Commissioning Terms Glossary

2004/18/EC

The updated EU Procurement Directive. This is a consolidated Directive

which sets out the Europe-wide rules for public procurement in the three
areas of works, supplies and services. The Directive came into force on 31st
January 2006. (see EU Directive)

Accountability

Means by which individuals and organisations report their actions and are
answerable to others for what they have done

Advance payment

Payment made before the provider has incurred the expenditure and before
the product or service - or an agreed part of it - has been delivered.

Appropriation

Parliament's allocation of money to a programme, which may be a specific or

general allocation.

Arrears payment

Payment made after the provider has incurred the expenditure and after the
product or service - or an agreed part of it - has been delivered.

Audit

An independent, objective assurance and consulting activity designed to add

value and improve an organisation's operations. It helps an organisation
accomplish its objectives by bringing a systematic, disciplined approach to
evaluate and improve the effectiveness of risk management, control and
governance processes.'

Award Stage

The second stage of the tendering process. This may be incorporated into the
first stage to make a single tendering procedure. Sometimes a shortlist is
formed during the selection stage during which tenderers are selected for
entry either to a short list or a select list. In these cases the award stage forms
a separate phase of the tendering process.
B

Benchmarking

A method for gauging performance in a service area or outcome by

comparing it to the performance of other organisations of a similar size and
nature

Best Value

A framework introduced in 1999, based on a set of indicators defined by

statute to help local authorities plan, measure, manage and improve their
performance. Although still in force it has largely been replaced by the
Comprehensive Performance Assessment (CPA).

Bid

Usually used in connection with grant funding. The funder sets out the
problems which the grants are intended to address. Bids from applicants offer
a variety of ways of solving the problems and at various costs. Successful
bids result in the award of a grant.

Capacity building

In this case, a resourced approach (typically through staff training and

development) boosting the sector's ability to manage projects, deliver services
or engage in consultation and policy processes, partnerships and social
enterprise by ensuring that voluntary and community organisations have the
skills, knowledge, structures and resources to realise their potential.

Channel

Three types of funding channel - grant, grant-in-aid or procurement - that are

available to public bodies in funding VCOs.

Charitable incorporated organisation (CIO)

A new legal form of organisation which is expected to be introduced by the

forthcoming Charities Act 2006. CIOs will be registered charities and
regulated by the Charities Commission. CIOs will have corporate status and
the benefits of limited liability. It is likely that once the CIO form becomes
available, many existing charities will convert to this form.
Clawback

The concept that where an asset financed by public money is sold, all or part
of the proceeds of the sale should be returned to the funder.

Commissioning

The process by which local authorities decide how to spend their money to
get the best possible services for local people. Involves anticipating future
needs and expectations rather reacting to present demand.

Commissioning Officers

Officers who hold the budget for the purchasing of local services and make
the business case for the services to be purchased. Commissioning functions
must be separated from those of Procurement Officers.

Community benefit society (CBS)

Community benefit societies were formally known as charitable industrial and

provident societies (see IPS definition below).

Compact

The voluntary and community sector's written agreement with the government
(or local public bodies) which has undertakings on both sides, shared
principles and values such as recognising the sector's independence, and
mechanisms for making it work.

Competition Law

Is underpinned by Article 81 of the Treaty Establishing the European

Community /The Treaty of Lisbon 2007/Article 85 of the Treaty of Maastricht.
The following are prohibited as incompatible with the common market: all
agreements between undertakings, decisions by associations of undertakings
and concerted practices which may affect trade between Member States and
which have as their object or effect the prevention, restriction or distortion of
competition within the common market, and in particular those which:

(a) directly or indirectly fix purchase or selling prices or any other trading
conditions;
(b) limit or control production, markets, technical development, or investment;
(c) share markets or sources of supply;
(d) apply dissimilar conditions to equivalent transactions with other trading
parties, thereby placing them at a competitive disadvantage;
(e) make the conclusion of contracts subject to acceptance by the other
parties of supplementary obligations which, by their nature or according to
commercial usage, have no
connection with the subject of such contracts.
Competitive Dialogue

A new tendering procedure which can be used for complex contracts where
the final specification is yet to be decided. The process uses the selection
stage to identify a number of tenderers, each of whom will be invited to
contribute their ideas towards the final specification. This is the "Dialogue"
phase. When the specification has been decided then the Procurement
Officers must declare the dialogue complete. Those tenderers identified
during the selection stage are then invited to compete for the contract in the
"Competitive" phase

Consortium Tendering

Referenced in Regulation 28 (see Public Contracts Regulations 2006). The

Regulation defines a consortium as two or more organisations tendering
together. It goes on to say that purchasing authorities shall not exclude a
tender for the sole reason that it has been submitted by a consortium.

