Term
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Definition
| description of the technical requirements for a material, product, or service. |
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Term
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Definition
| "Statement of Work" - specfriciation for service to be performed. |
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Term
| What are the 2 specifications components & what do they include? |
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Definition
1. defines what the product must look like or do. Can include: blueprints, materials specifications, performance specs, and statements of work.
2. Quantitative info. Example include parts-per-million or parts-per-billion for electronic componenets, mean time between failures for equipment, process cabability Cpk for custom production, and allowable frequency of defaults in performance of a service. |
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Term
| What is acceptance criteria? |
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Definition
criteria that defines the specs the product/service must meet upon delivery in order to be accepted and paid by customer.
ie. tangible goods - measurements to be taken during inspection process; equipment - level of performance at which equip. must operate and for how long at level before it is deemed unacceptable; service - definition of finished deliverable which may be a look, report, product or performance of equipment. |
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Term
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Definition
| Typically used in service or capital equipment. Defines what product or service must DO. Details of how performance will be achieved rest with supplier and supplier assumes risk. |
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Term
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Definition
| provide a complete an detailed description of what the product or service MUST look like. Define process by which product will be made, materials used, and step by step instructions to carry out a service. Buyer assumes risk of performance of end product. |
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Term
| Internal vs. external specifications |
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Definition
| Specs that the organization has adopted for use within organization. Internal specs that are the same as external specs set by industry or government are most desirable. If internal and external not same, product costs more. |
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Term
| Do supplier samples serve as specifications? |
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Definition
| Yes. When sample meets need, specs will reference sample. |
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Term
| Is it best to offer to buy or supplier offer to sell? |
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Definition
| Responding to an offer to sell. Permits buyer to keep power of acceptance, otherwise an offer to buy (PO) not being responded to by supplier is not a contract. Needs an offer to by and sell to be a contract. |
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Term
| What are the two ways that informal bids/quotations are used? |
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Definition
1. bids refer to a quote that is less than a per-estabilished monetary limit.
2. quotes used to solicit budgetary info for estimation purposes (critical that supplier mark bid to indicate that proposal is for budgetary purposes and subject to change. |
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Term
| What are the 4 practices regarding competitive proposals? |
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Definition
1. initated by a request that sets out orgs. requirements and criteria for proposal eval.
2. contemplates the submission and timely response by max # of suppliers.
3. provides for discussion with those suppliers found to be within the competitive range.
4. concludes with aware of contract to one supplier.
*To be effective and fair, orgs. have specifric policies addrssing procedure to be followed before and after isuing RFPs. |
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Term
| What is formal advertising? |
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Definition
| A type of sealed bid, used frequently for procurement of services such as building/maintenance contracts, construction, and equipment; also for selling scrap & surplus. |
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Term
| What are the reasons for restricted competition? |
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Definition
Specialization of resources, lack of competition in a region and regulatory restrictions.
*this type should be carefully analzyed by a multifunctional team, using benchmark data with comparable requirementsw, to ensure it IS competitive. |
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Term
| What is non-competitive negotiation and when is it used? |
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Definition
Negotiation with one supplier
*typically where specs are not yet clear or if performance specs have been developed. Used when one supplier is clearly superior (critical skills, capabilities, or technologies). |
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Term
| What is 2 step bidding & when used? |
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Definition
Step 1 - bids requested only for technical proposals, without any prices.
Step 2 - bids are sent only to those suppliers that met tech requirements asking chosen suppliers to submit updated bid WITH pricing.
Used when inadequate specs preclude initial use of competitive bidding. |
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Term
| What is a reasonable profit? |
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Definition
| profit that rewards the seller for th risk involved in providing the product or service. |
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Term
| What are the 3 dimensions that determine price from a sellers point of view? |
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Definition
1. market strucutre effects
2. cost based pricing models
3. valyue based pricing |
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Term
| How does a seller define a fair price? |
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Definition
Price that covers the full cost to produce (including overhead ande reasonable profit)
or
Price that compensates the seller based on the value of the product to the purchaser (and covers relevant costs). |
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Term
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Definition
| One seller with many buyers. Seller creates any price they want. Illegal in US. |
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Term
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Definition
many sellers with one buyer. Buyer controls pricing.
