accrual

Funds are accrued, (liened), to cover a purchase which has not yet been invoiced.

Acknowledgment

A communication (written or electronic) used to inform the buyer that the supplier has accepted the purchase order. An acknowledgment may add additional terms. However, a bilateral agreement is consummated as a result of this acknowledgment, as long as the terms of the acknowledgment are not substantively different from those of the purchase order.

Affirmative Action

A provision of the Equal Opportunity Act of 1972 that requires all firms to take affirmative action to move toward achieving a work force that accurately reflects the composition of the local labor pool. In recent years, this interpretation has been liberalized somewhat. The current definition is: "Any effort taken to expand opportunity for women or racial, ethnic, and national origin minorities by using membership in those groups that have been subject to discrimination as a consideration."

Alaska Native Corporations (ANC)

Any Regional Corporation, Village Corporation, Urban Corporation, or Group Corporation organized under the laws of the State of Alaska in accordance with the Alaska Native Claims Settlement Act of 1971, and considered a minority and economically disadvantaged concern.

Asian-Pacific Americans

United States citizens whose origins are in Japan, China, the Philippines, Vietnam, Korea, Samoa, Guam, the U.S. Trust Territory of the Pacific Islands, (Republic of Palau), the Northern Mariana Islands, Laos, Kampuchea (Cambodia), Taiwan, Burma, Thailand, Maylasia , Indonesia, Singapore, Brunei, Republic of the Marshall Islands, the Federated States of Micronesia, Macao, Hong Kong, Fiji, Tonga, Kiribati, Tuvalu, or Nauru.

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B

Back Order

Items that have been ordered but cannot be shipped, (out of stock or some other reason). This is widely used as a measure of supplier performance and customer service (percent back orders, number of occurrences, number of back order days, etc.).

"Best Buy"

A term used to imply that a purchase represents an overall combination of quality, price, and various elements of required service that in total are optimal relative to the firm's needs.

Bid

In purchasing, a bid can be an offer to sell or an offer to buy. "Submittal response", "bid response", "proposal" are used interchangeably and refer to seller's documents and attachments in response to a bid request (i.e., Request for Proposal or Request for Quote).

Bill Of Lading (B/L)

A carrier's contract and receipt for goods it agrees to transport from one place to another and to deliver to a designated person.

Blanket Order

A term commitment (usually one year or more) to a supplier for certain goods or services over a predetermined period of time at predetermined prices, most-favored customer prices, or prices to be revised due to market or other conditions. This practice is aimed at reducing the number of small orders by utilizing short-term releases to satisfy demand requirements.

Buyer

A professional purchaser. Buyers typically specialize in a given group of materials or services and are responsible for market analysis, purchase planning, and coordination with users.

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C

Cartage

A charge made for the hauling and transferring of goods, usually on a local basis and short haul in nature.

Cash On Delivery (C.O.D.)

Cash payment for purchases on delivery.

Cash Discount

A form of discount the purpose of which is to secure prompt payment of an account.

Change Order

A purchaser's written authorization to the supplier to modify or change an existing purchase order. In public sector purchasing, these changes generally must be within the scope of the contract.

Code of Federal Regulations (CFR)

Is the codification of the general and permanent rules published in the Federal Register by the executive departments and agencies of the Federal Government. It is divided into 50 titles that represent broad areas subject to Federal regulation. Each volume of the CFR is updated once each calendar year and is issued on a quarterly basis.

Commodity Agreement

Primary source agreements designated for supply of goods or services to the University established as a result of a competitive quotation for indefinite quantities during a period of time at firm prices or with an established basis for price changes.

Commodity Manager

The Strategic Sourcing Manager assigned responsibility on a University-wide basis for coordinating standards and specification development covering specific commodities or groups of commodities commonly used by two or more campuses, 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.

Competitive Quotation

Responsive price quotations from a minimum of three qualified suppliers submitted in accordance with a solicitation from the Director of Business Services or Associate Director of Procurement Services.

