Acceptance and Offer
The agreement of the Client to an offer submitted by Contractor (University).
Obligations owed to others; list of outstanding bills. Liabilities on open account owed to private persons, firms or corporations for goods and services received
Obligations owed to your company by others; a list of outstanding invoices. Amounts owed on open account from private persons, firms or corporations for goods and services furnished
Act of God
Also know as Force Majeure. Unexpected or uncontrollable events, including those caused by nature that can impact the contracts price, terms and conditions. These events are not due to contractor’s or client’s negligence and may excuse contractor performance during the events and under certain conditions caused by them. Acts of God or nature or disruptive conditions for which a contractor cannot be held responsible.
The specific right to perform acts and make decisions or prescribe rules governing the conduct of others as given to an agent by a principal.
A written change, addition, alteration, correction or revision to a bid, proposal or contract document. These documents are prominently used for any changes to scope of services or services to be performed. The terms addendum, addenda and amendment are synonymous.
The amount of variation permitted by an adjustment clause in the contract generally permitting a change upward or downward in the price or obligation in case certain events transpire.
A branch or a unit of a larger organization. A company effectively controlled by another or associated with others under common ownership or control.
A written statement of facts provided by one party which may be made under oath before a person of authority or a written declaration made under oath before an authorized official, usually a Notary public.
A person authorized by a superior, i.e. principal, to act for him or her. In public procurement, this designation is usually incorporated into statute and ordinance. Empowered to act for another.
An understanding, usually in writing, between two or more competent parties, under which one party agrees to certain performance as defined in the agreement and the second party agrees to compensation for the performance rendered in accordance with the conditions of the agreement. Agreements and contracts are sometimes used synonymously. Generally agreements are approved by an attorney “as to form” and legal sufficiency prior to execution.
Allowance for Doubtful Accounts
An allowance for doubtful accounts is an estimate of the un-collectability of past due receivable. The balance is an offset to the accounts receivable balance and is used to write off accounts that are deemed uncollectible.
Alternate Dispute Resolution (ADR)
A process or procedure used voluntarily between parties to resolve issues in controversy without the need to resort to litigation. ADR may include but are not limited to mediation, fact-finding and arbitration.
An agreed addition to, deletion from, correction or modification of a document or contract. To revise or change an existing document. A formal revision, improvement or correction. The terms addendum and amendment are synonymous.
A process by which a dispute between parties is presented to one or more disinterested parties (arbitrators or neutrals) for a decision whose decision the contending parties agree to accept with no further appeal process also known as binding arbitration. The resolution of a conflict between parties by a party removed from the dispute. A form of Alternate Dispute Resolution (ADR).
Anything the company owns having a positive monetary value. The entire resources a fund, including any property, tangible or intangible, of monetary value.
A detailed review and examination of records, documents and the business processes with the confirmation by outside experts of a situation or condition concluding with a detailed report of findings. A formal examination or verification of financial accounts or other business operations. Examples include financial, compliance and management audits.
Bad Debt Expense
A bad debt expense is an entry booked against the appropriate expense account to record adjustments to the allowance for doubtful accounts.
Shows how much the company is worth overall. A statement of a Fund’s financial condition showing a summary of its assets, liabilities, and Fund balance.
Battle of the Forms
Colloquial references to various forms that are exchanged between buyer (Client) and seller (Contractor) in an attempt to have their document prevail in the event of a disagreement between the contracting parties.
The act of measuring a process, service, or product against the characteristics of the recognized leaders in the given area of review. A study, review, or process whereby a procurement organization identifies world-class organizations with which to compare its practices, policies, and performance outcomes. An organization’s performance is judged against selected criteria from other organizations deemed “best in class”.
A name, term, symbol, design, or any combination of these that identifies a seller’s (Contractor’s) products and distinguishes them from competitive products.
Breach of Contract
Failure by either contracting party to fulfill a contract, wholly or in part, without legal excuse. An action by one party to a contract that violates the terms of the contract thereby permitting the other party to declare the contract in default. The failure of one party to fulfill the terms of a contract when there is no legal reason for that failure.
A financial statement that projects income and/or expenditures over a specified period, sometimes referred to as a fiscal year. Governmental budgets generally are classified as operating budgets or capital budgets.
Immediately available money in the form of currency, checks, or bank deposits. Currency, checks, postal and express money orders and bankers drafts in the hands of State agency.
The amount of goods and services that an organization can produce or provide in a given time interval.
The movement of money through an organization over a daily, weekly, monthly, or yearly basis. The management and monitoring of the cash flow within a business is critical to its financial well being.