Example: market for military fighter aircraft controled by US government by domestic producers. |
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Term
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Definition
Few sellers and many buyers. Few sellers create illusion of many sellers through product differentiation.
Example: breakfast cereal industry in which a few companies control entire industry. Offer a wide variety of productw that compete for market share not only with other orgs products but also with the org. own brands. |
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Term
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Definition
few sellers and many buyers. Price is controlled by either an industry leader or a cartel.
Example: Steel industry; 1 org propose price and rest of industry quickly adopts that price.
Example: OPEC is a cartel in petroleyum industry; they establish a price for its member. |
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Term
| What is perfect competition? |
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Definition
| many buyers and sellers. Price is based on supply demand structure. Ideal situation. |
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Term
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Definition
| many sellers and few buyers. Buyers have a major effect on pricing because sellers compete for the business. |
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Term
| When would you use lotting strategies & what are the options to structure those strategies? |
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Definition
When there are a large # of items to be bid.
Can require suppliers to bid on all lots, permitting to only bid on those items that supplier can provide or allowing suppliers to structure their own lot structure. |
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Term
| What is an RFI and when do you use, is it binding, problems? |
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Definition
Request for Information
Used to allow org. to obtain info about supplier capabilities, gain marketplace intelligence, and make desicisions about future relationships.
Not binding.
Problems; used too often suppliers may refuse to respond. |
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Term
| When do I use a bidders conference? |
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Definition
Complex due to specs, # of suppliers, amount of business, criticality, etc.
Prebid conference to communicate info to supply base. |
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Term
| What is benefits and problems of a bidders conference? |
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Definition
Benefit: org. can quickly learn of any discrepancies or errors in bid package.
Problem: Time it takes; overuse may discourage suppliers from attendeing; supplierws may not feel comfortable and could refrain from asking questions. |
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Term
| In solicitation, it is important that all vendors receive the same information and updates because? |
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Definition
| All information needed to evaluate appropriately across evaluation criteria. |
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Term
| What is the general assumption inh a competitive bidding process? |
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Definition
| business will be awarded to supplier providing the least total cost or greatest value to the org. |
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Term
| What are the 5 items a solicitation for bid should have? |
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Definition
1. complete specs or SOW
2. quantity to be quoted
3. where/when items to be shipped/installed or where/when services to be performed.
4. Due date for quote
5. due date for product/service |
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Term
| WHat is an EOI and when is it used? |
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Definition
Expression of interest
issued prior to formal solicitation to allow an org. to decide whether it wants to submit a bid. |
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Term
| What should you take into consideration during a bid when it comes to issue dates and why? |
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Definition
1. Holidays (no closing date on a holiday) - may decrease numbers of responses.
2. Do not issue during suppliers peak season (if possible). - May increase pricing and decrease concessions
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Term
| WHat types of bids have closing dates? |
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Definition
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Term
| What types of bids have opening dates but not closing dates? |
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Definition
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Term
| What is included in custom terms and conditions? |
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Definition
1. Acceptance testing
2. updating service info
3. emergency services
4. financing
5. installation
6. training
7. initial provisioning
8. maintenance
9. spare parts
10. contract renewal |
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Term
| What are included in standard terms and conditions? |
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Definition
contract cancellation
subcontracting
confidentiality
delivery
shipping
indemnity
legal venue
applicable laws
inspection
payment terms
packaging
warranties |
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Term
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Definition
| Gaurantees that if work awarded to bidder accepting t&cs and obligations; if refuses cost of altenrative source are borne by insurer. |
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Term
| What are peformance bonds? |
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Definition
| guarantee prompt delivery of goods that meet specs; if construction, guarantees work will be done in time and correct specs. |
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Term
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Definition
| protects org against liens that are filed against supplier if supplier does not pay its suppoliers, subcontractors, employees. |
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Term
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Definition
Used as a device to discourage financial unstalbe suppliers from bidding.