Contract

Legally binding agreements between (in this case) a government body and a
TSO to provide services on behalf of the public body. A contract will specify
the services to be provided and what the contractor is to be paid for providing
them. It will also include provisions, in greater or lesser detail, setting out the
legal obligations which each of the parties accepts in order to fulfil the
purposes of the contract.

Cost Effectiveness

Analysis that compares the costs of alternative ways of achieving the same or
similar outcomes

CPD

Common Procurement Directive. This is the European legislation which

governs purchasing across the EU. Set up for Supplies and Services following
the Single Market Treaty of 1986. The Directive for Services came into
legislation in 1993. A new consolidated Directive was approved in March
2004, implemented into UK law on 31st January 2006. The purpose of the
Directive is to open up purchasing so that there is a single market across
Europe and to increase competitiveness for contracts funded by public
money.

CPD Thresholds

The value of a contract over which the Directive requires, in most

circumstances, publication in the OJEU. The new thresholds came into effect
on 8th January 2008 for the years 2008 and 2009 (The European fiscal year
is the calendar year).
For purchasing by government bodies and generally also the NHS:
supplies and services this is £90,319
works this is £3,497,313

For purchasing by other public sector bodies such as Local Authorities:

supplies and services this is £139,893
works this is £3,497,313

CPV

Common Procurement Vocabulary. The numerical system of identifying goods

and services in the tendering process. Also used as part of the e-procurement
process to identify services offered by the tendering organisation.

De-commissioning

Is the process of planning and managing a reduction in service activity or

terminating a contract in line with commissioning objectives, (including
non/under performance issues).

Development Funding

Investing in new organisations or new capacity in existing organisations to

develop their ability to contribute to a funder's policy objectives.

DDA

Disability Discrimination Act 1985

EoI

Expression of Interest. A first stage in a tendering process. Prospective

tenderers express interest in the way described in the advertisement. This
results in the tender documents being sent to the prospective tenderer. The
EoI may require prospective tenderers to submit a summary of the proposed
activities and an indication of cost. Not as stringent or detailed as a PQQ

EU Commission

The politically independent institution that represents and upholds the

interests of the European Union as a whole. It proposes legislation, policies
and programmes of action and it is responsible for implementing the decisions
of Parliament and the Council amongst other things for the implementation of
European Treaties.
EU Directive

A European Union legal instruction or secondary European legislation which

is binding on all Member States but which must be implemented through
national legislation within a prescribed time-scale. The European single
market is covered by a number of Directives, which must be implemented by
each of the 27 Member State into their own legislative framework, and give
detailed instructions on tendering procedures.

European Court of Justice

The European Court of Justice (ECJ) is based in Luxembourg. It is an

institution of the European Union (EU) and should not be confused with the
European Court of Human Rights. The ECJ plays a crucial part in the process
of the integration of the EU Member States. Its role is to interpret the EU
Treaties. These Treaties are a type of international law, but are also part of
the internal common law of the Member States.

Evaluation

The assessment of the extent to which the programme has met its objectives:
that is, has been effective, economical and efficient. There are two sorts of
evaluation: summative and formative. Summative evaluation makes the
assessment after the programme has been in operation for some time, or is
complete, while formative evaluation assesses the programme as it is being
put in place and during its early operation.

e - Auction

An online exercise in which suppliers compete against each other to lower the
tender price. Sometimes known as a "reverse auction". Can be used by the
purchaser to establish the market price.

e- Marketplace An internet based facility that enables trade between one or

more purchasing organisations and a variety of suppliers.

e-Tendering ending requests for information and prices to suppliers and

receiving the tender responses from suppliers using Internet technology.

