Appendix C—Definitions

Competitive Procurement: The effort by more than one offeror to obtain a contract, with the winner being selected on the basis of criteria established in a solicitation issued by the purchasing office.

Cooperative Agreement: A type of financial assistance involving the transfer of money or property to a recipient or subrecipient to accomplish a public purpose of support or stimulation authorized by Federal statute where the Government intends to have substantial involvement.

Cost/Benefit Analysis: A best-value analysis used in competitive negotiated contracting to select the most advantageous offer by evaluating and comparing factors in addition to cost or price.

Cost Comparison Analysis: Review and evaluation of (1) the separate cost elements and proposed profit contained in an offeror’s or contractor’s cost or pricing data and (2) the judgmental factors applied in projecting the estimated costs, for the purpose of forming an opinion on the degree to which the proposed costs represent what the cost of the contract should be, assuming reasonable economy and efficiency. Cost analysis is used to establish the basis for negotiating contract prices when price competition is inadequate or lacking altogether and when price analysis, by itself, does not ensure price reasonableness.

Cost Plus Award Fee Contract: A cost-reimbursement contract that provides for a fee consisting of (1) a base fee (which may be zero) fixed at inception of the of the contract and (2) an incentive-type fee, based upon a periodic judgmental evaluation by the Government, sufficient to provide motivation for excellence in such areas, as quality, timeliness, technical ingenuity, and cost-effective management during contract performance.

Cost-Reimbursement Contract: A contract that provides for payment to the contractor of allowable incurred costs to the extent provided in the contract.

Fixed-Price Contract: A type of contract providing for a price that is not subject to adjustment on the basis of the contractor’s cost experience in performing the contract.

Government-Owned Contractor-Operated Facility: An industrial or R&D facility that is owned by the Government but operated by a contractor.

Joint Venture: A legal entity in the nature of a partnership engaged in the joint prosecution of a particular transaction for mutual profit. Unlike a partnership it does not entail a continuing relationship between the parties. It requires a community of interest in the performance of the contract or project, a right to direct and govern the policy in connection with the contract or project, and a duty, which may be altered by agreement, to share in both profit and losses.

Life-Cycle Costing: The total cost to the Government of acquiring, operating, supporting, and (if applicable) disposing of the items being acquired.

Make-or-Buy Analysis: The process by which a determination is made as to which major items to be produced or work efforts to be performed should be in the prime contractor’s facilities and which should be subcontracted. This analysis may consider cost, timeliness, technical excellence and socioeconomic considerations.

Management and Operating Contract: An agreement under which the Government contracts for the operation, maintenance, or support on its behalf of a government-owned or government-controlled research, development, special production, or testing establishment wholly or principally devoted to one or more major programs of the contracting Federal agency.

Proprietary Information: Information contained in a bid or proposal, cost or pricing data, or any other information submitted to the Government by a contractor and designated as proprietary.

Sole-Source Contract: A contract for the purchase of supplies or services that is entered into, or proposed to be entered into, by an agency after soliciting and negotiating with only one source. Such contracts are entered into if there is only one source known to be able to perform the contract, or if one source for justifiable, reason is found to be most advantageous for the purpose of contract award.

Statement of Work: That portion of a contract that describes the actual work to be done by the contractor by means of (1) specifications or other minimum requirements, (2) quantities, (3) performance dates, (4) time and place of performance of services, and (5) quality requirements.

Subcontract: A contract or contractual action entered into by a prime contractor or subcontractor for the purpose of obtaining supplies, materials, equipment, or services under a prime contract.

Surplus Property: Contractor inventory not required by any Federal agency.

Unsolicited Proposal: A written proposal that (1) is submitted to a Government agency on the initiative of the submitter for the purpose of obtaining a contract with the Government and (2) is not in response to a formal or informal request (other than an agency request constituting a publicized general statement of need).