Cooperative Contracts Boost Purchasing Power
Cooperative Contracts Boost Purchasing Power
Jack Beacham, C.P.M., A.P.P., Purchasing Agent, Tarrant County (TX) Purchasing
(Below) Terry Davenport, Computer Equipment Contracts Administrator, WSCA
Bob Wooten, Coordinator of Program Development for the H-GAC Cooperative Purchasing Program
Cooperative purchasing programs can vary as widely as the products that government agencies buy, but their common goal is to stretch taxpayer dollars by purchasing large amounts of the same item, at the same time, on one contract. Vendors’ administrative costs are lowered because there is one contract to maintain instead of several, and, in turn, the contract can lower a commodity’s unit price. Purchasing cooperatives also save administrative time by handling the competitive bid/proposal process. Some specialize in high-tech equipment, and others in pens, pencils, and paper. Some receive payment directly, and others avoid the actual transaction completely. Some reach all 50 states, and others exist in just one. Here’s a sampling of what four cooperative purchasing programs have to offer.
Tarrant County, TX
Word-of-mouth is how most government agencies hear about the Tarrant County Cooperative Purchasing Group that began in 1996. Tarrant County is the third-largest county in Texas, containing more political subdivisions, approximately 40, than any other county in the state. When Jack Beacham, Purchasing Agent, Tarrant County, began working for the county, he drew upon his past co-op experience with North Central Texas Council of Governments. “They never got the participation they hoped for. They never could find a commodity or group of commodities that people would actually purchase together at the same time,” Beacham says.
With the decade-old endeavor in mind, Beacham and his staff created the Tarrant County Cooperative Purchasing Group. “When I came to the county seven years go, I remembered those efforts, and I thought since we have more entities within our county line than any other county in Texas, what better service could we perform than to let them purchase off some of our contracts. Because of our county size, it only made good sense that by leveraging our purchasing cooperatively, we could lower our unit cost,” Beacham explains.
“Our quantities have grown from about 18 entities that piggybacked with us for years to purchase road materials to 121 entities, and that’s still growing,” Beacham states. The Tarrant County Cooperative Purchasing Group currently has 121 local entities purchasing from 117 annual contracts for goods and services such as janitorial supplies, inmate uniforms, tools, police vehicles, fleet fuel cards, and pagers.
No fees and no frills is the premise behind the Tarrant County program. Some cooperative purchasing programs charge a small fee, a sliding-scale percentage per purchase cover administrative costs, or annual membership dues.
However, there is no cost to participate in the Tarrant County Cooperative Purchasing Group. The end users are responsible for their own purchase orders. “After the award is made, we electronically send them a copy of the award document, the tabulation sheet, and the recommendation for award. It’s their responsibility to contact the vendor, to issue their own purchase orders, and pay their own bills,” Beacham states. “By doing that, we’re leveraging our purchasing with their quantities, thereby decreasing our costs. We’re not doing their paperwork for them.”
Government entities that wish to participate return a signed inter-local contract agreement enabling the entity to legally participate in Tarrant County’s cooperative contracts. The agreement gives Tarrant County the authority and responsibility to advertise bids, accept bids when they come in, open the bids, and recommend awards. Currently, all participating entities are within the state of Texas.
Beacham cautions that the process should not be used to check prices. For example, if an end user commits to buying squad cars with Tarrant County, it should not then issue its own bid at the same time to see which price will be better. If this happens, and the end user buys off its own bid, that end user will be removed from the cooperative list.
“The way we maintain our pricing levels—and they are excellent—is based on quantity,” Beacham explains. “If that’s the only bid around or one of a few, the chances of your pricing being excellent are far greater than if you’re going it alone and you put a bid out by yourself. You’re taking away the power of the volume, the power of the quantity, and the solidarity of problem solving if you try to accomplish this by yourself.”
