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| Standards of Conduct | Ethical conduct of personnel involved in the purchase or sale of goods or services. Includes personal conduct and compliance with laws, regulations, and corporate standards. Frameworks and procedural and policy documents. |
| Standard of Conduct Documents -Formal, written statements that act as a guides for how people in the organization should act in order to make ethical decisions | -Formal, written statements that act as a guides for how people in the organization should act in order to make ethical decisions |
| Apparent Authority | The right by an agent for a principal to exercise power where the principal knowingly permits the agent to exercise authority, though not actually granted. |
| Conflict of Interest | Term used in connection with public officials and fiduciaries and their relationships to matters of private interest or gain to them. Ethical problems connected therewith are covered by statues in most jurisdictions and by federal statutes on the federal level. Arises when an employee’s personal or financial interest conflicts or appears to conflict with his/her official responsibility. |
| Corporate responsibility and personal conduct | Laws and standards governing both corporate and individual behavior, including standards of ethics and conduct, social responsibility, law, regulations, and public policy. |
| Defective specifications | Mistakes and omission in the requirements set forth. |
| Delegation of authority | The conferring of authority, from one government agency or representative to another, to accomplish contract administrative task. Such authority may be shared or recalled. |
| Ethics | Of or relating to moral action, conduct, motive, or character, professionally right or benefiting, conforming to professional standards of conduct. Viewed as both a means and end, there is also a practical application and benefit associated with high ethical standards and conduct. Good for business and gvt. Business flourishes in a environment of profitability and sustainability. Government functions best in an environment of service to be governed, efficiency, and trust. A critical component to both the business and gvt models. |
| Fraud | Unethical conduct in the creation of the contract. Includes offer and acceptance, conduct that communicates a promise on the part of one party and a manifestation to the terms of the offer by the other party. Conduct of both parties represents capacity to contract, good faith dealings (honesty in fact and reasonable standards of fair dealings) and legality of purpose. Includes apparent authority; the authority that although not actually granted, the principal knowingly permits an agent to exercise or the principal holds the agent outs as possessing. |
| Kickback | The process of the seller providing a portion of the purchase price to the buyer to induce purchase to the buyer to induce purchase or to influence future purchases. |
| Acceptance | The act of an authorized buyer which the buyer assents to ownership of existing and identified supplies, or approves specific services rendered as partial or complete performance of a contract. It must be communicated and (in common law) must be the mirror image of the offer. |
| Agency | A relationship whereby the principal authorizes another (the agent) to act for and on behalf of the principal and to bind the principal in contract. |
| As is | A contract phrase referring to the condition of property to be sold or leased, and generally pertains to a disclaimer of liability. |
| Bilateral Contract | Contract which both parties make promises |
| Unilateral Contract | Contract which only one party (promissory) makes a promise. |
| Breach of Contract | The failure, without legal excuse, to perform any promise that forms the whole or part of a contract. |
| Common law | A body of law common to the whole populations, produced primarily by the efforts of the judiciary to harmonize their decisions and changes in law or regulation. |
| Compensable delay | A delay for which the buyer is contractually responsible for that excuses the seller’s failure to perform and is compensable. |
| Condition precedent | Generally, a condition that activates a term in a contract. A condition precedent is a condition in the contract that contemporaneously exists with the contract. |
| Condition subsequent | A condition that suspends a term in a contract. The condition will come into force if the condition described or allowed (or prohibited) by the condition occurs. So an activation of a term may actually be this. |
| Contract formation | The elements of offer, acceptance, mutuality of consideration, competent parties, legal subject matter, and mutuality agreement. |
| Discharge of a contract | Results when the obligation incurred by the parties when they entered the agreement are excused, and the parties are no longer bound to perform as promised. |
| Express contract | An express contract is one in which the terms of the contract are stated in words, either written or spoken. |
| Federal Acquisition Regulation | The government wide procurement regulations mandated by Congress and issued by the DoD, GSA, and NASA. |