A financial instrument whose value is guaranteed by the financial institution upon which the check is drawn.
A written alteration that is issued to modify or amend a contract or purchase order. A bilateral (agreed to by all parties) or unilateral (government orders a contract change without the consent of the contractor) request which directs the contractor to make changes to the contracted scope of work or specifications.
A written assertion or demand, by one of the parties to a contract, which seeks, as a contractual right, payment of money, adjustment of contract terms, or other relief, for injury, loss, or damage arising under or relating to the contract.
Conflict of Interest
A clash between the public interest and the private pecuniary interest of the individual concerned. The term identifies those situations where contractors or public officials may obtain a benefit from a public contract. Conflicts of interest may result in a breach of ethics or an ethical code.
The loss of revenues and/or profits incurred by a purchaser as a result of a seller’s breach; may involve injury to a person or property, including loss of life or business.
To work or serve in an advisory capacity. A person or company/organization that possesses unique qualifications which allow them to perform specialized advisory services usually for a fee.
A contract is an obligation, such as an accepted offer, between competent parties upon a legal consideration, to do or abstain from doing some act. The essential elements of a contract are: an offer and an acceptance of that offer; the capacity of the parties to contract; consideration of to support the contract; a mutual identity of consent; legality of purpose; and sufficient certainty of terms. A contract is a legally binding promise, enforceable by law.
Any alteration in specifications, delivery point, frequency of delivery, period of performance, price, quantity, or other provisions of the contract, accomplished by mutual written agreement of the parties to the contract.
Cost of Goods
Expenses directly associated with producing and making a specific product. Companies differ as to which expenses they attribute to cost of goods, but generally items such as source materials, direct labor, and freight are included.
Cost of Sales
Expenses directly associated with selling a product or service. This typically includes items such as sales commissions, distributor’s fees, etc., but does not generally include more indirect costs such as marketing.
Assets that can be converted quickly, with relative ease to cash; these assets are designed to be turned over in the normal course of doing business, such as bank deposits, inventory, and accounts receivable. Cash and other assets or resources commonly identified as those which are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the State (usually no longer than one year) such as bank deposits, inventory, and accounts receivable
Any bills, debts, or obligations occurring in the ongoing course of business; any debt due within the next year. Includes accounts payable, accrued payroll expenses, and loans and credit lines with less than one year’s maturity date. Liabilities which are payable within a relatively short period of time, usually no longer than one year.
A monetary settlement awarded to a party that is injured through a breach of contract. Compensation, usually monetary, for injury to goods, persons or property. Also, compared to liquidated damages.
An ongoing obligation of the company, such as a bank loan.
Delegation of Authority
The conferring of authority by someone who has it, to another person, in order to accomplish a task or sign legal documents such as contracts.
The completion of a milestone or the accomplishment of a task. Used to measure successful performance.
To differ or move away from an established course. To offer an alternative product, service or business solution from what has been established or specified.
An allowance, reduction or deduction from a selling price extended by a selling price or list price extended by a seller (University) to a buyer (Client) in order for the net price to become more competitive. More common forms of discounts include trade discounts, quantity discounts, seasonal discounts and cash discounts.
A contractual disagreement or misunderstanding between contracting parties specific to contract provisions or language. Resolution is generally through pre-established administrative procedures or agreed upon alternative dispute resolution provisions.
Electronic Funds Transfer (EFT)
The direct payment to contractors and businesses through electronic transfer of funds between financial institutions. Payment by paper check is eliminated.
Employer Identification Number (EIN)
The number assigned to a business unit or individual for purposes of withholding tax; used by many purchasing organizations as a vendor identification number. In government entities, referred to as a FEIN (Federal Employer Identification Number).
Contracts with automatic renewal clauses or provisions for renewals for a specified number of years. This has the benefit of allowing suppliers and agencies to establish longer-term working relationships.
Charges incurred, whether cash or non-cash, which are presumed to benefit operations of the current fiscal period.
Fair Market Value
The value of an item as determined by negotiations between purchasers (Clients) and sellers (University), which is acceptable as a basis for a purchase and sale. The price of a service upon which purchaser (Client) and vendor or contractor (University) agrees in an open market when both are fully acquainted with market conditions.
Use of a work that is not an infringement of a copyright because it is used for the purpose of criticism, comment, news reporting, teaching, scholarship, or research.
Federal Acquisition Regulations
A sum of money paid for some service. A change or payment, usually for professional or technical services.
An individual’s obligation to serve the best interests of selected stakeholders, especially those of their employer.
