NIGP- Procurement Terms set 1 Final
Exam with Already Solved Solutions
2026 Updated.
A/E Professional Services - Answer Services that require performance by a registered
architect or engineer. Professional services of an architectural or engineering nature that are
associated with research, planning, development, and design for construction, alteration, or
repair.
A+B Bidding - Answer A cost-plus-time bidding procedure that selects the low bidder based
on a monetary combination of the contract bid items (A) and the time (B) needed to complete
the project or a critical portion of the project. It is used to motivate the contractor to minimize
the overall time on high priority and high usage projects. This encourages contractors to finish
early by (1) offering bonuses for early completion and (2) assessing fines for late completion.
ABA Model Procurement Code for State and Local Government. - Answer Developed by the
American Bar Association (ABA) and adopted in 1979. A collection of statutory principles and
policies that provides guidance to public policy managers who wish to manage public
procurement. State and larger local governments have individually codified the ABA MPC into
procurement law and policy to effectively guide their procurement organizations. The code was
updated in 2000 and contains enhancements in the following area: Electronic Commerce,
Cooperative Purchasing, Flexibility in Purchasing Methods and Processes for Delivery of
Infrastructure Facilities and Services. Also called the Model Procurement Code.
ABA Model Procurement Ordinance for Local Governments - Answer Similar to ABA Model
Procurement Code, but for use by small local jurisdictions.
ABC inventory classification - Answer divides inventory into dollar volume categories that
map into strategies appropriate for the category
absolute advantage - Answer the ability to produce a good using fewer inputs than another
producer
accelerator - Answer A model relating to changes in output. Asserts that firms invest more
when output is rising and less when it is falling. The rise in output raises the ratio of output to
capacity.
Accept - Answer to receive as approved, adequate, or satisfactory
Accept with Consideration of Non-conforming Goods - Answer Terminology that describes
the process that occurs after non-conforming goods have been rejected by the buyer. The
,vendor offers a discount or other incentive to encourage the buyer to accept the non-
conforming goods and when the buyer then accepts them, it is done with consideration of non-
conforming goods. Example: Buyer contracts for black color garbage bags and the vendor ships
clear garbage bags in error. Buyer notifies vendor of the nonconforming goods and the vendor
offers to reduce the price of this shipment in order to entice the buyer to keep and use the non-
conforming goods.
Accept without Consideration of Non-conforming Goods - Answer Describes the buyer's
decision to accept the goods as-is, even though the item delivered does not meet what was
ordered. This could be accepted for any number of reasons, however, most often it's because
the contracting agency has a need for that ordered item.
Acceptable Quality Level (AQL) - Answer Maximum acceptable percentage of defectives
defined by producer, or minimum performance that must be achieved by a product or service o
perform as per specifications.
Acceptance - Answer Indication that all parties to the contract agree to be bound by the
terms of the contract.
Acceptance Sampling (Acceptance Testing) - Answer A quality control technique used to
evaluate the overall condition of a given lot by physically inspecting only a portion or sample of
the lot. Also see Acceptable Quality Level (AQL).
Access to Information Act - Answer The Access to Information Act (R.S.C. 1985 c. A-1) gives
every Canadian citizen, permanent resident, individual or corporation in Canada the right to
request access to the records that are under the control of federal government institutions,
regardless of their format.
Accessorial Transportation Charges - Answer The costs that a carrier may charge in addition
to the actual freight transportation charge such as: Inside delivery, interim storage, and
redelivery charges. (ISM, 2000)
Account - Answer A list or enumeration of monetary transactions between parties to a
contract showing purchases, payments, and credits for goods or services.
Accountability - Answer Employees who accept an assignment and the authority to carry it
out are answerable to a superior or a higher authority for the outcome.
Accountable - Answer expected to answer for one's actions; responsible, liable, answerable
,Accounting Cycle - Answer the four-step procedure of an accounting system: examining
source documents, recording transactions in an accounting journal, posting recorded
transactions, and preparing financial statements
Accounting Equation - Answer Assets = Liabilities + Owner's Equity
Accounts Payable - Answer Financial obligations that arise as a result of making credit
purchases. An accounting function that is responsible for making payment to contractors and
suppliers for charges incurred. Liability accounts that indicate the charges owed on open
accounts.
Accounts Receivable Turnover - Answer Net Sales / Average Accounts Receivable
Accounts Receivables - Answer 1. Amounts that are due and payable to a firm as a result of
sales to its customers. 2. An accounting function that is responsible for the collection and
deposit of payments received on open customer accounts for goods and services sold.
Accredited Purchasing Practitioner (A.P.P.) - Answer The Accredited Purchasing Practitioner
(A.P.P.) designation of The Institute of Supply Management (ISM) is no longer available for
testing and is in re-certification-only status. Those already holding the A.P.P. designation may
continue to apply for re-accreditation or lifetime re-accreditation. If an A.P.P. designation lapses
beyond the one-year grace period, it cannot be reinstated. (ISM, A.P.P., 2015)
Accrual Basis Accounting - Answer An accounting system that encumbers or sets aside funds
for a specified future expenditure. Using this system, transactions are recognized at the time
they are incurred, as opposed to when cash is received or spent. This method of accounting is
the most commonly used, especially among governmental entities. Agencies in the United
States and Canada may require an encumbrance and a receipt before payment can be
authorized by demanding procedural separation between the ordering of goods and services,
encumbrance of funds, and authorization of payment.