Framework Agreement

Agreement between one or more contracting authorities and one or more

economic operators, the purpose of which is to establish the terms governing
contracts to be awarded during a given period, in particular with regard to
price and, where appropriate, the quantity envisaged.
Full cost recovery (FCR)

Full costs are the direct costs of your project or service plus a relevant portion
of organisational overheads (central administrative costs). FCR is the process
of costing activities to include the appropriate share of overhead or indirect
costs, as well as the direct costs of delivering a service.

Funding model

The form that the funding programme takes when implemented in practice,
once the questions raised in this tool have been answered.

Funding stream

A sum of money allocated by government for a defined purpose.

Governance

The combination of processes and structures implemented by the board to

inform, direct, manage, and monitor the activities of the organization toward
the achievement of its objectives.

Government Procurement Card

A payment card issued by an authority to staff that may be used to purchase

goods and/or services up to an agreed value from certain suppliers. Although
similar in operation, it is not a credit card that can be used anywhere and
there is no credit facility. For suppliers typically payment in full will be made
direct to their bank accounts usually within three working days.

Grant Payments to outside bodies should be made in the form of grants

where a department is required, or wishes, to maintain detailed control over
the expenditure and where a procurement approach is not suitable.

Grant

Payments to outside bodies should be made in the form of grants where a

department is required, or wishes, to maintain detailed control over the
expenditure and where a procurement approach is not suitable.

Grant in aid

A payment by a government department (normally referred to as the sponsor

department) to finance all or part of the costs of the body in receipt of the
grant in aid. Grant in aid is paid where the government has decided, subject to
Parliamentary controls, that the recipient body should operate at arm's length.
The sponsor department does not therefore seek to impose the same detailed
controls over day-to-day expenditure as it would over a grant.

Green Paper

Green papers, which are issued much more frequently, are more open ended
than white papers. Green papers, also known as consultation documents,
may merely propose a strategy to be implemented in the details of other
legislation or they may set out proposals on which the government wishes to
obtain public views and opinion.

Infrastructure

Physical facilities, structures, systems, relationships, people, knowledge and

skills that support, develop, co-ordinate, represent and promote front-line
organisations to enable them to deliver their missions more effectively.

Individual commissioning

This is specifically related to an individual child or young person, for example

a placement, education or care package.

Industrial and provident society (IPS)

An organisational form sometimes used by VCOs; charitable IPSs are usually

known as community benefit societies. A charitable IPS is an incorporated
body with limited liability, governed by the Industrial and Provident Societies
Acts.

ITT

Invitation To Tender, sometimes referred to as a call to tender. This is sent to

tenderers who have completed the PQQ and successfully passed the
selection stage. The ITT starts the second or award stage. Usually requires
the completion of a Method Statement. Sets out tender requirement, content,
deadline, etc.

Joint commissioning

Is the process whereby two or more organisations act together to co-ordinate

the commissioning of services, taking joint responsibility for the translation of
strategy into action.
K

KPIs

Key Performance Indicators. KPIs are tools which help purchasers to

measure the performance of suppliers against their contractual obligations.
KPIs are normally detailed in the service specification document.

LAA

An agreement between central and local government to achieve local

solutions to meet local needs whilst also contributing to national priorities and
the achievement of standards set by central government.

Locality commissioning

This is based around a smaller geographical area, cluster of schools or is

community focused etc.

Lowest Price

One of two systems which the EU allows for tender selection. This allows for
selection on the basis of price and financial appraisal only.

M
Match funding

A requirement by funding agencies that any contributions they make towards

programme or project costs should be matched by other funders, or by the
applicants from their own resources.

MEAT

Most Economically Advantageous Tender. One of two systems which are

allowed for tender selection. This enables tender evaluation on the basis of
the quality of the tender the offer as well as the price. The quality is scored
against a set of criteria identified for each tender

Method Statement

A statement of the methods and resources to be employed in executing work

specified in a contract. The statement is closely linked to the contract delivery.
Failure to deliver the methods and resources set out in the method statement
could lead to an action for breech of contract.
Milestone

A point at which you can measure progress on the way to achieving a goal or
objective.