| Federal regulations | Applicable directives and instructions issued by several departments and agencies that establish and implement acquisition policies. Examples include the FAR, agency FAR supplements, and OMB circulars. |
| Quasi contract | “implied in law” are obligations imposed by law to prevent the unjust enrichment of one person at another’s expense. |
| Trade | Law in the US, including the Robinson-Patman Act, unfair-trade laws, fair-trace laws, and other legal and regulatory restrictions on the conduct of business, especially with respect to pricing |
| Robinson-Patman Act | Section 2(a) of the Clayton Act, as amended in 1936 by the this Act. Makes it unlawful for any seller engaged in commerce to directly or indirectly discriminate in the price charged purchasers on the sale of commodities of like grade and quality where the effect may be to injure, destroy, or prevent completion with (a) person who grants or knowingly receives discrimination or (b) the customer of either. |
| Sherman Antitrust Act | Prohibits any unreasonable interference by contract, combination, or conspiracy with the ordinary, usual, and freely competitive pricing or distribution system of the open market in interstate trade. |
| Federal statutes | Applicable laws enacted by the legislative branch and signed by the president that affects acquisition. Examples include the Armed Services Procurement Act (1947), Federal Property and Administrative Services Act (1949), Competition in Contracting Act (1984), and Federal Acquisition Streamlining Act (1994) |
| Forbearance | An intentional failure of a party to enforce a contract requirement, usually done for an act of immediate or future consideration from the other party. It is sometimes referred to as a nonwaiver or as a one-time waiver, but not as a relinquishment of rights. |
| Implied contract | Sometimes referred to as “implied in fact” . Contract in which the terms of the contract are wholly or partly inferred from conduct or surrounding circumstances. |
| Novation agreement | A legal instrument executed by the seller (transferor), the successor in interest (transferee), and the byer, by which the transferor guarantees performance of the contract, and the buyer recognizes the transfer of the contract and related assets. |
| Offer | A legally binding promise, made by one party to another, to enter into a contractual agreement. |
| Clayton Act | A federal law enacted in 1914 as an amendment to the Sherman Antitrust Act dealing with antitrust regulations and unfair trade practices. This Act prohibits price discrimination, tying and exclusive dealing contracts, mergers and interlocking directorates, where the effect may be substantially to lesson completion or tend to create a monopoly in any line of commerce. |
| Uniform Commercial Code | Uniform standard government commercial transactions, developed by the National Conference of Commissioners on Uniform State Laws and the American Law Institute, which has been adopted by all states in the US except Louisiana and is sometimes used to aid in the interpretation and enforcement of government subcontracts. |
| Accessibility | The availability of public conveyance, facilities, utilities, technologies, and other designated resources to all per-sons. In the US, accessibility considerations are the purview of the Access Board, an independent federal agency devoted to accessibility for people with disabilities. The Access Board develops and maintains accessibility requirements for the built environment, transit vehicles, telecommunications equipment, and electronic and information technology provide technical assistance and training on these guidelines and standards; and enforces accessibility standards for federally funded facilities. |
| Diversity | Programs designed to encourage a diverse workforce or education and training group, such programs that prohibit employment or workplace discrimination based on race, color, religion, sex or national origin, age, or disability. |
| Domestic end product | A type of product considered to be manufactured in the US if the cost of components mined, produced, or manufactured exceed 50% of the cost of all its components. |
| Employment | Legal requirements addressing Equal Employment Opportunity (EEO) discrimination and others aspects of the employer-employee relationship. |
| Environmental issues | Policies and procedures supporting the government’s program for ensuring a drug-free work place and of protecting and improving the quality of the environment through pollution control, energy conservation, identification of hazardous materials, and use of recovered materials. |
| Labor surplus area | A geographical area identified by the Department of Labor as an area of concentrated unemployment or underemployment, or an area of labor surplus. |
| Labor laws | Policies and procedures for implementing labor laws. In government contracting, examples include the Davis Bacon Act, Contract Work Hours and Safety Act, and the Service Contract Act. In commercial contracting, examples would include the National Labor Relations Act (NLRA) and state statues in the US. |
| Small and disadvantaged business concerns | Business owned (at least 51%) by members of socially and economically disadvantaged groups (ie groups that have been subjected to racial or ethnic prejudice or cultural basis) |
