FINANCIAL MANAGEMENT/Purchasing co-op stretches dollars
If procurement officers are looking for ways to decrease the cost of supplies, the options are limited. In procurement, the more units that are ordered, the less the units will cost. But if the number of units ordered annually does not vary much, the overall cost of the contract is going to stay about the same.
Governmental agencies buy pretty much the same things – office supplies, pagers, diesel fuel, asphalt and other day-to-day necessities. If two agencies join together and increase the number of units ordered on a single contract, both agencies will see a decrease in costs.
That is the idea behind the Tarrant County Cooperative Purchasing Program, which began four years ago when Tarrant County Purchasing Agent Jack Beacham began calling cities within the county to gauge their interest in forming a cooperative. The city of Colleyville was the first to sign on, joining the county in buying fuel. Through additional phone calls – but mainly by word of mouth – other agencies joined the co-op. Now, 67 agencies across North Texas – from water districts and cities to school districts and counties – are able to stretch taxpayers’ dollars by purchasing supplies under the program.
The cooperative also saves time for its members. Tarrant County prepares bid specifications, gets quotes and reviews bids on behalf of the other members, producing approximately 100 contracts for bid each year. Additionally, it benefits smaller agencies by ensuring better service from vendors. Suppliers are more likely to listen to a complaint from a member of the co-op rather than to a small city with a single contract.
When specs are being written, Tarrant County e-mails program members to determine whether they will participate in an order. While participation is voluntary, the savings are hard to pass up.
The program has demonstrated its success in the money it has saved its members. Last year, for example, the cooperative’s contract price for digital pagers was $1.95 per month per unit. That was a dollar less than the state’s contract, and considerably more savings over the average $4.95 per unit that other Texas agencies were paying.
The cooperative also got a great price – $19,148 each – on fully packaged police cars. In recent bids by agencies not participating in the program, Collin County paid $19,192 for the cars; Denton County paid $19,219; and the state of Texas paid $19,250. Also, the cooperative’s cost for tires is 10 percent to 12 percent less than the state’s cost.
“When we were doing our bidding locally, we were paying $200 to $300 more per car,” says Ellis County Purchasing Agent Hannah McCleary. “But we were only putting out bids for four cars. Jack (Beacham) puts out bids for 150 to 250 cars at a time.”
Membership in the program is a two-way street, allowing Tarrant County to take advantage of purchasing bargains made by other members. For example, the county is currently buying fuel under Fort Worth’s contract, which saves the county about $25,000 a year. Other agencies also may hold contracts for the entire cooperative. In fact, Dallas County is expected to host the next round of bids for police cars.
The program is especially helpful to small communities that do not have the staff to manage bids on their own. Not only does the co-op help save money with higher volume buying, it also saves on costs related to the bidding process, such as advertising.
While cities and counties may have many operational differences, there are enough similarities in their basic day-to-day necessities to make a purchasing cooperative successful.