Competitive Bidding

A common method of source selection; the offer of prices and specified elements of performance by firms competing for a contract. Major public sector purchases generally require that the award be made to the lowest responsive and responsible bidder.

Conflict Of Interest

A situation in which an individual has a personal interest (or responsibility as well as a job responsibility) and a clear possibly exists that there may be a conflict between the two. The individual's actions may be influenced by his/her personal interest to the detriment of performing the professional responsibility effectively (e.g., buying from a supplier owned by a family member).

Contract

A written or oral agreement between two or more competent parties that defines a job or service to be performed and that is legally enforceable.

Contracting Officer

The government contracting officer, often at an installation other than the one making the contract, who handles the business administration of the contract.

Cost Avoidance

A purchasing action by means of which certain material/supplier increases are not incurred by the purchasing firm. Since it is not always possible to reduce existing costs, cost "avoidances" often are reported as savings when measuring or evaluating purchasing performance.

Credit Memo

A document used to correct an overcharge, pay a rebate, or credit the value of goods returned.

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D

Decentralized Purchasing

When a firm approaches purchasing in a decentralized manner, individual departments (in a single-site organization) or location managers (in a multi-site organization) control the purchasing functions. There is no central purchasing department with specialized buying expertise in a single-site operation, although in a multi-site operation each plant may have its own purchasing department.

Delivery Terms

Conditions in a contract that relate to carrier and routing, freight charges, place of delivery, time of delivery, etc.

Director- Business Services

Same as Director - Materiel Management ; Office of the President representative with facilitative, consultative, and coordinative responsibility for the Materiel Management function of the University and administrative responsibility for the Planned Purchasing and Classification and Coding programs.

Disabled Veteran

A veteran of the military, naval, or air service of the United States with a service connected disability who is a resident of the State of California . To qualify as a veteran with a service connected disability, the person must be currently declared by the United States Veterans Administration to be 10 percent (10%) or more disabled as a result of service in the armed forces. (California Military and Veterans Code, Article 6, Section 999 et seq )

Disabled Veteran Business Enterprise (DVBE)

A business that is at least fifty-one percent (51%) owned by one or more disabled veterans or, in the case of any publicly owned business, at least fifty-one percent (51%) of the stock of which is owned by such individuals: and whose management and daily business operations are controlled by one or more of such individuals.

Disadvantaged Business Enterprise (DBE)

A business concern which is at least fifty-one percent (51%) owned by one or more socially and economically disadvantaged individuals or, in the case of any publicly owned business, at least fifty-one percent (51%) of the stock of which is owned by such individuals and whose management and daily business operations are controlled by one or more of such individuals. Business owners who certify that they are members of named groups (Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent-Asian Americans) are to be considered socially and economically disadvantaged.

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E

Expedite

The act of contacting a supplier or carrier with the goal of speeding up the delivery date of an inbound shipment.

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F

Fabrication

To construct equipment from a set of instructions or blueprints from supplied parts by a manufacturer or expert.

Fabrication (UC)

UC "constructed" using equipment and supplies from many vendors under a fabrication number issued by Equipment Management. All orders are inventoried under the same number.

Federal Acquisition Regulation (FAR)

Is the primary regulation used by all federal executive agencies in their acquisition of supplies and services with appropriated funds, under the joint authorities of the Administrator of General Services, the Secretary of Defense, and the Administrator for the National Aeronautics and Space Administration.

Federal Contracts And Grants

Extramural agreements that fund selected campus activities, and prime contracts governing National Laboratory operations.

Free On Board (F.O.B.)