| Small business | Business independently owned and operated, and is not dominant in its field, a business concern that meets government size standards for is particular industry type. |
| Contract structures | Specific pricing arrangements employed for the performance of work under contract. Specific business arrangements that govern the buyer-seller relationship. Types of promises or sets of promises that courts will enforce. |
| Fixed Price | A type (family) of contract providing for a firm pricing arrangement established by the parties at the time of contracting. Includes FFP, FP with economic price adjustment, FP incentive, FP redetermination (prospective and retroactive), and FPLOE, |
| Firm fixed price contract | Provides for a price that is not subject to adjustment on the basis of the contractor’s costs experience in performing the contract. This contract type places on the contractor maximum risk and full responsibility for all costs and resulting profit or loss. It provides maximum incentives for the contractor to control costs and perform effectively and imposes a minimum administrative burden on the contract parties. |
| Fixed price contract with economic price adjustment | Provided for upward and downward revision of the stated contract price on the occurrence of specified contingencies Three general types 1) published or otherwise established prices of specific items or the contract end items 2) actual labor or materials 3) cost index of labor or materials. |
| Fixed price incentive contract | Provides for adjusting profit and establishing the final contract price by formula based on the relationship of final negotiated total cost to total target price. The final price is subject to a price ceiling, negotiated at the outset. Two types 1) firm target and 2) successive target |
| Fixed price contract with prospective price determination | Provides for 1) a firm fixed price for an initial period of contract deliveries or performance and 2) prospective redetermination at a stated time (or times) during performance of the price for subsequent periods of performance. |
| Fixed price contract with retroactive price determination | Provides for 1) fixed ceiling price and 2) retroactive price determination with the ceiling of completion of the contract |
| Firm fixed price, level of effort contract | Requires the contractor to provide a specified level of effort, over a stated period of time on work that can be stated only in general terms, and requires the buyer to pay the contractor a fixed dollar amount. |
| Cost reimbursement | A form of pricing arrangement that provides for payment of allowable, allocable, and reasonable costs incurred in the performance of a contract to the extent that such costs are prescribed or permitted by the contract. Includes CPAF, CPFF, cost plus incentive fee, and cost sharing. |
| Cost contract | Cost reimbursement contract in which the contractor receives no fee |
| Cost-sharing contract | Cost reimbursement contract in which the contractor received no fee and is reimbursed only for an agreed-upon portion of its allowable costs. |
| Cost-plus-incentive-fee contract | Cost reimbursement contract the provides for an initially negotiated fee to be adjusted alter by a formula based on the relationship of total allowable costs to total target costs. |
| Cost plus award fee contract | Cost reimbursement contract that provides for a fee consisting of 1) a base amount (which may be zero) 2) and award amount, based on a judgmental evaluation by the government, sufficient to provide motivation for excellence in contract performance in such areas as quality, timeliness, technical ingenuity, and cost-effective management. |
| Cost plus fixed fee contract | Cost reimbursement contract that provides for payment to the contractor of a negotiated fee that is fixed at the inception of the contract. The fee does not vary with actual costs by mat be adjusted as a result of changes in the work to be performed under the contract. This contract type permits contracting for efforts that might otherwise present too great a risk to contractors, but it provided the contractor only a minimum incentive control costs. |
| Basic Agreement | A written instrument or understanding, negotiated between a buyer and seller, which contains contract clauses applying to future contracts between the parties during its term and contemplates separate future contracts that will incorporate, by reference or attachment, the required and applicable clauses agreed upon in the basic agreement. Is not a contract. |
| Basic Ordering Agreement | A written instrument or understanding, negotiated between a buyer and seller, which contains terms and clauses applying to future contracts (orders) between the parties during its term; a description, as specified as practicable, of supplies or services to be provided; and methods for pricing, issuing, and delivering future orders. Is not a contract. |
| Time and materials contract | Provides for acquiring supplies or services on the basis of direct labor hours at specified fixed hourly rates that include wages, overhead, G&A expenses, profit, and materials at cost, including if appropriate material handling costs as part of material costs |
