Procurement & Payment Services
Have you ever spoken to a staff member in Procurement & Payment
Services and wondered what it was they were talking about? Below
you will find definitions for commonly used terms and phrases within
the purchasing and accounts payable functions.
- ABC Analysis (or 80/20 rule)
- Application of Pareto's Law, or the "80/20 rule", ABC analysis,
as related to inventory and spending, is simply a determination of
the relative ratios between the number of items purchased and the
dollar value of the items purchased repetitively for stock.
In most businesses, 10-20% of the items ("A" items) account for 70-80%
of the investment.
- Back Order
- Items ordered but not shipped due to a stockout or some other reason.
- A standard or point of reference used in measuring or judging quality,
value, performance, price, etc. This process attempts to locate
a top-level (world-class) firm with which to compare one's own level
- Best Buy
- A term used to imply that a purchase represents an overall combination
of quality, price and various elements of required service that in
total are optimal relative to the business's needs
- Best Value
- An award that optimizes quality, cost and efficiency that typically
applies to complex services and technology contracts and is quantifiable
whenever possible. Costs in the case of "best value"
are distinguished from "price". Costs include conversion
costs, life-cycle costs, etc. and embody price which is the amount
charged by the vendor for the commodity or service.
- (See Competitive Bid)
- Bid Opening
- In public sector purchasing, the process through which the contents
of bids are revealed for the first time to the government, to other
bidders and usually to the public.
- Blanket Order
- A term commitment (usually one year or more) to a supplier for certain
goods or services over a predetermined period of time at predetermined
prices, or at prices to be determined based on market or other conditions.
This practice is aimed at reducing the number of small orders utilizing
short-term releases to satisfy demand requirements.
- Cash Discount
- A discount designed to encourage prompt payment of an account.
The net price of the purchased items yields a fair profit to
the supplier and is the price the supplier expects most customers
to pay. Those who do not pay within the specified time limit
must pay the gross price.
- Centralized Purchasing
- An organizational policy and structure in which most of the
firm's purchasing is done by one specialized group representing multiple
user groups or geographic sites. There are numerous advantages
for this type of arrangement, including the ease of standardization
of products, reduction of administrative duplication, more leverage
capability due to a larger quantity of purchases, limited interdepartmental
competition in times of short supply, more control over purchase commitments,
greater administrative efficiency for suppliers, and the development
of specialized expertise in purchasing activities. With the exception
of the AMEX Procurement Card Program, SUNY Brockport practices centralized
- A secret agreement or cooperation between two or more parties to
accomplish a fraudulent, deceitful, or unlawful purchase.
- Collusive Bidding
- An unethical and illegal practice in which suppliers act in collusion
to "fix" their bids in a collectively advantageous manner.
- A standard article of commerce in the form of material goods, supplies,
products or similar items.
- Competitive Bid (or IFB - Invitation For
- A common method of source selection is the offer of prices and specified
elements of performance by vendors competing for a contract.
Public sector purchases are often required to perform competitive
bid selection using a sealed bid process with the law requiring that
the award be made to the lowest responsive and responsible bidder.
- Concealed Damage
- Damage to the contents of a package which appears to be in good
- A written or oral agreement between two or more competent parties
that defines a job or service to be performed and which is legally
- Contractual Services
- Expenses for services rendered by outside vendors under formal or
informal contracts such as office machine maintenance, printing, equipment
rentals, consultants, insurance, etc.
- Credit Memo
- A document used to correct and overcharge, pay a rebate or credit
the value of goods returned.
- Decentralized Purchasing
- Under a decentralized purchasing policy, individual departments
or location managers' control the purchasing activities. The
AMEX Procurement Card program utilizes a decentralized purchasing
- Emergency Purchase
- Is considered an urgent and unexpected requirement where health
and public safety or the conservation of public resources is at risk.
An agency's failure to properly plan in advance which then results
in a situation in which normal purchasing practices cannot be followed
does not constitute an emergency.
- The recording of a monetary commitment in an account's budget to
buy goods or services via requisition, purchase order or contract.
- Items with a relatively long useful life and costing over $1,500
including office furniture, personal computers, laboratory equipment,
- A system of moral principles or rules of conduct recognized as essential
to a particular class of actions. Procurement agents for NYS
must adhere to a code of conduct as detailed in the "Public Officers
Law" provided by the NYS Ethics Commission.
- The act of contacting a supplier or carrier with the goal of speeding
up the delivery date of an inbound shipment.
- Fiscal Year
- The timeframe in which a budget is in effect or financial reporting
is done. SUNY Brockport's fiscal year begins July 1 through
June 30 of the following calendar year.
- FOB (Free On Board)
- F.O.B. terms establish a contractual arrangement in which title
(or ownership) of goods is transferred between supplier and
purchaser at the F.O.B. point.
- Force Majeure
- Acts beyond the control of the party in question (e.g., acts of
God or other disruptive conditions for which a supplier or a carrier
cannot be held responsible).
- Deceit, trickery, breach of confidence or other illegal act used
to gain unfair or dishonest advantage.
- Hazardous Materials
- Materials that have been determined by the Department of Transportation
(DOT) to be a risk to health, safety and property, including such
items as explosives, flammables, poisons, corrosives and radioactive
materials. These materials must be packaged, labeled, handled
and transported according to stringent regulation from several agencies.