In domestic trade, and when the item is used with no further explanation, it means delivery of the goods with all charges paid aboard the carrier's equipment without cost to the buyer. However, the F.O.B. terms go far beyond this concept and establish a contractual arrangement in which title is transferred between supplier and purchaser at the F.O.B. point. F.O.B. Destination, Freight Collect: means that title passes from the supplier to the buyer at the destination point, and that the freight charges are the responsibility of the purchaser. The supplier owns the goods in transit and is responsible for filing loss and damage claims against the carrier, but the purchaser pays and bears the freight charges and files any overcharge claims. The purchaser will be billed directly by the carrier. F.O.B. Destination Freight Prepaid and Allowed, or F.O.B. Destination Freight Prepaid, or F.O.B. Destination Freight Allowed: means that title passes from the supplier to the buyer at the destination point, and that the freight charges are paid by the supplier. The supplier pays and bears the freight charges, owns the goods in transit, and may file a claims for overcharge, loss, and damage, etc. F.O.B. Destination Freight Prepaid and Add: means that the title passes at the destination point, and that the freight charges are paid by the supplier and added to the invoice. The supplier pays the freight charges, owns the goods in transit, and files all claims for overcharges, loss, damages, etc. The purchaser bears the freight charges. F.O.B. Origin , Freight Prepaid and Allowed: means that the purchaser obtains title where shipment originates and is responsible for all shipment originates against the carrier, but that the supplier pays for the freight charges. F.O.B. Origin , Freight Collect: means that title passes to the buyer at the point of origin, and that the buyer must pay the freight charges. The buyer owns the goods in transit, and files all claims against the carrier. Purchaser will be billed directly by the carrier. F.O.B. Origin , Freight Prepaid and Add: means that title passes to the buyer at the point of origin, and that the freight charges are paid by the supplier and then collected from the purchaser by adding the amount of the freight charges to the invoice. The supplier pays the freight charges and files claims for overcharges. The purchaser bears the freight charges, owns the goods in transit, and files claims for loss anddamage with the carrier.

Freight Bill

The carrier's invoice for transportation charges applicable to a shipment.

Freight Claims

A claim against a carrier due to loss of, or damage to, goods transported by that carrier; also for erroneous rates and weights in assessment of freight charges.

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G

Goodwill

One of the intangible values beyond its net worth that a business acquires from suppliers and customers as a result of their business relationships. It is promoted by granting more business as a reward for good service, sharing plans and forecasts, working together to solve problems, mutual research and developing, etc.

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H

Hazardous Materials

Materials that have been determined by the Department of Transportation (DOT) to be a risk to health, safety, and property; including such items as explosives, flammable, poisons, corrosives, and radioactive materials. These materials must be packaged, labeled, handled, and transported according to stringent regulation from several agencies (current U.S. regulations appear in the Code of Federal Regulations, Title 49, Parts 171-178). International shipments must comply with docket HM-181, where the term "dangerous goods" is often used interchangeably with hazardous materials.

Historically Black Colleges & Universities (HBCU)

Any US accredited historically black college or university that was established prior to 1964, and whose principal mission was, and is, the education of Black Americans.

HUBZone Small Business

certified by the SBA as a business located in a historically underutilized business (HUB) zone that is unconditionally owned and controlled by one or more US citizens, and at least 35% of its employees must reside in a HUBZone.

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I

Implied Warranty Of Fitness For A Particular Purpose

One of the warranty protections granted by law under the Uniform Commercial Code (UCC) (See Uniform Commercial Code). If the seller knows the buyer's intended use for the goods, and if the buyer has relied on the seller's expertise in choosing these goods, then the seller warrants that these goods will be fit for the buyer's intended use. Frequently sellers attempt to limit or exclude fitness for a particular purpose in their warranty terms.

Independent Contractor

Independent Contractor - an independent contractor relationship exists when the University has the right to control only the result of the service, not the manner of performance. The following elements are essential to establish the relationship of an independent contractor to its client, as contrasted with the relationship of an agent to its principal. An independent contractor must: (1) exercise independent judgment as to the means used to accomplish the result; (2) be free from control or orders from any other person; and (3) be responsible only under the contract with the client for the result obtained.

Independent Consultant

An independent consultant relationship exists when the University does not control either the manner of performance or the result of the service. Independent consultants are individuals not employed by the University, or organizations not a part of the University, with proven professional or technical competence who provide primarily professional or technical advice.

