Glossary

Advertisement. A formal notice of a government contracting opportunity intended to ensure full and open competition. The notice is typically published in a newspaper of general circulation and/or publications of professional societies, as well as contract registers of government bodies.

Appropriation. An action by a government body to provide funding for a line item project or a program. Appropriations are typically contained in the budget of the governmental body, but may also be enacted separately. See also Line Item Projects and Program.

Best Value Selection. A selection process in which proposals submitted by potential sellers are evaluated using several factors including the seller’s price. Each seller receives a quantitative point score for each factor except for price, which is already quantified. The process often involves assigning a predetermined weight to each factor; however, a government body may elect not to assign a weight to price. If a weight is assigned to price, a contract is awarded to the seller with the best weighted score. If a weight is not assigned to price, each seller’s price can be divided by the weighted score of other factors and the contract awarded to the seller with the lowest price per point. Alternatively, the selection process may perform an evaluation of sellers and determine which proposal is most advantageous to the government body without use of weights to combine factors.

Civil Service System. A system in which government employees hold office from one administration to another. Their positions are protected, provided that they remain politically neutral. See also Spoils System.

Defined Contribution. Split funding by program where some fund source(s) contribute a fixed amount, with one source funding the balance. See also Fund Source.

Defined Elements of Work. Split funding by program where each fund source bears the cost of its portion(s) of the project on a percentage basis. See also Fund Source.

Devolution. Delegation of work or power by a national government to a regional or local government, or by a regional government to a local government.

Devolve. See Devolution.

Eminent Domain. A process that allows the government to take possession of private property when this is deemed to be in the best interests of the public.

Encumbrance. See Obligation.

Environmental Review. A process in which potential impacts to natural, cultural, historical, and community resources are identified and examined, and strategies are developed to mitigate any significant impacts. Environmental review typically culminates in the production of one or more environmental documents (e.g., EIR).

Full and Open Competition. A process in which all responsible sources are allowed to compete for a contract.

Fund Source. A source of funding for a government project. A project may have more than one fund source. Fund sources may include national, regional, and local governments, as well as other sources (e.g., banks and financial institutions).

Government Body. An assembly of people at the national, regional or local level, which deliberates and establishes applicable laws or regulations and administers government projects. In some jurisdictions, laws or regulations may also be known as “statutes” and “ordinances.”

Government Transfer Payment. See Obligation.

Hybrid Staff. A mixture of civil service and contracted staff.

Indefinite Delivery Indefinite Quantity (IDIQ) Contracts. Contracts that state the type of service to be delivered, the length of time in which the service can be requested (generally five years or less), and the minimum and maximum contract amount, but give no project-specific information. Additionally, the contract typically includes a “price book” and each potential seller submits a markup or markdown in the form of a coefficient (e.g., 1.1 or 0.9).

Job Order Contract (JOC). See IDIQ contracts.

Line-Item Projects. Projects that are added to the budget of the government body on a project-by-project basis rather than as a program. See also Appropriation; compare to Program.

Local Government. A government body of a small geographic region within a nation. Local governments may or may not overlap geographically. When local governments overlap, they typically have differing duties. Examples of local governments include counties, cities, towns, municipalities, school boards, water boards, road boards, sanitation districts, electrification districts, fire protection districts, and hospital districts.

Lowest Responsible Seller. A responsible seller who submits the lowest bid or proposal that is responsive to the IFB or RFP, respectively. The selection process includes evaluation of each seller’s proposal to ensure that it meets minimum qualifications of the government body. The degree of qualification may vary, but a seller must meet the minimum qualifications of the government body to be determined to be “responsible.” For example, in construction contracts, the minimum qualifications are generally a contractor’s license and a performance bond. For professional service contracts, a different selection process is used. See also Responsible Seller; compare to Qualifications-Based Selection.

Matching Funds. A form of split funding by program. When governments “devolve” project selection to lower government bodies, they often require those lower government bodies to pay a portion of the project cost. Matching funds may be apportioned on a percentage basis or as a defined contribution. See Split Funding, Defined Contribution, and Defined Elements of Work.