- Any payment, fee or other compensation given to a covered individual
for services that are not related to the individual's official State
duties when that compensation is made as a gratuity of an award of
- IFR (Income Fund Reimbursable) Account
- A self-supporting account that generates revenues and provides services
which are not included in the state operating budget. IFR's
include athletics fee, technology fee, parking fees and fines, student
health fee, facilities and user fee, recreational services, non-credit
continuing education programs, fine arts events box office receipts,
salary reimbursements from sponsored grants and contracts, transcript
and placement file fees, time payment plan and telephone resale.
An IFR account must follow all State and campus purchasing and payroll
regulations and procedures. The difference between an IFR account
and a state operating budget account is an IFR generates its own revenue
to support its expenditures, whereas a state operating budget account
is supported by general State revenues and by SUNY revenues.
The year-end cash balance in an IFR is carried over to the next year;
it does not revert back to the State.
- A bill for goods or services purchased that includes pertinent information
with respect to the quantity, price, terms, nature of delivery, etc.
- Lead Time
- The time that elapses from placement of an order until receipt of
the order, including time for order transmittal, processing, preparation
- Acquisition of real and personal property by means of a contract
in which the lessor conveys to the lessee the use of the property
in return for a specified rent or other compensation.
- M/WBE (Minority/Women Business Enterprise)
- Any legal entity, organized to engage in commercial transactions
that is at least 51 percent owned and controlled by one or more minority
(or woman) persons. Ownership interest in the firm must be real,
substantial and continuing.
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- Nonresponsive Bid
- A bid that does not conform to the essential requirements of the invitation
for bid (IFB).
- OEM (Original EquipmentManufacturer)
- A purchaser who acquires materials or components for incorporation
into another product. "OEM parts" refer to spare parts made by
the original manufacturer.
- A decision made by a business to purchase an item or service that
previously was made or completed in-house.
- Packaging List
- An itemized listing of package contents that is prepared by the shipper.
- Per Diem
- This term literally means "per day" and is used to determine a specific
daily rate allowable for a specific purpose.
- Petty Cash
- A method of purchasing low-value items from a business' petty cash
system. The Petty Cash limit for SUNY Brockport is $250.
- Pro Forma Invoice
- A document prepared in advance of a sale to provide evidence of the
final form and amount of invoice.
- Procurement Card
- A payment method whereby individuals are empowered to deal directly
with suppliers for low-dollar, high-frequency purchases. The cards
reduce paperwork and enable purchasing and accounts payable personnel
to focus on more value-added activities.
- Procurement Record
- Procurement law requires that a procurement record be kept for each
acquisition. The record formalized the practice of agencies to
maintain documentation concerning the procurement process and the decisions
made during that process. The Procurement Record, including the
solicitation documents, should contain all the materials necessary to
be conveyed to the Office of the State Comptroller (OSC) for contract
review purposes and any other material the agency determines is essential.
The record is designed to both serve and protect agencies and the business
community during and after the procurement.
- Public Sector Purchasing
- The purchasing function as carried out by governmental agencies.
- Purchase Order
- A written contractual document prepared by a buyer to describe all
terms and conditions of a purchase.
- Purchase Requisition
- A written or computerized request to the purchasing department for
the procurement of goods or services from suppliers.
- Quotation (or RFQ - Request For Quote)
- A document which can be used to obtain pricing from suppliers when
a formal bid opening is not required including discretionary, sole source,
single source or emergency purchases.
- If buyers give preference to suppliers because they are also customers,
then buyers are engaging in a practice known as reciprocity. This
purchasing action is illegal if it tends to restrict competition or
- Responsible Bidder
- One that is determined to have skill, judgment and integrity and is
found to be competent, reliable, experienced and financially qualified.
- Responsive Bidder
- One whose offer meets the specifications or requirements prescribed
in the bid documentation or solicitation.
- RFP (Request For Proposal)
- A type of bid document which is used for procurements where factors
in addition to cost are considered and weighed in awarding the contract
and where the method of award is "best value".
- SMRT (SUNY Management Resource Tool
- A web-based application for querying budget and expenditure information
for an account from the SUNY accounting system.
- Scope (or Statement) of Work
- A statement outlining the specific services a contractor is expected
to perform, generally indicating the type, level, and quality of service,
as well as the time schedule required.
- Sealed Bid
- A bid which has been submitted in a sealed envelope to prevent its
contents from being revealed or known before the deadline for the submission
of all bids.
- The performance of a task or tasks which may include the use of a
material good or quantity of material goods.
- Single Source
- The practice of using one source, among others in a competitive marketplace
that, for justifiable reason, is found to be most advantageous for the
purpose of fulfilling a given purchasing need.
- Small Business
- A business which is resident in NYS, independently owned and operated,
not dominant in its field and employs one hundred or less persons.
- Sole Source
- The use of one source when that source is the only available firm
possessing the ability to fulfill the purchasing firm's needs.
- A description of the technical requirements for a material, product
or service that includes the criteria for determining whether these
requirements are met. A specification may describe the performance
parameters that a supplier has to meet, or it may provide a complete
design disclosure of the work or job to be done. Specifications
for service contracts normally take the form of a "scope or statement
- System Contract
- A contract generated by the purchasing department that authorizes
designated employees of the buyer's firm, using a predetermined release
system, to place orders directly with the supplier for specified materials
during a given contract period. A systems contract typically is
the extension and a more sophisticated form of a blanket order.
- Expenses for travel on official State business such as meals, lodging,
airline tickets, personal car mileage, conference registrations, etc.
- A documentary record of a business transaction denoting payment due
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