Invoice

A bill for goods or service being purchased that includes pertinent information with respect to the quantity, price, terms, and nature of delivery.

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L

Lead Time

The time that elapses from placement of an order until receipt of the order, including time for order transmittal, processing, preparation, and shipping.

Lease

Acquisition of real and personal property by means of a contract in which the lessor conveys to the lessee the use of the property in return for a specified rent or other compensation.

Lien

Funds are encumbered (liened) when the purchase order is opened and invoicing has not yet occurred.

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M

Materiel Manager

Director of Business Services, official responsible for Materiel Management functions, which generally includes purchasing, receiving, storehouse operations, and equipment management. As used in this guide the term includes Director of Materiel Management and designees of a Materiel Manager.

Memorandum Of Understanding

A Memorandum of Understanding (MOU) may express mutual understanding of an issue without implying commitments by parties to the understanding.

Minority Business Enterprise (MBE)

Any legal entity, organized to engage in commercial transactions, that is at least 51 percent owned and controlled by one or more minority persons. Ownership interest in the firm must be real, substantial, and continuing.

Minority Institution (MI)

as found in the US Higher Education Act, a single minority group or combination of those minority groups (“minority defined as American Indian, Alaska Native, Black (not of Hispanic origin) and Hispanic, that exceeds 50% of its total enrollment.

Most-Favored-Customer Clause

Price protection clauses in a contract which specify that the seller will not offer a lower price to other buyers unless seller agrees to extend such lower price to buyer.

MRO

Maintenance, repair and operating supplies that are consumed in the operations process, but which do not become part of the product (e.g., soap, lubricating oil, machine repair parts, office supplies.).

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N

Native Americans

American Indians, Eskimos, Aleuts, and native Hawaiians.

Negotiation

In the purchasing context, negotiation is an exploratory and bargaining process (planning, reviewing, analyzing, compromising) involving a buyer and seller, each with their own objectives, seeking to reach a mutually satisfactory agreement on the phases of a procurement transaction, including price, service, terms, specifications, technical and quality requirements, and payment.

Non-Lien

Funds are encumbered only when invoices have been received against the blanket order.

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O

Offer

An offer is an invitation to "come and do business with me on these terms". It is a promise made to the other party that if the terms proposed are satisfactory, there will be a contract. It is, in fact, a legal commitment to the other party to form a contract if that other party agrees.

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P

Packing List

An itemized listing of package contents which is prepared by the shipper.

Performance Specification

A specification that details the functional performance criteria required for a particular material or product (as opposed to a design specification, which prescribes in detail the design characteristics and manufacturing methodology for the material or product).

Personal Property

Any movable item subject to ownership; material, but not real property.

Personal Services

Infrequent, technical, or unique functions performed by an independent contractor. Personal services contracts almost always run to individuals rather than partnerships, firms, or corporations, and the services performed frequently are not the full-time occupation of the contractor. Example of personal services contracts include translation, technical editing, technical appraisal.

Petty Cash Purchase

A method of purchasing low-value items from a firm's cash on hand system. This is often combined with a C.O.D. approach.

Point Of Origin

The location where a transportation company receives a shipment from the shipper.

Pool Purchase

A purchase involving two or more locations which provides that definite or guaranteed minimum quantities of specified items be purchased at fixed prices during a stated period. Pool purchases normally are made on a regularly scheduled basis one or more times a year.

Prepaid Freight

Transportation charges are paid by the supplier at the point of shipment.

Price Schedules

Agreements designated as optional for supply of goods or services to the University. Such agreements are not used in lieu of securing competition.

Prior Approval

Approval to commit may be delegated to an operating department by buyer or supervisor with the assurance that the appropriate paper work will follow.

Procurement

Procurement includes such duties as specification development, value analysis, supplier market research, negotiation, buying activities, contract administration, and perhaps inventory control, traffic, receiving, and stores.