The Tarrant County Cooperative Purchasing Group’s popularity has been somewhat of a surprise. “It’s been more successful in terms of the number of participating entities than we could have ever imagined. We have kept it simple; we have been very logical in the process. Since we would have processed these bids anyway, by increasing the participation in each bid, our payback has been the decreased costs that we pay,” Beacham says. He attributes much of the program’s success to the entities that purchase off Tarrant County contracts. “We could not do everything we have done without all these other participants. Our numbers have gotten better because of the 121 entities that piggyback with us on our contracts,” Beacham states.
For more information, visit: www.tarrantcounty.com
WSCA—Western States Contracting Alliance
In October 1993, state purchasing directors from 15 states joined forces with the goal of buying quality goods and services at cost-effective prices, and WSCA, the Western States Contracting Alliance, was born. Alaska, Arizona, California, Colorado, Hawaii, Idaho, Minnesota, Montana, Nevada, New Mexico, Oregon, South Dakota, Utah, Washington, and Wyoming are the original participating states. The alliance is sponsored by the National Association of State Purchasing Officials (NASPO).
Although a variety of goods and services are available on WSCA contracts, ranging from infant formula to satellite monitoring equipment, the group’s computers and peripherals program has really taken off.
“Right now, we have $2.6 billion in total combined sales in the [program’s] first three years,” says Terry Davenport, WSCA’s Computer Equipment Contracts Administrator. “We have 18 permanent volume price reductions so far. It has been the most successful multigovernment cooperative purchasing venture ever.” HP Compaq, Dell, Gateway, and IBM currently hold WSCA contracts.
The WSCA cooperative purchasing program focuses on state governments. Once a state government becomes a participant, it can sign an agreement allowing entities throughout the state to use the program. The lead state plans, organizes, and administrates the contract with the support of other WSCA states.
For example, the state of New Mexico, where Davenport serves as Information System Procurement Special-ist, is the lead state for the computers and peripherals program. If an end user has a problem with a product or service, the lead state has the responsibility to follow up and resolve the issue.
One of WSCA’s strengths is that participating government entities can avoid the time-consuming competitive bid process that involves formulating and issuing requests for proposal, evaluating vendors, and negotiating contracts. Each participating government entity adds an addendum to the original contract, slightly altering the contract’s terms and conditions to meet its own purchasing requirements.
“We’re all working off one contract,” Davenport explains. “Instead of the contractor having to maintain thousands of contracts across the country, they only have to maintain one. By us streamlining our side, [vendors] can provide the products and prices at a much lower cost than they could otherwise.”
By banding together, smaller purchasing entities can benefit from the same low prices as enjoyed by high-volume buyers. “A little school in Hawaii gets the same prices as a school district in San Diego,” Davenport says.
“Our thrust is that we choose partners with high-quality products and services as opposed to prices or some other criteria,” Davenport adds. “We have a miniscule administration fee because of our low overhead, and we’re looking for very long-term relationships with these contractors. It’s a perfect example of government public-sector/private-sector partnership that people always talk about, but we actually implement it.”
For more information about WSCA and to view a sample addendum, visit www.aboutwsca.org
Houston-Galveston Area Council (H-GAC)
Celebrating its 30 th anniversary this year, the Houston-Galveston Area Council (H-GAC) Cooperative Purchasing Program serves more than 1,300 local and state governments and nonprofit corporations. More than 100 vendors provide products and services for the program’s participants. H-GAC specializes in complex, high-ticket capital equipment such as fire trucks, ambulances, bulldozers, and garbage trucks. All products on contract have been subjected to the competitive bid proposal process and awarded by H-GAC’s 36-member board of directors.
In response to both end-user and vendor input, H-GAC has recently discontinued the e-procurement feature of its Web site, HGACBuy. com. According to Bob Wooten, Coordinator of Program Development for the H-GAC Cooperative Purchasing Program, “Difficulty arose in trying to get all the thousands of line items and price options into a functional electronic catalog.” E-catalogs are more common among commodity suppliers.
To maintain the e-procurement feature, H-GAC was entering massive amounts of data received in various forms. “The e-procurement standards were not in place to allow the easy transfer of data,” Wooten says. “It will come eventually as e-procurement advances.”
The updated Web site fosters more two-way communication between end user and vendor, which is necessary for capital items. “When you order paper, pencils, or even a PC, you really don’t need that two-way communication,” Wooten notes.