| Labor hour contract | Variation of the T&M contract, differing only in that materials are not supplied by the contractor. |
| Indefinite delivery/Indefinite quality Contract (IDIQ) / Government wide agency contract (GWAC) | Contracts that provide for an indefinite quantity within stated limits of supplies or services to be furnished within a fixed period with deliveries or performance to be scheduled by placing orders with the contractor. Examples of these contracts are delivery order, task order, definite quality, requirements, and indefinite quantity. GWAC are available to multiple buyers. |
| Delivery order contract | Contract for supplies that does not procure or specify a firm quantity of supplies (other than a minimum or maximum quantity) and that provides for the issuance of orders for the delivery of supplies during the period of the contract. |
| Task order contract | A services contract that does not procure or specify a firm quantity of services (other than a min and max quantity) and that provides for the issuance of orders for the performance of tasks during the period of the contract. |
| Definite quantity contract | Provides for delivery of a definite quantity or specific supplies or services for a fixed period, with deliveries or performance to be scheduled at designated locations upon order. |
| Requirements contract | Provides for filling all actual purchase requirements of designated government activities for supplies or services during a specified contract period, with deliveries or performance to be scheduled by placing orders with the contractor. |
| Indefinite quantity contract | Provide for an indefinite quantity, within stated limits, of supplies or services during a fixed period. The buyer places orders for individual requirements. Quantity may be stated as number of unites or as dollar values. |
| Incentive contracts | Are appropriate when a FFP contract is not appropriate and the required supplies or services can be acquired at lower costs and in certain instances, with improved delivery or technical performance, by relating the amount of profit or fee payable under the contract to the contractor’s performance. Are designed to obtain specific acquisition objectives by 1) establishing reasonable and attainable targets that are clearly communicated to the contractor efforts that might not otherwise be emphasized and 2) discourage contractor inefficiency and waste. |
| Cost incentives | Most incentive contracts include only these, which take the form of profit or fee adjustment formula and are intended to motivate the contractor to effectively manage costs. No incentive contract may provide for other incentives without also provide a cost incentive (or constraint). Incentive contract typically include a target costs, a target profit or fee, and a profit or fee adjustment formula. These targets and the formula provide that (within the constraints of a price ceiling or min and max fee) 1) the actual cost that meets the target will result in the target profit or fee 2) the actual cost that exceeds the target will result in downward adjustment of target profit or fee 3) the actual cost that is below the target will result in upward adjustment of target profit or fee. |
| Delivery incentives | Should be considered when improvement for a required delivery schedule is a significant government objective. It is important to determine the buyer’s primary objectives in a given contract (ie earliest possible delivery or earliest quantity production.) |
| Performance incentives | May be considered in connection with specific product characteristics (ie a missile range, an aircraft speed, an engine thrust, or vehicle maneuverability) or other specific elements of the contractor’s performance. These incentives should be designed to relate profit or fee to results achieved by the contractor compared with specified targets. |
| Multiple incentive contracts | Such contracts should motivate the contractor to strive for outstanding results in all incentive areas and compel trade-off decisions among the incentive areas consistent with the buyer’s overall objectives for the acquisition. |
| Fixed price incentive (firm target) contract | Specifies a target costs, a target profit, a price ceiling (but not a profit ceiling or floor), and a profit adjustment formula. These elements are all negotiated at the outset. |
| Fixed price incentive (successive target) contract | Specifies the following elements, all of which are negotiated at the outset: an initial target cost, an initial target profit, and a initial profit adjustment formula. These targets and formula are used to establish 1) the firm target profit, including a ceiling ad floor for the firm target profit 2) the production point at which the firm target cost and firm target profit will be negotiated (usually before delivery or shop completion of the first item) and 3) a ceiling price that is the maximum that may be paid to the contractor, except for any adjustment under other contract clauses providing for equitable adjustment or other revision of the contract price under stated circumstances. |