Acid Test Ratio - Answer (Current Assets - Inventory) / Current Liabilities
Acknowledgement - Answer A written or electronic communication sent by the supplier to
the buyer that indicates that the supplier has accepted the order (Purchase Order). It may be a
form of acceptance and may create a bilateral contract. It may also be a form of counter offer
from the seller to the buyer.
ACORD (Association for Cooperative Operations Research and Development) - Answer A
global, nonprofit organization founded in 1970 that serves the insurance and related industries.
ACORD facilitates fast, accurate data exchange and more efficient workflows through the
, development of electronic standards, standardized forms, and tools to support their use.
(ACORD, 2015)
Acquisition - Answer 1. The process of obtaining supplies, services, or construction through
purchase, lease, or grants. 2. As defined under FAR 2.101, acquisition means 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. (U.S., FAR,
2005)
Acquisition Cost - Answer The total sum of all actual and administrative costs incurred by the
buyer in the process of acquiring goods and services. Acquisition cost may include indirect labor
and overhead costs, costs associated with generating and processing an order (including
administrative costs), and the price level or value of the supplies or services to be purchased
under a contract.
Acquisition Price - Answer The amount paid to a supplier or contractor for the goods or
services obtained.
Act of God - Answer An unforeseen occurrence beyond human control, caused by nature,
such as a tornado or hurricane. Not attributable to the negligence of the contractor. (Harney,
1992)
Actual Authority - Answer 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. (Garner, 2004)
Actual Cost - Answer All direct and indirect costs incurred for services, supplies, or
construction as distinguished from estimated or forecasted costs.
Actual Damages - Answer Real damages to compensate for loss or injuries that actually
occurred, resulted from another's wrongdoing, and can be precisely measured.
Ad Hoc Committee - Answer A committee created for a specific purpose that is in place for a
short period of time. (Business, 2002)
Ad Valorem - Answer According to value. Customs duty (rate) that is generally charged on the
value of goods irrespective of weight or other material considerations. Generally expressed as a
percentage of the value of the goods as indicated on an invoice or bill of materials. (ISM
Glossary, 2000)
Ad Valorem Duty - Answer A customs duty or tax based on the value of the goods under
consideration rather than on the quantity of the goods.
Exam with Already Solved Solutions
2026 Updated.
A/E Professional Services - Answer Services that require performance by a registered
architect or engineer. Professional services of an architectural or engineering nature that are
associated with research, planning, development, and design for construction, alteration, or
repair.
A+B Bidding - Answer A cost-plus-time bidding procedure that selects the low bidder based
on a monetary combination of the contract bid items (A) and the time (B) needed to complete
the project or a critical portion of the project. It is used to motivate the contractor to minimize
the overall time on high priority and high usage projects. This encourages contractors to finish
early by (1) offering bonuses for early completion and (2) assessing fines for late completion.
ABA Model Procurement Code for State and Local Government. - Answer Developed by the
American Bar Association (ABA) and adopted in 1979. A collection of statutory principles and
policies that provides guidance to public policy managers who wish to manage public
procurement. State and larger local governments have individually codified the ABA MPC into
procurement law and policy to effectively guide their procurement organizations. The code was
updated in 2000 and contains enhancements in the following area: Electronic Commerce,
Cooperative Purchasing, Flexibility in Purchasing Methods and Processes for Delivery of
Infrastructure Facilities and Services. Also called the Model Procurement Code.
ABA Model Procurement Ordinance for Local Governments - Answer Similar to ABA Model
Procurement Code, but for use by small local jurisdictions.
ABC inventory classification - Answer divides inventory into dollar volume categories that
map into strategies appropriate for the category
absolute advantage - Answer the ability to produce a good using fewer inputs than another
producer
accelerator - Answer A model relating to changes in output. Asserts that firms invest more
when output is rising and less when it is falling. The rise in output raises the ratio of output to
capacity.
Accept - Answer to receive as approved, adequate, or satisfactory
Accept with Consideration of Non-conforming Goods - Answer Terminology that describes
the process that occurs after non-conforming goods have been rejected by the buyer. The
,vendor offers a discount or other incentive to encourage the buyer to accept the non-
conforming goods and when the buyer then accepts them, it is done with consideration of non-
conforming goods. Example: Buyer contracts for black color garbage bags and the vendor ships
clear garbage bags in error. Buyer notifies vendor of the nonconforming goods and the vendor
offers to reduce the price of this shipment in order to entice the buyer to keep and use the non-
conforming goods.
Accept without Consideration of Non-conforming Goods - Answer Describes the buyer's
decision to accept the goods as-is, even though the item delivered does not meet what was
ordered. This could be accepted for any number of reasons, however, most often it's because
the contracting agency has a need for that ordered item.
