This section of the Toolbox includes the definitions of concepts included in the OECD Recommendation on Public Procurement.

Access

Access refers to facilitating the participation in procurement opportunities for potential competitors of all sizes.

Accountability

Accountability is about having managers to be held responsible for carrying out a defined set of duties or tasks, and for conforming with rules and standards applicable to their posts.

Award criteria

The award criteria refer to the criteria by which the successful tender is to be selected.

Balance

Balance refers to balancing secondary policy objectives against the primary policy objective when using public procurement systems.

Bid rigging

Bid rigging (or collusive tendering) occurs when businesses, that would otherwise be expected to compete, secretly conspire to raise prices or lower the quality of goods or services for purchasers who wish to acquire products or services through a bidding process.

Bidder

A bidder is a person, commercial company or other organisation, which offers to provide goods, services or works in response to a request from a public organisation. The emphasis on offering the goods, services or works in response to a request from a public organisation is necessary to differentiate a bidder from a supplier (see Supplier)

Capacity

Capacity refers to the ability to meet obligations and objectives based on existing administrative, financial, human and infrastructure resources.

Centralised purchasing

Centralised purchasing is a procedure in which a contracting authority takes the responsibility of: 1) acquiring goods or services intended for one or more contracting authorities; 2) awarding public contracts for works, goods or services intended for one or more contracting authorities; or 3) concluding framework agreements for works, goods or services intended for one or more contracting authorities.

Collusion

Collusion involves a horizontal relationship between bidders in a public procurement, who conspire to remove the element of competition from the process by raising or fixing the prices and reducing output in order to increase profits. Bid rigging is the typical mechanism of collusion in public contracts. (see Bid rigging)

Contract with option

A contract with option is contract that gives the purchaser of the option the right, but not the obligation, to buy (a “call” option) or to sell (a “put” option), e.g. a particular financial instrument or commodity at a predetermined price (the “strike” price) within a given time span (American option) or on a given date (European option).

Corruption

Corruption refers to the abuse of public or private office for personal gain.

Dynamic purchasing

Dynamic purchasing is a public procurement process which is limited in duration and open throughout its validity to any economic operator which satisfies the selection criteria and has submitted an indicative tender that complies with the specification.

E-auction

E-auction is an online electronic system which allows economic operators to submit new, downwards revised, prices and/or revisions to elements of their tenders in real time, and in direct, anonymous competitions with other economic operators.

E-catalogue

E-catalogue is a listing of available products and/or services that can be viewed and bought in an electronic format and can include information such as illustrations, prices, and product and/service description.

Efficiency

Efficiency refers to achieving maximum output from a given level of resources used to carry out an activity.

E-procurement

E-procurement refers to the integration of digital technologies in the replacement or redesign of paper-based procedures throughout the procurement process.

Evaluation

Evaluation refers to a periodic and consistent assessment of the effectiveness of the public procurement system from individual procurements to the system as a whole.

Framework agreement

A framework agreement is an agreement with one or more economic operators for the supply of goods, services and, in some cases, works, the purpose of which is to establish the terms governing contracts to be awarded by one or more contracting authorities during a given period, in particular with regard to maximum price, minimum technical specifications and, where appropriate, the quantities envisaged.

Green public procurement

Green public procurement is defined in the EU as “a process whereby public authorities seek to procure goods, services and works with a reduced environmental impact throughout their life cycle when compared to goods, services and works with the same primary function that would otherwise be procured".

Impact assessment

An impact assessment is an analytical process that systematically examines the possible environmental, socio-economic consequences of the implementation of projects, programmes and policies.

Integration

Integration refers to combining procurement processes with public finance management.

Integrity

Public integrityrefers to the consistent alignment of, and adherence to, shared ethical values, principles and norms for upholding and prioritising the public interest over private interests in the public sector.

Integrity pact

An integrity pact is an agreement between a government or government department with all tenderers for a public sector contract that neither side will pay, offer, demand, or accept bribes, or collude with competitors to obtain the contract or while carrying it out. In case of breach, the contract terms and conditions include the possibility of cancellation of contract, forfeiture of bond, liquidated damages and debarment.

