What does a "letter of intent" signify in the procurement process?

A "letter of intent" in the procurement process is significant because it serves as a preliminary agreement that outlines the general terms and conditions that are anticipated to be negotiated in a future formal contract. While it does not create a binding contract, it indicates that the parties involved are moving forward in their discussions and negotiations and clarifies their intentions regarding the future agreement. This letter can include important details such as the scope of work, timeline, and key responsibilities, helping to lay the groundwork for a more formal contract later on.

By establishing this initial understanding, the letter of intent can help all parties align their expectations and approach the subsequent negotiations with a clear context of what has been discussed, which can ultimately smooth the pathway to finalizing a contract.