Tenders on infrastructures: a matter of acronyms

Whenever the public sector or a private body seeks to launch a project involving infrastructures and services it calls for a tender. The documents generated in these procurement processes are full of specialised terminology. It is crucial to know what each acronym or abbreviation means.

For non-English-speaking staff, this task becomes more complicated in international tenders, when the acronyms or abbreviations used refer to expressions in English. We have therefore listed the most common ones. We have classified them into two groups: the procurement process, referring to the stages involved, and models of contract, which allude to the type of services that the company awarded the contract is required to provide.AcronymAcro

If you want to closely monitor an international procurement process involving infrastructures or services, keep this list to hand.  It will help you to understand each and every detail.

Procurement process

• RFI (Request for Information): The aim is to gather data on the general capabilities of several suppliers. NB: This should not be confused with RFP (Request for Proposals) or RFT (Request for Tender), which are more specific. Indeed, an RFI may not ultimately materialise as a project.

• EOI (Expression of interest): A supplier uses this document to express its interest in undertaking a project and sets out its capabilities for doing so. Procurement processes generally start when the public sector requests this information.

• RFQ: This case is more complicated, as there are two possible meanings:

• Request for Quotations: This request is used for those contracts in which the products and services have already been defined, which means the price is the key factor for awarding the contract. It is used for setting an accurate list of prices in the RFP.

• Request for Qualifications: The answers to this request detail a company’s capabilities for providing a service or a specific product. It enables the procuring organisation to establish a group of possible suppliers.

• RFP (Request for Proposals) [Spanish: presentación de propuestas/submission of proposals]: This is used for those projects in which the supplier is required to have both technical and financial capability. The answers include general information on the company, its financial capacity and technical expertise, as well as the material and human resources it is going to deploy.

• RFT (Request for Tender): This is basically the term used to define an RFP in the public sector. This generally involves establishing a concrete framework for the response process in order to guarantee both transparency and objectivity.

• BAFO (Best and Final Offer): Choice of the best bids submitted to a tender.

Models of contract

• BOOT (Build–Own–Operate–Transfer): This means that the infrastructure belongs to the company during the concession/licensing period.

• BOO (Build-Own-Operate): In this case, ownership of the infrastructure always remains in the hand of the private company.

• BBO (Buy-Build-Operate): In this kind of contract, the public sector sells the asset to the private company, which also refurbishes and enlarges it, and finally operates it.

• BLT (Build–Lease–Transfer): A private company builds an infrastructure, owning it for a certain time during which it assigns or licenses its operation to a third company. Once the time specified in the contract has elapsed, both the infrastructure and its operation are conveyed to the public sector.

• DB (Design-Build): The private company is responsible for the design and construction of an asset.

• DBO (Design-Build-Operate): This agreement covers the infrastructure’s design, construction and operation, while ownership remains with the public sector.

• DBM (Design-Build-Maintain): Besides the design and construction, the successful bidder is responsible for maintenance. The public sector owns and operates the asset.

• DBFO (Design–Build–Finance–Operate): This is the most common model of contract in infrastructures, especially for motorways and highways. The private company is responsible for designing, constructing and operating the infrastructure. In addition, it needs to find the necessary financing for undertaking these tasks for the period stipulated in the contract. Nevertheless, the infrastructure is owned by the public sector.

• DBOM (Design-Build-Operate-Maintain): The contract covers the infrastructure’s design, construction, operation and maintenance by the successful bidder. The financing is provided by the public sector.

• BOT (Build–Operate–Transfer): In contracts of this nature, the infrastructure is constructed by a private company, which operates it for a specific licensing period.

• BTO (Build–Transfer–Operate): The infrastructure is conveyed to the public sector as soon as it has been constructed.

• DBOT (Design–Build–Operate-Transfer): The private company is responsible for the infrastructure’s design, construction and operation, without assuming its financial risk, for a specific period of time, at the end of which it is conveyed to the public sector. This is commonly used in those cases in which the agency issuing the tender does not have the technical knowledge to undertake the project.

• DBFOM (Design-Build-Finance-Operate-Maintain): The private company is responsible for the infrastructure’s design, construction, operation and maintenance. Ownership is in the hands of the public sector.

• DBFOMT (Design-Build-Finance-Operate-Maintain-Transfer): This differs from the previous model in that the private company owns the infrastructure throughout the life of the contract, at the end of which it is conveyed to the public sector.

• DBMF (Design–Build–Manage–Finance): In these contracts, the private company designs, constructs and operates an infrastructure according to the public sector’s specifications, and also assumes the costs. The public sector agrees to pay the company a certain amount for these services on a regular basis. This means that the company is guaranteed a continuous cash flow, while the public sector avoids the budgetary impact that the construction of the infrastructure would have.

We cannot conclude without mentioning a typical arrangement in the sector of infrastructures and services:

• PPP (Public-Private Partnership) [Spanish: acuerdos de colaboración público-privada/public private cooperation agreements]: This refers to those projects that are financed with public money but managed by a private company. The abbreviations P3 or 3P may also be used.