Internal control

Based on the definition used by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), the International Auditing and Assurance Standards Board defines internal control as, “the process designed, implemented, and maintained by those charged with governance, management, and other personnel to provide reasonable assurance about the achievement of an entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations.” Specific elements of internal control framework include: executing effective and efficient strategic and operational processes;

  • providing useful information to internal and external users for timely and informed decision making;
  • ensuring conformance with applicable laws and regulations, as well as with the organization’s own policies, procedures, and guidelines;
  • safeguarding the organization’s resources against loss, fraud, misuse, and damage; and;
  • safeguarding the availability, confidentiality, and integrity of the organization’s information systems, including IT.

Joint procurement

A joint procurement means combining the procurement actions of two or more contracting authorities. The key defining characteristic is that there should be only one tender published on behalf of all participating authorities.

Participation

Participation refers to providing opportunities for direct involvement of relevant external stakeholders in the procurement system.

Primary procurement objective

Primary procurement objective refers to delivering goods and services necessary to accomplish government mission in a timely, economical and efficient manner.

Procurement workforce

The procurement workforce is person who is involved in the different stages of the procurement cycle regardless of whether they hold a public official role or not. In this sense, the term captures a broader spectrum of professionals than the term public procurement official may refer.

Public private partnership

A Public-Private Partnerships (PPPs) are long term contractual arrangements between the government and a private partner whereby the latter delivers and funds public services using a capital asset, sharing the associated risks.

Public procurement

Public procurement refers to the process of identifying what is needed; determining who the best person or organisation is to supply this need; and ensuring what is needed is delivered to the right place, at the right time, for the best price and that all this is done in a fair and open manner.

Public procurement cycle

Public procurement cycle refers to the sequence of related activities, from needs assessment, through competition and award, to payment and contract management, as well as any subsequent monitoring or auditing

Public procurement system

The public procurement system consists of the following elements items that are commonly regarded essential: 1) an adequate legislative framework, supported by regulations to address procedural issues not normally the subject of primary legislation; 2) an adequate institutional and administrative infrastructure (at central, local and regional level); 3) an effective review and accountability regime; 4) an effective sanctions regime; and 5) adequate human, financial and technological resources to support all elements of the system.

Risk management

Risk management refers to an integrated part of an entity’s management system, effected by an entity’s board of directors, management, and other personnel, applied in strategy setting and across the enterprise, designed to (a) identify, understand, and assess potential risks and opportunities (and their interdependence) that may affect the entity, and (b) manage those risks and opportunities to be within its risk appetite, so as to provide proper disclosure and reasonable assurance regarding the achievement of entity objectives.

 

Risk management also relates to generating ideas and promoting good practice, and is most effective when line managers (a) embrace it and use it as part of their management process, and (b) provide their employees with a better understanding of the entity’s risk appetite, to help manage risk across the organization.

Secondary policy objective

Secondary policy objective refers to any of a variety of objectives such as sustainable green growth, the development of small and medium-sized enterprises, innovation, standards for responsible business conduct or broader industrial policy objectives, which governments increasingly pursue through use of procurement as a policy lever, in addition to the primary procurement objective.

Specification

Specification is a concise statement of a set of requirements to be satisfied by a product, material or process that indicates whenever appropriate the procedures to determine whether the requirements are satisfied. As far as practicable, it is desirable that the requirements are expressed numerically in terms of appropriate units, together with their limits. A specification may be a standard, a part of a standard, or independent of a standard.

Supplier

A supplier is a person, commercial company or other organisation, which provides goods, services or works in the market. A supplier does not need to have responded to a request from a public (see bidder).

Sustainable public procurement

Sustainable public procurement is defined as the procurement of goods and services by government entities that take into consideration social, economic and environmental aspects in an effort to generate social, economic and environmental benefits to society.

Tender

A tender refers to the process through which government invites bids for a purchase or project. A document containing specific information on requirements and terms associated with a potential contract must be submitted within a definite timeline. Tender methods can vary depending on the type, value and risk of goods, services and works to be procured. The main types of tender are: open tender, direct purchase, negotiated purchase and accelerated public tender (emergency procurement and non-emergency accelerated procurement).

Transparency

Transparency refers to an environment in which the objectives of policy, its legal, institutional, and economic framework, policy decisions and their rationale, data and information related to policies, and the terms of agencies’ accountability, are provided to the public in a comprehensible, accessible, and timely manner.

Whistle-blowing

Whistle-blowing refers to the disclosure by employees of wrongdoing of whatever kind in the context of their workplace to the competent authorities in good faith and on reasonable grounds.