The common lament of government procurement customers is it takes far too long to award a contract. It often takes several days for a requisition to wend its way through the maze of approvals to the procurement shop. It takes months before a contract is awarded and the supplier can start assembling the order for delivery. One technology customer complained that she requisitioned the latest innovation, only to discover that it was obsolete by the time it was delivered.
Cooperative purchasing provides a fast and convenient alternative for many common government requirements. Based on the adage, "Why reinvent the wheel?" cooperative purchasing gives governments access to contracts for common products and services that were contracted by other governments.
What Is Cooperative Purchasing?
The American Bar Association Model Procurement Code for State and Local Governments, which sets the standard for state and local procurement law, defines cooperative purchasing simply as "procurement conducted by or on behalf of one or more public procurement units". My dog-eared copy of the NIGP Dictionary of Purchasing Terms defines cooperative purchasing as:
- Procurement conducted on behalf of two or more public procurement units.
- The combining of requirements of two or more public procurement units in order to obtain the benefits of volume purchases and/or reduction of administrative expenses.
- A variety of arrangements whereby two or more public procurement units purchase from the same supplier using a single IFB or RFP.
This definition describes two of the three primary benefits of cooperative purchasing:
- Volume purchases — By combining the requirements of multiple governments, suppliers are able to take advantage of economies of scale and offer lower pricing than might be available to a single government. This is especially true for smaller governments that may not qualify for the deep discounts available to larger governments.
- Reduced administrative costs — Obtaining bids and proposals requires hundreds of labor hours costing thousands of dollars and months to process. Cooperative purchasing gives governments the ability to buy immediately from existing contracts.
- Access to technical experts — Cooperative contracts are usually prepared and awarded by larger government procurement agencies or associations by skilled procurement professionals with support from technical, financial and legal experts.
- Better utilization of staff — By using cooperative purchasing contracts, managers can focus procurement resources on other activities, including contracts for unique program requirements.
- Convenience and efficiency — Cooperative purchasing contracts provide immediate access to a wide variety of products and services.
Types of Cooperative Purchasing Contracts
Most cooperative purchasing contracts are based on open competition through competitive bids or proposals and contain provisions allowing cooperative use. Cooperative contracts come in many forms:
- "Piggyback" Contracts — This is the most basic form of cooperative contract in which one government awards a procurement contract with a clause allowing other governments use of the contract or to "piggyback". While these contracts are convenient, they do not provide the economies of scale because the contracting authority cannot predict demand for the contract and potential customers may not be identified in the contract.
- Estimated or Definite Quantity Contracts — By providing suppliers with the estimated or actual need, based on a survey of participating governments, these contracts provide both convenience and economies of scale. These contracts
require a higher level of effort from the contracting authority to identify participating members and survey requirements.
- Multiple Award Schedules — The General Services Administration (GSA), Texas, California and other state governments offer multiple award schedules that give customer access to pre-qualified suppliers for specified products and services.