Mode

A term used in this tool to refer to three broad types of objective that a policy
programme may have: financing a service or project; development funding or
strategic funding.

Model

The form that the funding programme takes when implemented in practice,
once the questions raised in this tool have been answered.

Monitoring

In this case, the ongoing collection of information about the programme and
assessment of the implications. Such information may be needed for three
purposes: effective management of the programme; wider accountability for
the programme; and policy development.

Negotiated Procedure

A tendering procedure which is generally used for large capital projects where
a range of solutions to deliver the requirements specified are possible. The
selection stage is used to select those organisations who will proceed into the
negotiated award stage.

NUTS Code

Nomenclature for Territorial Units for Statistics. A Geopolitical standard for

referencing the administrative divisions of countries for statistical purposes.
The standard was developed by the European Union, and thus only covers
the member states of the EU in detail. The EU has also devised a hierarchy
for the 10 countries that joined the Union in 2004, but these are subject to
minor changes. The NUTS divisions do not necessarily correspond to political
or administrative divisions within the country. The relevant code(s) for contract
delivery must be referenced in tender advertisements.
O

Objective

Something you need to achieve in order to meet your goal. To be effective,

objectives should ALWAYS be written so that they are SMART (Specific,
Measurable, Achievable/Agreed, Relevant and Time-bound).

OJEU

Official Journal of the European Union. The OJEU is published Monday to

Saturday every week, except on days which are public holidays in Belgium. It
carries calls to tender above the CPD threshold from all 27 EU Member
states, the EEA countries and from the USA and Australia under the WTO
agreement. Average contents of a single issue of the OJEU are in the region
of 3-4,000 calls for tender. OJEU can be purchased in paper format or viewed
online at Tenders Electronic Daily which can be found at http://ted.europa.eu/

Open Procedure

A tendering process in which the selection stage is followed almost

immediately by the award stage in order to identify a single contractor to
deliver the supplies or services specified. Sometimes both the selection stage
and award stage are combined into a single phase.

Outcome
The term used to describe the totality of what a programme or project is set
up to deliver or achieve.

Output

The end result of carrying out an activity - usually a product. It is important to

distinguish what has been produced (the output) from the effect that it may be
designed to help achieve (the outcome)

"Part B" Services

Those services included in an Appendix, or "Part B" to the Directive

2004/18/EC and the Public Contracts Regulations 2006. In procuring these
services, which include health education and social care, purchasers are not
required to comply with all of the regulatory requirements.

Payment formula

A financial model must include the appropriate mix of bases and timings - this
is called the payment formula. The payment formula must follow from the
objectives of the programme, and the agreed approach to risk management.
Performance Indicator

A clearly defined measure of how well an organisation is doing in meeting its

objectives and measures. Indicators can relate to Inputs, Outputs and
Outcomes.

PIN

Pre- Information Notice. A short notice indicating that a call for tenders is
planned during the coming three months. The publication of a PIN means that
the deadline for submitting the tender from the publication of the call may be
shortened.

Plan

A plan is defined as "a detailed document that sets out the intended method of
progressing from the current situation to achievement of one or more desired
outcomes (objectives or goals). The sequence of steps must be measurable."

Presentations

Tenderers may be invited to make a presentation as part of the tender

process. This can happen as one criterion used to assess the MEAT, award
stage process.

In a second scenario the MEAT assessment may be used to produce a short

list. All short listed tenderers are then invited to make a presentation which is
assessed prior to contract award.

Procurement

The purchase of goods and/or services by publicly funded bodies at the best
possible total price, in the right quantity and quality, at the right time generally
via a contract. The functions of procurement are a) ensuring legal compliance;
b) purchasing supplies or services; c) entering into contracts. Procurement
must be kept separated from Commissioning.

Procurement Officers

Legal officers who undertake the procurement functions. They are usually
based in a Procurement Department which form part of the Chief Executive's
or public authority's legal department.

Programme

A portfolio of projects selected, planned and managed in a co-ordinated way.

Project

A temporary organisation formed to produce a unique and pre-defined

outcome, or result, to a pre-specified timescale, using predetermined
resources. It is important to understand that a project is something that can be
planned and is something with a specific end in sight and which is managed
to deliver as a single coherent whole.

