You should understand this is normally NOT a contract but simply a letter, without legal binding, that says the buyer intends to hire the seller.
Means a contractual relationship. You should understand the following because it explains privity and shows you how questions on this topic are asked.
Company A hires company B to do some work for them. Company B subcontracts to company C. The project manager for A is at the job site and tells company C to stop work. Generally, does company C have to listen?
Answer No. Companies C and A have no contractual relationship. A needs to talk to B who needs to talk to C.
What if there is only one seller, or you want to work with a company you have worked with before? Do you have to go through the procurement process? No. There is no reason that you must go through the procurement process unless the procurement is for a government, or the performing organization has rules restricting such procurements. You would, however, lose the value of competition.
When would you award work to a company without competition?
The following is a more complete list.
You should be familiar with the following forms of non-competitive procurements:
You may save time not having to do the procurement process before bids or proposals are received, but you will have to spend time (perform extra work) after they are received to come up with a contract.
Most of the questions on the exam will present various situations and ask you questions about those situations. In procurement, tricky questions can include addressing concepts that you many have not dealt with before, such as describing the work that would need to be done to negotiate a contract when there is no competition. The following exercise will help.
Exercise What topics must be addressed in creating a contract for noncompetitive procurement that would not need as much attention in a competitive environment?
For Single Source—Preferred Supplier
Make sure you read questions on the exam carefully. They might ask what to watch out for, or what needs to be negotiated in non-competitive procurements. They may simply ask about the procurement process. Wouldn’t your efforts during the contracting process be different if there wasn’t another company to go to for the goods or service?
Evaluation criteria are included in the procurement document to give the seller an understanding of the buyer’s needs and help them decide if they should bid or make a proposal on the work. During select sellers, evaluation criteria become the basis by which the bids or proposals are evaluated by the buyer.
If the buyer is purchasing a commodity like linear meters of wood, the evaluation criteria may be just the lowest price. If they are buying construction services, the evaluation criteria may be price plus experience. If the buyer is buying services only, the evaluation criteria will be more extensive. In the latter case, such evaluation criteria may include:
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