Covers amount in liquidated damages to which the org would be entitled should supplier not perform to t&cs. A good faith deposit that they will complete work. Losing bidders receive 100% refund. |
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Term
| How does real estate surety work? |
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Definition
| Org. requires supplier to put assets into escrow as a form of surety that supplier will meet obligations. If they fail, they forfeit the asset. |
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Term
| Why is cash surety not a good approach? |
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Definition
| May affect suppliers liquidity and ability to perform because they cannot obtain materials and services. |
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Term
| What are the various types of bods/types of surety:? |
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Definition
Bid bonds
Performance bonds
payment bonds
deposits
letter of credit
real estate
cash |
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Term
| What are the 3 ways of communicating attributes of a product/service" |
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Definition
1. SOW
2. Internal/external specs
3. Supplier samples |
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Term
| What are the types of solicitation/bids? |
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Definition
1. offer to buy/offer to sell
2. informal bid/quotation
3. RFx
4. Competitive proposal
5. seald bids/formal advertising
6. restricted competition
7. non-competitive negotiations
8. two step bidding
9. alternative/innovative proposals (IFB) invit. 4 bid
10. pricing models/market baskets
11. lotting strategies |
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Term
| What are the general solicitation procedures and concepts? |
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Definition
1. Comparability - all suppliers receive same info
2. fairness buisness ethics
3. general format/content of bid request
4. fair response time
5. issue dates
6. open/close dates
7. inclusion of potential contract/T&Cs |
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Term
| What are the problems related to solicitation ad receipt of offers? |
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Definition
1. Time extensions and amendments to solicitation
2. late bids (without time extension)
3. offers with errors, irregularities or omissions
4. conflicts of interest
5. protests
6. confidentiality/security
7. alternate proposals
8. debriefing process
9. procedure for cancellation of solicitations |
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Term
| True or Fals: If one person is granted a time extension to a proposal ALL bidders are notified and receive the same extension. |
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Definition
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Term
| True or Fale: Late bids are accepted without an official extension. |
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Definition
| False. Refuse late bids and return unopened. |
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Term
| Offers with errors: Courts allow the withdrawal of bids only under what two circumstances? |
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Definition
1. mistake was mechanical or clerical in nature, not an error in judgement
2. bidder was not guilty of blame de serving negligence in making error or in delaying notification to the org. of error. |
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Term
| True or False: Offers with errors: When a supplier identifies a mistake in a bid after submission you cannot allow vendor to cancel/withdraw bid. |
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Definition
| False. It is good practice to allow supplier to cancel or withdraw the bid. |
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Term
| Offer with error: True/False: If an obvious error in a bid is identified by the org.; org should confirm correct prior to making an award. |
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Definition
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Term
| Offers with error: True/False: Org should seek clarification of any information that is unclear prior to final analysis. |
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Definition
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Term
| What is a conflict of interest? |
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Definition
| Employee of org. who has any authority to purchase goods or has influence in any way to transactions that also has financial or personal interests with seller. |
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Term
| If anyone protests the award of a bid, what can they do? |
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Definition
| File a protest and request an administrative review of th action/decision. |
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Term
| True or False: Confidential information included in a supplier bid can be shared with other suppliers. |
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Definition
| False. Sharing information violates confidentiality and security. |
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Term
| What should be included in the "debreifing process"? |
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Definition
Name of winner to losing suppliers
internal customers/end users
Introduce staff to supplier staff
3rd party suppliers involved ihn contract |
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Term
| True or False: Each bidding supplier should be notified in writing as promptly as possible if org. decides to cancel a solicitation. |
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Definition
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