Proportionality

The principle of not burdening funded organisations out of proportion to the

amount of funding, which applies especially to monitoring. Guidance states
that monitoring arrangements etc. should be proportionate to the level of, and
risk to, the amount of funds involved. The principle of not burdening funded
organisations out of proportion to the amount of funding, which applies
especially to monitoring. Guidance states that monitoring arrangements etc.
should be proportionate to the level of, and risk to, the amount of funds
involved.

Propriety

Linked to regularity, it is the further requirement that funds must be handled in

accordance with Parliament's intentions and Parliamentary control. Decisions
must be taken fairly and be free from undue influence.

Protocol

A protocol is "an agreed set of procedures or standards usually between 2 or

more parties and most often established in relation to data transfer."

PQQ

Pre-qualification Questionnaire. A document which forms the basis of the first

or selection phase of the tendering process. The PQQ forms the gateway to
the tendering process. Failure to submit a successful PQQ and therefore
succeed at the selection stage means that the tenderer is excluded from the
process and cannot proceed to the award stage.

Public Contracts Regulations 2006

The UK legislation which was brought into force by Statutory Instrument (SI
Number 5) dated 09.01.2006. The Regulations set out the rules which govern
all aspects of public purchasing in England and Wales.

Purchase-to-pay cycle

The post tender purchasing process whereby a public authority raises a

purchase requisition, places an order, receives goods or services and make
payments to suppliers.
R

Re-commissioning

Is where evidence within the cyclical commissioning process points to

continuing an existing service, or redesigning an existing service due to
changed evidence of need, with the same or a different provider.

Regional/sub regional commissioning

This is where whole regions or a number of authorities within regions agree to

commission services on the basis that there is cross boundary activity which
makes sense to recognise. There may also be economic benefit to several
areas commissioning services from the same providers to achieve discounted
rates

Regularity

Linked to propriety, it is the requirement for funds to only be used for the
purposes for which they were awarded.

Remedies Directives

A set of Directives, setting out the rules under which the decisions of public
purchasers may be challenged, in some cases this may take place even
before the contract has been signed. The most recent Directive, 2007/66/EC
of 11 December 2007 amends Directives 89/665/EEC and 92/13/EEC with
regard to improving the effectiveness of review procedures concerning the
award of public contracts. This sets out legal remedies which can be
introduced at a stage before a public contract is actually concluded. The EU
Commission believes that previous rules in this area have not been
sufficiently effective in all Member States and therefore required
strengthening. In addition it was believed that, illegal direct awards of public
contracts, which are the most serious violations of Community law in the area
of public procurement, needed to be combated more fiercely. The new
Directive provides businesses, wherever in the EU they would like to tender
for public contracts, with more effective national review procedures when
awarding authorities have violated the EU Directives on public procurement.

Restricted funds

These are funds which must be spent on a specific purpose within a specified
time. If this type of fund is not spent within the specified time or for the
specified purpose, it may have to be returned to the funder.

Restricted Procedure

A tendering process which uses the selection stage to set up a select list or
framework of providers. The list may then be used for a defined period of up
to eight years to invite tenders or request quotes as specific services as
required.

Risk

Uncertainty of outcome (whether positive opportunity or negative threat). It is

the combination of the chance of an event and its consequences.

Risk meeting/s

Meetings held before a project begins, to identify and describe each of the
relevant risks, in terms of likelihood and impact, and who is best placed to
manage each one.

Risk register

A document used to record the risks facing a project or programme, usually

produced as a table. It should, as a minimum, record a description of each
risk, an assessment of its likelihood and impact and the management actions
to be taken to minimise the risk, though it can be more sophisticated.

Selection Stage

The first phase of the tendering process. The selection stage involves the
completion and an assessment of the PQQ. This is based on an appraisal of
business/financial acumen and most importantly, risk. Sometimes called
"shortlisting" with those who pass going onto the Award Stage. The selection
stage is usually managed, and PQQs scored, by Procurement and legal
officers. The selection stage is sometimes outsourced to firms of solicitors.
Never assume that the PQQ will be scored by Commissioning Officers.