Multiple Award Schedules. A type of contract that can be used when there is a generally accepted “reasonable price” for a good or service. Multiple award schedules are particularly valuable for procurement of commodities. Each potential seller submits its qualifications and schedule of rates to the government body. Assuming each schedule of rates is based on generally accepted “reasonable” prices, the government body can select the seller that is most advantageous to the government. If these are approved, government agencies may buy goods and services at the published rates without a separate competition.

National Government. The government body of an internationally recognized nation. Examples of national governments include a confederation, federation, or unitary state.

Obligation. A budget process that places funds for a contract into a separate account that can be used only for the specific contract. The funds remain available for two to five years, depending on the rules set by the government body. This avoids the need to return to the government body and seek additional appropriation in each fiscal year. See also Appropriation and Zero-Balance Budgeting.

On-Call Contracts. See Indefinite Delivery Indefinite Quantity Contracts.

Opposition Stakeholders. Stakeholders who perceive themselves as being harmed if the project is successful.

Other Than Full and Open Competition. A process where one or more responsible sources is excluded from competing for a contract. Examples of this scenario include a set-aside for small disadvantaged businesses or small and a sole source contract. See also Sole Source Contract.

Percentage Split. Split funding by program where each program funds a percentage of the project.

Prevailing Wage. The prevailing wage is often the wage paid to the largest number of people in the job classification in the geographic area. When so defined, the prevailing wage represents the “modal” average. However, the prevailing wage may also be defined as the “mean” average of the wages paid to all people in the job classification.

Program. A group of projects managed in a coordinated way to obtain benefits not available by managing them individually. See also Line Item Projects.

Protest. A formal objection to the selection or award of a government contract to a seller by a disappointed seller or any other person. The formal objection typically must be filed during the selection process and comply with a mandatory procedure established by the government body.

Qualifications-Based Selection. A selection process in which the contract is awarded to the best-qualified seller among those who offer a reasonable price to the government. This approach is most often used on design contracts, where the design cost is a small fraction of the construction cost, but increased attention to design can result in large construction savings. Sellers’ qualifications are evaluated, the sellers are ranked, and a contract is negotiated with the most qualified seller. If the government and the seller cannot agree on a reasonable price, the government terminates negotiations with the highest-ranked seller and begins negotiating with the next highest-ranked seller.

Regional Government. A government body of a large region within a nation. In small nations, there are often no regional governments—only a national government and local governments. In confederations and federations, the regional government has considerable autonomy. In unitary states, the regional government is subject to control by the national government. Examples of regional governments include states, provinces, departments, cantons, kingdoms, principalities, republics, regions, and territories.

Regulators. Individuals or organizations that must approve various aspects of the project. Regulators enforce rules and regulations. They are actively involved in the project, but generally have no interest in its success—it will not affect them. Regulators are either agents of a higher government or of another agency in the same government as the performing organization.

Responsible Seller. A seller that meets the minimum qualifications required by the government body to perform the work.

Sole Source Contract. A contract in which there is only a single seller that can accomplish the work—by reason of experience, possession of specialized facilities, or technical competence—in a time frame required by the government. See also Other Than Full and Open Competition.

Split Funding. A project that receives funding from multiple fund sources or from budgets in more than one budget year. See also Matching Funds, Defined Contribution, and Defined Elements of Work.

Spoils System. A system in which each new administration can replace government employees. See also Civil Service System.

Tight Matrix. A system in which each project has an assigned work area, and employees sit together in that area while they are working on the project, even though they do not report to the same supervisor.

Use It or Lose It. A provision in the annual budget of a government body that requires funds to be spent or obligated by the end of the fiscal year.

Weighted Price and Qualifications. See Best Value Selection.

Zero-Balance Budgeting. A budget process where each year’s budget starts with a zero balance, requiring justification of every expense and income item. See also Obligation.