Professional Services

Infrequent, technical, and/or unique functions performed by independent contractors whose occupation is the rendering of such services. While not limited to licentiates, the services are considered "professional," and the contract may run to partnerships, firms, or corporations as well as individuals.

Pro Forma Invoice

A document prepared in advance of a sale to provide evidence of the final form and amount of invoice.

Procurement Card (Or Purchasing Card)

A payment method whereby requisitioners are empowered to deal directly with suppliers for low-dollar, high-frequency, typically MRO-type purchases, by using a card issued by a bank or major credit card provider. The cards reduce paperwork and enable purchasing and accounts payable personnel to focus on more value-added activities.

Proposal

An offer made by one party to another as a basis for negotiations, prior to the creation of a contract.

Purchase Order

A purchase contract written on a University purchase order form which becomes a contract through execution by both parties or, when there is performance by the supplier against a purchase order.

Purchase Requisition (See Also Requisitioner)

A written or computerized request to the purchasing department authorizing a request for the purchase of goods or services from suppliers.

Purchasing

One of the major business functions of any organization. The function typically is responsible for acquisition of required materials, services, and equipment used in the organization

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Q

Quantity Discount

A discount in unit price determined by either purchase quantity or dollar amount.

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R

Reasonable Price

A price that does not exceed that which would be incurred by a prudent person in the conduct of a competitive business. Reasonable price can be established by market test, price or cost analysis, or the experience and judgment of the Director of Business Services. Such judgment considers total value to the University. There is value to the University in purchases which meet the University's needs, such as those involving quality, quantity, delivery and service; and those which further the University's outreach goals. A reasonable price need not be the lowest price available, but is one which offers the highest total value to the University. For transactions above $50,000, reasonable price is established through competition sufficient to ensure an adequate market test, or set by applicable law or regulation, or supported by an appropriate price or cost analysis.

Receiving

The function of receiving and processing incoming materials.

Recording Number

A four digit alpha-numeric that represents the location, account, fund, sub of a department's account(s).

Request For Information (RFI)

Is usually submitted for planning purposes, including development of a bid solicitation. Vendors are advised that an award will not be forthcoming.

Request For Proposal (RFP)

Is a request for a bid submittal which requires each seller to submit their plan for meeting the bid requirements. The award decision is based on evaluation of proposals in determining which proposal has the lowest overall cost and takes into consideration a quality assessment in addition to price.

Request For Quotation (RFQ)

Is a request for bid submittal awarded on the basis of lowest price meeting a minimum specification.

Requisitioner

One who initiates a purchase requisition.

Responsive Bidder

A business entity (company) determined by the Director of Business Services/designee to be in substantial conformance with the specifications, delivery requirements and conditions prescribed in the request for quotation, free of material mistake or errors.

Responsible Bidder

A business entity (company) which has the capability in all respects to fully perform the contract requirements and whose integrity and reliability will assure good faith performance. Factors considered in evaluating responsibility may include: financial resources, past performance, delivery capability, experience, organization, personnel, technical skills, operations controls, equipment, and facilities.

Robinson-Patman Act

A federal law that requires a supplier engaged in interstate commerce to sell the same item to all customers at the same price (assuming like terms). Exceptions are permitted. A lower price is permitted: (1) for a larger purchase quantity, providing the seller can justify the lower price through lower costs; (2) to move obsolete or distressed merchandise; or (3) to meet the lower price of local competition in a certain geographic region. It is illegal for a buyer to knowingly induce or accept a discriminatory price.

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S

Scope Of Work

The purpose is to provide bidders with a clear, accurate, and complete description of the work to be performed, including inspection, test and acceptance (see Statement of Work).

Service-Disabled Veteran Owned Small Business (SDVOSB)

A business concern which is at least 51% unconditionally owned by a veteran(s) of the US armed forces and must have a service-connected disability of at least 10% or more, and whose management and daily business operations are controlled by one or more of such individuals.

