GLOSSARY OF ACQUISITION TERMS - FAI.GOV

1 Federal ACQUISITION InstituteACKNOWLEDGMENTS This December 1998 version of the GLOSSARY Of ACQUISITION TERMS was prepared by the: Federal ACQUISITION Institute Washington DC contracting with M. Dale Shields, DAYPRO Associates Dayton, OH The following individuals are acknowledged for their specific contribution toward this GLOSSARY : Ms. Bettie Feit Ms. Mellisa Gary Ms. Karen Hause Ms. Gayle Messick Mr. Jerry Olson Ms. Jeritta Parnell Ms. Judy Steele Ms. Julia Wise A very special thanks is extended to Ms. Melinda D. Nelms for her invaluable administrative and technical support in the completion of this GLOSSARY . GLOSSARY OF ACQUISITION TERMS 8(a) Section 8(a) of the Small Business Act. (FAR (a)) 8(a) Contract A contract with the Small Business Administration under a program established by Section 8(a) of the Small Business Act.

2 Under that program, the Small Business Administration is authorized to enter into all types of contracts with other agencies and let subcontracts for performing those contracts to firms eligible for program participation. (FAR (a)) 8(a) Contractor A Small Business Administration subcontractor under an 8(a) contract. (FAR (a)) Acceptance 1. Also referred to as acceptance of offer. In contract law, the act accepting an offer ( , awarding a contract based on an offer under a request for proposals). 2. Also referred to as acceptance of work. The act of an authorized representative of the Government by which the Government, for itself or as agent of another, assumes ownership of existing identified supplies tendered or approves specific services rendered as partial or complete performance of the contract.

3 (FAR ) Acceptance of Offer See acceptance. Acceptance of Work See acceptance. Acceptance Period The number of calendar days available to the Government for awarding a contract from the date specified in the solicitation for receipt of offers. (FAR ) Acceptance The process followed by Government personnel during acceptance of a supply or Procedures service. Acceptance Time A definite period of time that one party to a negotiation has to accept an offer by another party. Instead of forcing a quick decision, this tactic can be used to deliberately give the other negotiator more time to grasp a solution or ideas. Accessory Item An item that facilitates or enhances the operation of plant equipment but which is not essential for its operation. (FAR ) Accrual of a Claim Also referred to as claim accrual.

4 Occurs on the date when all events, which fix the alleged liability of either the Government or the contractor and permit assertion of the claim, were known or should have been known. For liability to be fixed, some injury must have occurred. However, monetary damages need not have been incurred. (FAR ) Accrued Benefit Cost An actuarial cost method under which units of benefit ( , a pension benefit) are Method assigned to each cost accounting period and are valued as they accrue ( , based on the services performed by each employee in the period involved). The measure of normal cost under this method for each cost accounting period is the present value of the units of benefit deemed to be credited to employees for service in that period. The measure of the actuarial liability at a plan s inception date is the present value of the units of benefit credited to employees for service prior to that date.

5 (FAR ) Accumulating Costs Collecting cost data in an organized manner, such as through a system of accounts. (FAR ) GLOSSARY Of ACQUISITION TERMS ACQUISITION ACQUISITION Plan ACQUISITION Planning ACQUISITION Savings ACQUISITION Streamlining ACQUISITION Team Actual Cash Value Actual Costs Actuarial Assumption Actuarial Cost Method Actuarial Gain and Loss The acquiring by contract with appropriated funds of supplies or services (including construction) by and for the use of the Federal Government through purchase or lease, whether the supplies or services are already in existence or must be created, developed, demonstrated, and evaluated. ACQUISITION begins at the point when agency needs are established and includes the description of requirements to satisfy agency needs, solicitation and selection of sources, award of contracts, contract financing, contract performance, contract administration, and those technical and management functions directly related to the process of fulfilling agency needs by contract.

6 (FAR ) A document used to facilitate ACQUISITION planning. a. It must address all the technical, business, management, and other considerations that will control the ACQUISITION . b. It must identify those milestones at which decisions should be made. c. Specific content will vary, depending on the nature, circumstances, and stage of the ACQUISITION . d. Plans for service contracts must describe the strategies for implementing performance-based contracting methods or provide rationale for not using such methods. (FAR ) The process by which the efforts of all personnel responsible for an ACQUISITION are coordinated and integrated through a comprehensive plan for fulfilling the agency need in a timely manner and at a reasonable cost. It includes developing the overall strategy for managing the ACQUISITION .

7 (FAR ) In value engineering, savings resulting from the application of a value engineering change proposal (VECP) to contracts awarded by the same contracting office or its successor for essentially the same unit. They include: a. Instant contract savings; b. Concurrent contract savings; and c. Future contract savings. (FAR ) Any effort that results in more efficient and effective use of resources to design and develop, or produce quality systems. This includes ensuring that only necessary and cost-effective requirements are included, at the most appropriate time in the ACQUISITION cycle, in solicitations and resulting contracts for the design, development, and production of new systems, or for modifications to existing systems that involve redesign of systems or subsystems. (FAR ) All participants in Government ACQUISITION including not only representatives of the technical, supply, and procurement communities but also the customers they serve, and the contractors who provide the products and services.

8 (FAR (c)) The cost of replacing damaged property with other property of like kind and quality in the physical condition of the property immediately before the damage. (FAR ) Amounts determined on the basis of costs incurred, as distinguished from forecasted costs. Actual costs include standard costs properly adjusted for applicable variances. (FAR ) A prediction of future conditions affecting pension costs ( , mortality rate, employee turnover, compensation levels, pension fund earnings, and changes in values of pension funds assets). (FAR ) A technique which uses actuarial assumptions to measure the present value of future pension benefits and pension fund administrative expenses, and which assigns the cost of such benefits and expenses to cost accounting periods. (FAR ) The effect on pension cost resulting from differences between actuarial assumptions and actual experience.

9 (FAR ) GLOSSARY Of ACQUISITION TERMS Actuarial Liability Actuarial Valuation Adequate Evidence Adequate Price Competition Administrative Change Administrative Contracting Officer (ACO) Administrator, Wage and Hour Division Advance Agreement Advance Notice Advance Notification Advance Payment Bond Advance Payments cost attributable, under the actuarial cost method in use, to years before the date of a particular actuarial valuation. As of such date, the actuarial liability represents the excess of the present value of the future benefits and administrative expenses over the present value of future contributions, for the normal cost for all plan participants and beneficiaries. The excess of the actuarial liability over the value of the assets of a pension plan is the unfunded actuarial liability.

10 (FAR ) The determination, as of a specified date, of the normal cost, actuarial liability, value of the assets of a pension fund, and other relevant values for the pension plan. (FAR ) Information sufficient to support the reasonable belief that a particular act or omission has occurred. (FAR ) Adequate price competition exists when two or more responsible offerors, competing independently, submit priced offers that satisfy the Government s expressed requirement and: a. Award will be made to the offeror whose proposal represents the best value where price is a substantial factor in source selection; and b. There is no finding that the price of the otherwise successful offeror is unreasonable. Any finding that the price is unreasonable must be supported by a statement of the facts and approved at a level above the Contracting Officer.