Dictionary of Procurement Terms

Welcome to the NIGP Online Dictionary of Procurement Terms, the comprehensive reference for public purchasing terms and concepts.

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  • Business Valuation

    The act or process of determining the value of a business enterprise or ownership interest therein. (AICPA, 2015)

  • Buy American

    1. A policy or philosophy usually expressed in law or by executive order which mandates the purchase, at a certain dollar threshold, of products with a substantial percentage of American made components. 2. A preference policy generally adopted by a governmental body that requires the purchase of American-made products or products with a defined percentage of American-made components.

  • Buy American Act (U.S. Law)

    Originally enacted in 1933, generally requires that the Federal Government buy for public use only raw materials mined or produced in the United States, and only manufactured items that are made in the United States, “substantially all from” materials or items mined, produced, or manufactured in the United States. The act has several important exceptions. The general requirements are inapplicable if the items to be purchased are not available domestically, in commercial quantities of good quality, or if the cost of the domestic items is “unreasonable,” or if the head of the department otherwise determines it to be in the public interest to waive the requirement. (Burt, Dobler, & Starling, 2003)

  • Buy Local

    A bid preference which may be given to suppliers doing business in the purchasing jurisdiction.

    See Also: Local Preference, Preference, Bid Preference

  • Buyer

    A purchaser or procurer of products and services. This title may also refer to an individual who is responsible for the procurement activities of an entity, also commonly referred to as a purchasing or procurement agent.

    See Also: Law of Agency, Principal, Agent

  • Buyer-Seller Relationships

    There are three principal relationships between Buyers and Suppliers. 1. Transactional: An arm’s-length relationship, wherein neither party is concerned with the well-being of the other. Price is the focus of the relationship. 2. Collaborative: A strategic relationship is created that results in the reduction of risk and uncertainty. This type of relationship creates interdependency and cooperation. 3. Alliance: Relationship is based on institutional trust. Alliance partners share a vision of the future where ethics take precedence over expediency.

  • Buyer’s Market

    An economic condition within a competitive marketplace that occurs when the supply of a product or service exceeds the demand. Generally results in lower prices more favorable to the buyer. (Harney, 1992)

  • Buyer’s Option

    The contractual right, established in a purchase document, to buy an item or service at a fixed price within a specified time.

    See Also: Option

  • Buyer’s Right of Routing

    The right of the buyer to select the carrier to be used for shipment of goods when the buyer pays freight charges; the buyer’s right to name the carrier must be made part of the sales contract before shipment of goods if supplier prepays the freight.

  • Buying (Seasonal) Calendar

    A buying plan which is designed to take advantage of lower seasonal prices, such as road ice chemicals purchased in summer.

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