End users found the electronic ordering system was duplicating the steps that they normally had in place in their own jurisdiction. After making out their own purchase order, end users had to log onto the H-GAC system and do the procurement process all over again. “We were getting feedback that it was taking twice as long, so what we did to respond to their concerns was scale the whole operation back,” Wooten explains.
Now, end users go to HGACBuy. com, browse through the products, find what they want, and contact the vendor directly. Other conveniences such as purchase-order status, shipment information, and invoice tracking remain on the site.
Purchasing electricity has become a very successful program for H-GAC, according to Wooten. After the Texas retail electricity market was officially deregulated on January 1, 2002, H-GAC Energy Purchasing Corporation was formed. The energy co-op now provides electric aggregation services, with TXU Energy Services as the provider, to more than 100 local governments across Texas.
The electricity aggregation has proven successful in terms of pricing, in contract terms and conditions, and in the quality of the suppliers under contract. “In all those areas, I think we have been able to assist end users. It’s really emphasizing the best-value approach as opposed to just low price,” Wooten says.
H-GAC will be expanding its offering of homeland defense products and equipment, according to Val Toppin, Program Coordinator of Operations, H-GAC Cooperative Purchasing Program. Currently available through the H-GAC co-op are communications equipment and systems; rescue and fire apparatus, hazmat solutions, and local command centers; 9-1-1 systems; and auxiliary power generators. In 2003, H-GAC also will offer finance services, as well as decontami-nation and detection equipment.
Visit www.HGACBuy.com for information and a list of products.
With participating government entities in all 50 states, U.S Communities concentrates on high-use, high-volume items. All government entities, except federal, can use the U.S. Communities program. “U.S. Communities aggregates the volume of public agencies nationwide, thus helping us achieve our mission: ‘Government Purchasers Saving You Money,'” according to Rob Braulik, Director of Marketing for U.S. Communities, Walnut Creek, CA.
U.S. Communities’ current offerings and suppliers include: office/school supplies: Office Depot; electrical and communication/data supplies: Graybar; office furniture: Ha-worth, Herman Miller, Knoll, and Steelcase; computers: Insight, CompUSA, Gateway, IBM, Micron, Software Spectrum; janitorial supplies: ZEP Manufacturing; and school classroom furniture: Virco and School Specialty. Future products to be available include carpet and flooring, copy machines, procurement card services, and auto parts.
The Association of School Business Officials International (ASBO), the National Association of Counties (NACo), the National Institute of Governmental Purchasing (NIGP), the National League of Cities, and the U.S. Conference of Mayors are U.S. Communities’ national founding co-sponsors.
To select suppliers, an advisory board with members from end-user government entities recommends a product or commodity. A lead advisory board member prepares a competitive solicitation, evaluates proposals, and completes the award. Governments that wish to participate in the contract register online. There are no costs or fees for government entities to participate. U.S. Communities is funded as a nonprofit instrument of government and is funded through a one percent administrative fee paid by suppliers based on volume.
Braulik sums it up: “Here’s a contract that’s already been competitively solicited. It offers best government pricing, it’s non-exclusive, and there are no fees or costs to participate. Public agencies are able to get excellent pricing, but they’re also able to get really valuable contract offerings, which means that they can save time and energy in the public procurement process.”
For more information, visit www.USCommunities.org. What’s in store for the future of cooperative purchasing? Several groups are combining efforts for even greater success. For example, WSCA has worked with the Midwest Higher Education Commission, a consortium of 852 institutions of higher education in ten states. “They are cooperating with us in using our contract in the computer area,” Davenport says.
H-GAC and U.S. Communities are currently monitoring each other’s Web sites to track the number of cross-over visitors, according to Wooten. H-GAC and U.S. Communities are both linked with MiCTA, a national high-tech telecommunications purchasing program based in Mount Pleasant, MI. The Tarrant County Cooperative Purchasing Group is considering working with U.S. Communities on a squad-car contract, according to Jack Beacham. By pooling their numbers and sharing their expertise, public purchasers can use cooperative purchasing to benefit everyone.