How co-ops can deliver faster, less expensive procurement

When it comes to procurement, state and local governments have two main options: going the traditional bid route or taking a cooperative path, an expert says.

Each has its pros and cons, said Tammy Rimes, executive director of the National Cooperative Procurement Partners and former purchasing agent for the city of San Diego. She spoke March 22 during a webinar on cooperative procurement hosted by Power Almanac (GCN and Power Almanac are both owned by GovExec.). 

The traditional bid process can take months to result in a procurement. Requests are typically posted publicly for six to eight weeks, then an evaluation team looks at all of the proposals and whittles them down to the top choices. That kicks off a reference check and negotiation process before a contract award is approved. “I may still have to go to my city council or board for approval, and sometimes just getting it on their schedule or calendar is a month-long process,” Rimes said.

A traditional but faster process is sole-source contracting, or soliciting quotes for select suppliers without going through the bid process. Sole-source contracts are typically used when the total cost is less than a certain dollar amount, such as $5,000.

Cooperative procurement is an “arrangement for acquiring goods or services that involves aggregating the demand of two or more entities in an effort to obtain a more economical purchase,” according to the Federal Emergency Management Agency. It means that many government agencies can piggyback—or use—the same contract. The procurement is still developed through that traditional bid route, but after one government entity goes through the process, others can make use of negotiated contracts. 

“Knowing that this is going to be marketed and used by multiple agencies, [the supplier] generally brings their best offer,” Rimes said. “It might be great pricing, value-added services, extra warranties, all of that. And now it’s available for the next three to five years, depending on how long the contract terms are, for all those agencies across the U.S. to now use that contract. And when I say ‘all,’ I mean states, cities, counties, nonprofits, universities.”

There are four main benefits to cooperative purchasing, she said. First, it saves time because the piggybacking agency doesn’t need to go through bidding. Second, it often saves agencies money because the vendor typically offers incentives such as discounts when they know many organizations will become customers. Third, cooperative contracts are often awarded to world-class suppliers or manufacturers for proven solutions. Lastly, they can help fill gaps.

“Something new gets invented every single day,” Rimes said. “Co-ops usually have … more products than I would ever have, so now I can pick and choose and fill the gaps in my own contracts.”

A downside to cooperative purchasing is that it tends to favor big corporations that can serve regionally or nationally, but some have local connections through franchises. 

“A lot of times, I will have to reach out to that large company and say, ‘OK, I want to do business with you, but my city council is very interested in [a minority business enterprise] web participation. How can you help me out?’” Rimes said. “Sometimes they’ll coordinate with local trucking companies to make the deliveries, or they’ll do a better mix of their products where they’re starting to buy more products from local suppliers as well.”

Sometimes the cooperative consists of government entities, which is the case with the Texas SmartBuy Membership Program, which lets state-funded cities, counties and school districts access the same competitively bid statewide contracts that state agencies can. Other times, agencies work with a vendor such as Omnia Partners, which focuses on public sector cooperative purchasing.

The cooperative path doesn’t absolve a local government if anything goes wrong with the contract, however. “Due diligence is still required,” Rimes said. “The procurement team should ask: ‘How was it advertised? Where was it advertised? Can I see the solicitation documents? Can I see the evaluations? I want to see the contract,’” she said. “It’s not like you just piggyback on a contract and keep going down the road.”

Regardless of the route to the procurement, it’s important for vendors and procurement officials to cultivate relationships, she said. 

Historically, the procurement/vendor relationship has been structured. “I call it a one-and-done: You buy what you need, it’s delivered, you get the invoice, you pay it, that’s it,” Rimes said. “But it’s moving into relationships and partnerships with suppliers because things have gotten much more complicated.”

She gave the example of security cameras. It used to be that an agency purchased them and set them up. Now they require cabling, computer systems and monitoring, so agencies look for suppliers who can provide not only the hardware but associated consulting.

One place where vendors and governments can meet is at government information sessions on how to work with a city, county or state, or at events such as the Smart Cities Connect Conference, which attracts startups and companies offering innovative, cutting-edge technologies—and the places that want to use them.

Stephanie Kanowitz is a freelance writer based in northern Virginia.