| Fixed price contract with award fee | Used when the buyer wishes to motivated a seller and other incentives cannot be used because contractor performance cannot be measured objectively. Such contracts shall establish a fixed price (including normal profit) for the effort that will be paid for satisfactory contract performance. Such contracts shall establish the award fee earned will be paid in addition to that fixed price and provide for periodic evaluation of the contractor’s performance against an award fee plan. |
| Contracting Methods | Processes employed for soliciting offers, evaluating offers, and awarding a contract. |
| Competitive bidding/negotiation | A method of contracting involving a request for proposal that states the buyer’s requirements and criteria for evaluation, submission of timely proposals by a maximum number of offerors, discussion with those offerors found to be within the competitive range, and award of a contract to the one offeror whose offer, price, and other considerations factors are most advantageous to the buyer. |
| Electronic commerce | A paperless process, including mail, bulletin boards, funds transfers, data interchange, and similar techniques for accomplishing business transactions. |
| Framework pricing arrangement | A contract that is definitive in all respects except pricing. The agreement or contract specified a predetermined index, formula, or algorithm for the calculation of price at the point of sale. |
| Gap fillers | Interim agreements that define the rights and obligations of the parties and established the basis for the conduct of business prior to the establishment of a long-term contractual relationship. Includes MOUs, letter contracts, teaming agreements, and other short term agreements. |
| Master agreements | Business arrangements in which the parties determine the underlying commercial arrangement governing the relationship (ie terms and conditions) but defer specific negotiations of the elements of the contract to specific events or transactions (ie price). |
| Negotiations | A method of contracting that uses either competitive or other than competitive proposals and (Usually) discussions. It is a flexible process that includes the receipt of proposals from offerors, permits bargaining, and usually affords offerors an opportunity to revise their offers before award of a contract. |
| Performance based contract | A contract that is structured around the purpose of the work to be performed as opposed to either the manner in which the work is to be performed or a board SOW. |
| Point of sale transaction | Business arrangements in which the entire business arrangement between the parties is executed in a single event |
| Request for Information (RFI) | Tool used for gathering information from independent vendors for the purchase of determining availability of products and services and gathering market information on capabilities to perform. |
| Reverse auctions | Purchase transactions in which goods and services are purchased from the lowest bidder. |
| Auctions | Sale in which property, services, or merchandise are sold to the highest bidder. |
| Sealed bidding | A method involving the unrestricted solicitation of bids, a public opening, and a ward of a contract to the lowest responsive and responsible bidder. |
| Single-source negotiation | Negotiation with a single provider, because either the provider is the sole supplier of the product or service or the relationship with the provided is of strategic importance based on long-term relationships, built on mutual trust. |
| Two step sealed bidding | A combo of competitive procedures designed to obtain the benefits of sealed bidding when adequate specification are not available. Step one consist of the request for the submission of technical proposals, evaluation, and discussion without pricing. Step two involves the submission of sealed price bids by those who submitted acceptable technical proposals in step one. |
| Unsolicited proposal | Typically only used for research and development proposal they are made by a prospective contractor without prior formal or informal solicitation from a contracting activity. |
| Absorption of costing | A method of determining the actual cost of a unit of production (either at various stages of completion or when service is provided) that treats fixed indirect costs as product costs |
| Acquisition cost | Includes all costs associated with generating and processing an order and its related paperwork. It is the sum of the ordering, transporting, handling, and all inventory handling costs associated with the acquisition of material. |
| Direct cost | The costs specifically identifiable with a contract requirement, including but not restricted to costs of material and/or labor directly incorporated into an end item. |
| Direct labor | All work that is obviously related and specifically and conveniently traceable to specific products. |
| Fair value | Examines product or service features that enhance profits for the final product and the ability of a commercial firm to maintain a competitive advantage in the marketplace. |
| Market Price | The exchange value of a good or service, calculated with due consideration to market conditions, legal constraints, competitive pressures, and changes in market factor. |