Sharp Practice

Indirect misrepresentation, unscrupulous shrewdness, deceit or trickery, just short of actual fraud. Such actions are usually designed for short-term gain, but typically act to the detriment of good long-term supplier relations based on honesty, truth, and respect.

Single Sourcing

The practice of using one source, among others in a competitive marketplace which, for justifiable reason, is found to be most advantageous for the purpose of fulfilling a given purchasing need.

Small Business Enterprise (SBE)

an organized for profit business with a primary place of business located in the United States or its outlying areas, that is independently owned and operated and not dominant in its industry or service area.   Business size standards vary from industry-to-industry, and is measured by the number of employees and/or annual gross receipts that’s based upon the company’s service area.

Small Disadvantaged Business (SDB)

is at least 51% unconditionally owned by one or more socially and economically disadvantaged (as defined by the SBA) who are citizens of the United States, and whose management and daily business operations are controlled by one or more of such individuals.

Sole Sourcing

The only supplier capable of meeting University requirements within the time available, including emergency and other situations which preclude conventional planning and processing.

Solicitation

The document requesting potential suppliers to make offers or submittals to the buyer. Solicitations are also referred to as bid requests or submittal requests. Solicitations at UC Berkeley are generally formatted as a request for information (RFI), request for proposal (RFP) or a request for quotation (RFQ).

Specification

A description of the technical requirements for a material, product, or service that includes the criteria for determining whether these requirements are met. A specification may describe the performance parameters which a supplier has to meet, or it may provide a complete design disclosure of the work or job to be done. Specifications for service contracts normally take the form of a statement of work.

Statement Of Work

The statement of work (SOW) describes the specific requirement applicable to a particular item or service being purchased. It outlines 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.

Subaward

A subaward is issued to a sub-recipient (e.g. co-proposer, junior partner) performing a portion of a University research project or program that is funded by a Sponsoring Agency. Performance and compliance requirements are akin to those under the Prime Agreement, however the award comes not from the Sponsoring Agency but from the University as a "pass-through." The University's Sponsored Projects Office has been delegated the authority to prepare and negotiate all subawards for collaborative research.

Subcontract

A purchase contract issued to a for-profit entity under a federal prime contract or extramural grant to implement or procure research or other work necessary to perform the prime award requirements or scope of work. Subcontracts contain special terms and conditions and flowdown provisions, as required by the extramural prime award, which are unique and appropriate to the individual project.

Supplier Evaluation

Objective analysis of either existing suppliers by evaluating past performance, or as a preliminary assessment of potential new suppliers. Suppliers typically are evaluated on the basis of their technical quality, production capabilities, delivery, service, cost, and managerial capabilities.

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T

Termination

Action under a purchase order or contract that directs the cancellation, either in whole or in part, of any work or performance remaining to be done. This may be for the convenience of the purchasing organization, or more commonly because of the default of the performing organization.

Third Party Services

Services performed by any person or firm other than the buyer and supplier. Examples include transportation, public warehousing, brokerage services, rate auditing firms, and third-party network services in EDI data transmission.

Total Quality Management (TQM)

An integration of management techniques, improvement efforts, and technical tools which focuses on continuous process improvement activities involving everyone in both the buying and supplying firms. An integrated effort toward improving quality performance at every level.

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U

Uniform Commercial Code (UCC), Article 2

A codification of law which clarifies and regulates the rights and obligations of buyer and sellers engaging in commercial transactions. It has been adopted by all states except Louisiana .

Unique Products And Proprietary Services

A product or service the characteristics and functions or features of which are such that only a single product, particular feature, or service will properly satisfy the University's needs and all other products or services will be unacceptable for such needs.

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V

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W

Warranty, Express

A specific assurance made by the seller concerning the performance, quality, or character of the goods or services sold. An express warranty often delineates the rights and obligations of the parties in the event of defective items or services. The term is sometimes used interchangeably with "guarantee."

Woman-owned Small Business (WOSB)

is at least 51% unconditionally owned by one or more women who are citizens of the United States; and whose management and daily business operations are controlled by one or more women.