Senior Responsible Owner (SRO)

The single individual with overall responsibility for ensuring that a project or
programme meets its objectives and delivers the projected benefits.

Service/project funding

Payment for a particular service (ongoing) or project (time limited).

Service Level Agreement (SLA)

That part of a contract which specifies the services to be delivered. It has

been practice for purchasers to enter into contracts based on Service Level
Agreements which are in themselves contracts but do not set out full
contractual terms, simply detailing the services to be delivered and minimal
information such as contact details, addresses, etc. regarding the contractor.
Sometimes used between Departments within public authorities.

Service Provider

A service provider is any organisation that provides goods, facilities or

services to the public, whether paid for or free, no matter how large or small
the organisation is.

SMEs

Small and medium-sized enterprises, a term used to refer to smaller private

sector companies.

Specification

A detailed description of the supplies or services to be purchased. If an

organisation is unable to deliver what is required exactly as set out in the
specification it is not worth submitting a tender.

Spending review

A statement of the government's spending plans for a particular period.

Spot purchasing

Is procuring on an ‘as and when needed’ basis rather than planning the
procurement strategy that might achieve the best value for money.

Standing Orders

All procurement activities must comply with the purchaser's own rules which
are contained in their Standing Orders. These Standing Orders regulate how
a purchaser Council conducts business.

State aid

EU law on state aid aims to prevent member states from unfairly distorting
competition within the EU, except in certain permitted circumstances. A
prohibited state aid exists if all of the following four criteria apply to the
proposed programme:

It is granted by the state or through state resources

It favours certain undertakings or the production of certain goods
It distorts or threatens to distort competition
It has the potential to affect trade within the EU
Statutory bodies

Organisations created by Acts of Parliament which define their powers and

duties.
Statutory Instrument

Statutory Instruments (SIs) implement EU legislation into UK law. A similar

system applies in Scotland (SSIs)

Strategic commissioning

This is when a service is commissioned covering an entire borough or city etc.

Strategic funding

Financing for organisations recognised to be of strategic importance in that

they facilitate the achievement of other, more specific government objectives.

Stream/funding stream

A sum of public money which has been allocated for the achievement of a
particular objective or the implementation of a particular policy programme.

Target

Something you are aiming for - usually the numerically measurable part of an
objective.

Tender

A written offer to contract to provide goods or services precisely as specified

in the tender documents at a stated price or rate. Successful tenders result in
the award of a contract to deliver the goods or services specified.

TUPE

The Transfer of Undertakings (Protection of Employment) Regulations 1981.

The purpose of TUPE is to preserve continuity of employment and to
safeguard employment rights of all employees whose employment transfers to
a new employer as a result of a relevant transfer.

Third sector organisation (TSO)

VCOs pursue social and environmental objectives; do not distribute any

surpluses to shareholders; reinvest any surpluses in the pursuit of their
objectives; and are independent of government. VCOs can take a number of
organisational forms, with or without charitable status.

U
Unrestricted funds

Funds held for the general purposes of an organisation, with no specific

restriction on the purpose to which they are applied.
V

Value for money (VfM)

The optimum combination of whole-life cost and quality (or fitness for
purpose) to meet the user's requirement. Assessed by the National Audit
Office using the criteria of economy, efficiency and effectiveness.

Vires

The power in legislation for the funder to carry out the activity envisaged in the
policy intent for a programme. This may be a power that is specific to the
programme; or it may be a more general power that may be used to fund a
range of programmes, including the one at hand.

Voluntary and community organisation (VCO)

A general term used to refer to registered charities, non-charitable nonprofit

organisations, associations, self-help group and community groups.

White Paper

An informal name for a parliamentary paper enunciating government policy.

White papers are issued by the government and lay out policy, or proposed
action, on a topic of current concern. Although a white paper may on occasion
be a consultation as to the details of new legislation, it does signify a clear
intention on the part of a government to pass new law.

Whole life cost

The full cost to an organisation of a solution to a requirement over the full

period that the requirement will exist. Whole life costs will take into account
running costs such as energy usage, maintenance requirements, staff training
needs, and disposal costs such as recycling, as well as the initial purchase
price. The life span of the product will also need to be considered.