Cooperative Purchasing

Under Section 211 of the E-Government Act of 2002, state and local governments may use GSA Schedule 70 contracts for information technology products and services. Also under the Federal 1122 program, public safety agencies may purchase designated products through GSA.

Cooperative procurement is more than just shared contracts. Most cooperative procurement programs provide many other services for members, including networking sessions to share ideas and best practices, training, procurement and technical advisory services and shared resources.

Sources for Cooperative Purchasing Contracts

In addition to the Federal GSA Schedules, sources for cooperative contracts include:

State governments — According to a 2003 survey by National Association of State Procurement Officials, 43 states provide cooperative purchasing contracts to governments within their respective jurisdictions.

Local government cooperatives — When permitted by law or ordinance, multiple local governments may combine to form purchasing cooperatives. Often these cooperatives are regional such as a county or metro area or based on similar needs such as schools or transportation authorities.

NASPO and WSCA — The National Association of State Procurement Officials provides cooperative contracts to its national member states or on a regional basis such as the Western States Contracting Alliance (WSCA). Local governments are permitted to use the NASPO and WSCA contracts with the permission of the respective state procurement office.

US Communities is a national cooperative purchasing association that serves its members with contracts awarded by member governments.

Getting Started

1. First, check to see if state laws and local ordinances allow cooperative purchasing. If there is any question, confer with legal counsel.
2. Look for cooperative purchasing contract sources. The best place to start is with the state procurement office. Buyers may also contact the National Institute of Government Procurement (NIGP) or the local NIGP chapter, National Association of State Procurement Officials (NASPO) and US Communities. An Internet search and networking with colleagues may reveal other cooperatives.
3. Most cooperatives will require a membership application. Some cooperatives also require a membership fee or collect a small percentage of each transaction to cover administrative costs.
4. After joining the cooperative, members are eligible to use the cooperative contracts. Members should carefully follow the required procedures for using the contracts.
5. Members should carefully analyze the products and services under contract to ensure that they meet program requirements, compare prices and review the contract terms and conditions.
6. Some cooperative contracts establish ceiling prices. For large buys, the contractor may offer additional discounts. It never hurts to ask for a quantity discount.
7. Buyers should also review the terms and conditions of the purchase to ensure that they conform to program requirements. Most cooperatives allow some flexibility in negotiating contract terms and conditions.
8. If everything works out, place the purchase order with the cooperative contractor.

Cooperative Purchasing Pitfalls

Cooperative purchasing may not be the best answer for every government or for every requirement. Some cooperative contracts are nothing more than a state or local government contract with a "piggyback" clause. Pricing may be based on small order quantities and may not be advantageous for the buying community. A quick price comparison with a couple other sources will help ensure that the cooperative contract pricing is fair and reasonable.

Some cooperatives require annual membership fees. Other cooperatives collect a percentage of each purchase to cover administrative costs. These fees may be as small as 0.2 percent (two tenths of 1 percent) for the WSCA computer contract to as much as 5 percent for other national contracts. Buyers should factor in this fee when comparing prices.

National, regional and other large cooperative contracts are based on the aggregated requirements of many governments. Most local, small, woman-owned and minority-owned businesses may not be able to compete with large national firms for large cooperative contracts. Procurement officials should ensure that cooperative purchasing meets program and community objectives and keep management informed of the advantages gained through cooperative purchasing.