Fixed Assets (or Property, Plant, and Equipment)
Fixed assets are generally cumbersome to turn into cash; includes buildings, land, and equipment. A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be consumed or converted into cash any sooner than at least one year's time.
Ongoing expenses or overhead of a business that occurs regardless of the amount of sales. These expenses usually include items such as rent, utilities, and salaries.
Unexpected or uncontrollable events, including those caused by nature that can impact the contracts price, terms and conditions. These events are not due to contractor negligence and may excuse contractor performance during the events and under certain conditions caused by them. Acts of God or disruptive conditions for which a contractor or carrier cannot be held responsible.
The system of business in which individuals are free to decide what to produce, how to produce it, and at what price to sell it.
Used to track revenues and expenditures that support all services not assigned to other funds.
Revenues minus the cost of goods sold required generating the revenues.
A book or computer files with separate sections for each financial account.
Actions that display a complete disregard for life and safety. A deliberate indifference to the rights of others. A failure to act in a prudent manner or to take reasonable precaution.
Percentage of income your company realizes on each sale before administrative expenses. It’s Sales less direct Cost of Goods (or services) Sold.
To warrant or insure performance or quality. A warranty. A written assurance attesting to the quality or durability of a product.
A clause that requires the contractor to assume liability for damages resulting from an action taken by the contractor and absolves the government or other contracting body from any responsibility for the consequences of the action.
Hypertext Markup Language – The standard for publishing hypertext on the Web. It is a mark-up language not a programming language that uses tags to structure text into headings, paragraphs, links and lists. It tells a Web browser how to display text and images.
The knowledge and skills possessed by the workforce. The health, strength, education, training, and skills which people bring to their jobs.
Contracts containing both services and product and are usually governed by the “predominant purpose” doctrine in order to determine whether the contract is one for goods or services
Authority that is not defined expressly, but is only determined by inferences and reasonable deductions arising out of the conduct of the principal toward the agent and the agent’s actions.
A warranty or promise arising by operation of law that something which is sold shall be merchantable and fit for the purpose for which the seller has reason to know it is required. A contract to do certain work contains within itself an implied warranty that the work shall be done in a professional manner.
A financial statement that measures a company's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurred its revenues and expenses. It also shows the net profit or loss incurred over a specific accounting period, such as monthly, quarterly or on an annual basis.
Actual costs rather than estimated costs.
The agreement of a contracting party to hold the other party harmless, to secure the other party against loss or damage, or to give security for the reimbursement of the other party in case of an anticipated loss.
To protect against hurt or loss; to exempt from incurred penalties or liabilities. To compensate or pay for damages.
A worker hired by a business or public entity to accomplish a given result who has the right to control or direct his or her own work as to the details and means by which the desired results are achieved.
Costs incurred that are not directly related to service delivery such as insurance and employee benefits. Costs that do not relate directly to performance such as overhead costs incurred in the normal course of business.
Authority based on a government’s sovereignty, to enter into contracts, although not explicitly authorized.
The inability to pay debts when they become due. Insolvency will apply even if total assets exceed total liabilities, if those assets cannot be readily converted into cash to meet debts as they mature.
Includes inventions, patents, copyrights, trade secrets, trademarks, technical data, industrial designs that are generally protected and proprietary.
Also referred to an Intergovernmental Agreement (IGA). An agreement in which one government contracts with another for the delivery of goods and services.
A written account or itemized statement, addressed to the purchaser, of merchandise shipped or services performed, together with the quantity and the prices and other charges. An invoice is the seller’s bill or written request for payment of work or services performed under the contract.
Legality of Purpose
To be valid and enforceable, a contract must be consistent with federal, state or local law and cannot violate legal statutes of public policy.
Legal obligations, arising out of transactions in the past, that must be liquidated, renewed or refunded at some future date.
Loans and other debts that come due in more than a year’s time. This year’s interest payments on such loans, or debt service, are included in Current Liabilities.
Amount added to the unit cost of merchandise for resale to fund operating expenses, depreciation expense, and permissible prior year over/under recovery.
Amount of income after deducting all costs of doing business, including administrative overhead and other fixed costs. Net Profit is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses for a given period of time.
Financial statements based on projected future performance rather than actual historical data.
Are managed as their own “stand alone” business. Funds that depend upon self-generated income (sales) to support their operations, including service departments, storerooms, auxiliary enterprises and revolving funds.
A campus unit whose budget primarily consists of funds generated by the sale of goods, the provision of services, or donations, as opposed to state appropriations.
For a new business shows the initial investment necessary to begin operations.
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Last Updated: April 24, 2009