Acceptable Quality Level (AQL) - Answer Maximum acceptable percentage of defectives
defined by producer, or minimum performance that must be achieved by a product or service o
perform as per specifications.
Acceptance - Answer Indication that all parties to the contract agree to be bound by the
terms of the contract.
Acceptance Sampling (Acceptance Testing) - Answer A quality control technique used to
evaluate the overall condition of a given lot by physically inspecting only a portion or sample of
the lot. Also see Acceptable Quality Level (AQL).
Access to Information Act - Answer The Access to Information Act (R.S.C. 1985 c. A-1) gives
every Canadian citizen, permanent resident, individual or corporation in Canada the right to
request access to the records that are under the control of federal government institutions,
regardless of their format.
Accessorial Transportation Charges - Answer The costs that a carrier may charge in addition
to the actual freight transportation charge such as: Inside delivery, interim storage, and
redelivery charges. (ISM, 2000)
Account - Answer A list or enumeration of monetary transactions between parties to a
contract showing purchases, payments, and credits for goods or services.
Accountability - Answer Employees who accept an assignment and the authority to carry it
out are answerable to a superior or a higher authority for the outcome.
Accountable - Answer expected to answer for one's actions; responsible, liable, answerable
,Accounting Cycle - Answer the four-step procedure of an accounting system: examining
source documents, recording transactions in an accounting journal, posting recorded
transactions, and preparing financial statements
Accounting Equation - Answer Assets = Liabilities + Owner's Equity
Accounts Payable - Answer Financial obligations that arise as a result of making credit
purchases. An accounting function that is responsible for making payment to contractors and
suppliers for charges incurred. Liability accounts that indicate the charges owed on open
accounts.
Accounts Receivable Turnover - Answer Net Sales / Average Accounts Receivable
Accounts Receivables - Answer 1. Amounts that are due and payable to a firm as a result of
sales to its customers. 2. An accounting function that is responsible for the collection and
deposit of payments received on open customer accounts for goods and services sold.
Accredited Purchasing Practitioner (A.P.P.) - Answer The Accredited Purchasing Practitioner
(A.P.P.) designation of The Institute of Supply Management (ISM) is no longer available for
testing and is in re-certification-only status. Those already holding the A.P.P. designation may
continue to apply for re-accreditation or lifetime re-accreditation. If an A.P.P. designation lapses
beyond the one-year grace period, it cannot be reinstated. (ISM, A.P.P., 2015)
Accrual Basis Accounting - Answer An accounting system that encumbers or sets aside funds
for a specified future expenditure. Using this system, transactions are recognized at the time
they are incurred, as opposed to when cash is received or spent. This method of accounting is
the most commonly used, especially among governmental entities. Agencies in the United
States and Canada may require an encumbrance and a receipt before payment can be
authorized by demanding procedural separation between the ordering of goods and services,
encumbrance of funds, and authorization of payment.
Acid Test Ratio - Answer (Current Assets - Inventory) / Current Liabilities
Acknowledgement - Answer A written or electronic communication sent by the supplier to
the buyer that indicates that the supplier has accepted the order (Purchase Order). It may be a
form of acceptance and may create a bilateral contract. It may also be a form of counter offer
from the seller to the buyer.
ACORD (Association for Cooperative Operations Research and Development) - Answer A
global, nonprofit organization founded in 1970 that serves the insurance and related industries.
ACORD facilitates fast, accurate data exchange and more efficient workflows through the
, development of electronic standards, standardized forms, and tools to support their use.
(ACORD, 2015)
Acquisition - Answer 1. The process of obtaining supplies, services, or construction through
purchase, lease, or grants. 2. As defined under FAR 2.101, acquisition means 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. (U.S., FAR,
2005)
Acquisition Cost - Answer The total sum of all actual and administrative costs incurred by the
buyer in the process of acquiring goods and services. Acquisition cost may include indirect labor
and overhead costs, costs associated with generating and processing an order (including
administrative costs), and the price level or value of the supplies or services to be purchased
under a contract.
Acquisition Price - Answer The amount paid to a supplier or contractor for the goods or
services obtained.
Act of God - Answer An unforeseen occurrence beyond human control, caused by nature,
such as a tornado or hurricane. Not attributable to the negligence of the contractor. (Harney,
1992)
Actual Authority - Answer 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. (Garner, 2004)
Actual Cost - Answer All direct and indirect costs incurred for services, supplies, or
construction as distinguished from estimated or forecasted costs.
Actual Damages - Answer Real damages to compensate for loss or injuries that actually
occurred, resulted from another's wrongdoing, and can be precisely measured.
Ad Hoc Committee - Answer A committee created for a specific purpose that is in place for a
short period of time. (Business, 2002)
Ad Valorem - Answer According to value. Customs duty (rate) that is generally charged on the
value of goods irrespective of weight or other material considerations. Generally expressed as a
percentage of the value of the goods as indicated on an invoice or bill of materials. (ISM
Glossary, 2000)
Ad Valorem Duty - Answer A customs duty or tax based on the value of the goods under
consideration rather than on the quantity of the goods.
