Going green … cooperatively
Purchasing volume drives down costs. The easiest way to increase purchasing volume is by collaborating with other like-minded organizations. These two simple concepts, which assume a sufficient supply of products, are the founding principles of the growing number of purchasing cooperatives serving the government purchasing community.
Groups of government purchasers are banding together and pooling purchasing power to reduce administrative costs, lower prices for commodities and services and negotiate better terms and conditions. At least two of the largest government purchasing cooperatives are beginning to use their purchasing power to make it easier to buy more environmentally and socially responsible products from more environmentally and socially responsible companies.
Cooperative purchasing saves green
Larger organizations, including states such as California and New York, always have received preferential treatment from suppliers in the form of lower prices and better terms and conditions because their large purchasing volume makes them particularly valuable customers. Purchasing cooperatives are a way of making that preferential treatment available to everyone.
In a purchasing cooperative, a group of purchasers pools its purchasing power and leverages it to negotiate more favorable terms from the supplier community.
The cooperatives begin by identifying a lead agency to serve as the contract administrator. Members then agree to a common set of terms and conditions meeting the needs of each member of the cooperative. After agreeing on the terms and conditions, the lead agency issues a request for proposal or invitation to bid and evaluates supplier responses. Upon contract award, each member of the cooperative has access to the negotiated prices and terms.
The resulting cost savings can be substantial. The city of Seattle estimates that it saved $350,000 in fiscal year 2006 as a result of its cooperative purchases. In the same year, Fairfax County, Va., estimates that it saved more than $1.6 million.
The benefits of cooperative purchasing are not limited to lower prices. It also can reduce contract administration costs because the bulk of the oversight is centralized within the lead agency. As a result, cooperative purchasing can save time and money by reducing some of the demands on an already overburdened purchasing office, freeing it to manage other contracts.
Cooperative purchasing also allows governments to pool technical expertise. Members can share knowledge and, by relying on other members of the cooperative, reduce the time it takes to stay on top of new product developments or industry trends. This is particularly beneficial for more technically oriented commodities such as office and IT equipment and for staying on top of the latest opportunities to meet green purchasing requirements.
Cooperative purchasing goes green
In addition to reducing costs and negotiating better terms, government purchasers are beginning to use cooperative purchasing to reward and encourage product innovation, particularly innovation that improves the environmental performance of products and services.
Government purchasers are discovering that sourcing commodities and services with environmental benefits such as increased recycled content, improved energy efficiency and reduced toxicity is easier when a large group of purchasers is making the demand.
Sourcing more environmentally friendly computers meeting the EPEAT standard, recycled-content paper certified by EcoLogo, Green Seal or the Chlorine Free Products Association; or cleaning products certified by Green Seal or EcoLogo became significantly easier once multiple government purchasers began including those requirements in purchasing specifications and requests for proposal. Manufacturers responded to the growing demand for greener options by redesigning products and services to meet the government purchasing community’s requests.
Including similar environmental requirements as part of cooperative purchasing agreements can accelerate the introduction of greener products and services by consolidating and clarifying the demand for green. At least two prominent cooperative purchasing organizations, the Western States Contracting Alliance (WSCA) and U.S. Communities, are actively exploring this opportunity.
Western States Contracting Alliance
With a history dating to 1985, WSCA is one of the most established nonfederal purchasing cooperatives. It began when state purchasing pharmacists in Minnesota and Wisconsin combined purchasing volume to negotiate better pharmaceutical prices. Their early success led to the creation of the Minnesota Multi-State Contracting Alliance for Pharmacy (MMCAP), which grew to 10 states by 1992.
While exploring the effectiveness of the cooperative purchasing approach at a National Association of State Purchasing Officials (NASPO) meeting in 1992, a group of Western regional NASPO directors decided to expand MMCAP to a broader variety of products and services. The result was WSCA and it launched with 15 participating states.
WSCA immediately turned its attention to buying more environmentally preferable paper. With some financial support from the U.S. Environmental Protection Agency (EPA), WSCA developed a cooperative agreement to purchase recycled-content copy paper containing EPA recommended minimums for postconsumer recycled content.
Unfortunately, that early attempt at cooperative green purchasing failed to produce satisfying results. Manufacturers were not yet ready to provide the necessary volumes of recycled-content paper. WSCA’s initial attempt at cooperative green purchasing failed, but it allowed the group to develop the cooperative purchasing methodology and approach that it continues to use.
Last year, members spent $4.4 billion using WSCA contracts. They saved millions of dollars off the initial purchase price for computers, industrial supplies, janitorial supplies and industrial paper, quick-copy printing, tires and more.
WSCA’s growing success is leading to expansion in two directions. It is working to expand its geographic focus nationally and it is beginning to focus once again on green purchasing.
In 2006, WSCA directors, working through NASPO, created the NASPO Cooperative. It includes 45 states that have agreed to jointly develop cooperative contracts using funding provided by WSCA. In addition, WSCA is funding the development of purchasing cooperatives in the remaining NASPO regions – the Eastern, Midwestern and Southern regions.
WSCA also is expanding its focus on green purchasing with several new contracts in development containing specific environmental requirements, including incentives for manufacturers to have their products independently certified as meeting recognized environmental standards.
To further encourage WSCA members to consider the human health, environmental and social impacts of routine purchasing decisions, WSCA has been funding responsible purchasing training at NASPO regional events around the country.
WSCA directors emphasize that they are embracing green only where it makes sense and where its members are seeking greener alternatives. They remain conscious of the need to balance potentially competing goals, including: price and performance requirements; different regional definitions of “green”; a desire to support small and minority- and women-owned businesses; and a desire to buy locally. Even so, WSCA members are happy to see manufacturers responding much more favorably to their green preferences than the suppliers originally did back in 1992 when buying green was still a novelty.
U.S. Communities also has a long history of saving money for agencies using its contracts. In 2007, U.S. Communities members spent $1.3 billion through the cooperative, saving an estimated $200 million of taxpayer money.
U.S. Communities has contracts for a wide variety of products routinely purchased by government agencies, colleges and universities, and K-12 educational facilities. They include contracts for: office and school supplies; office furniture; office machines; electrical products; park and playground equipment; athletic equipment; janitorial supplies; technology products and solutions; telecommunication supplies; maintenance and hardware supplies; roofing supplies and services; auto parts and accessories; and housing compliance services.
While its history stretches more than 20 years, the U.S. Communities Government Purchasing Alliance was formally launched in 1999 through a collaboration that included the National Association of Counties, the National League of Cities, the Association of School Business Officials, NIGP, the U.S. Conference of Mayors, the California State Association of Counties and the League of California Cities.
Responding to growing demands from U.S. Communities members for greener product offerings, the cooperative recently launched its Green Initiative. The Green Initiative is a multifaceted program designed to educate both purchasers and suppliers about the human health, environmental and social impacts of purchasing decisions and to provide purchasers with the tools and information they need to buy greener products meeting price and performance requirements.
U.S. Communities has sponsored dozens of green purchasing training sessions, including a recent session at the 2008 NIGP Forum in Charlotte, N.C. It also is posting green purchasing resources, including information on writing green purchasing policies, calculating the environmental benefits of green purchases, using environmental labels and other responsible purchasing training materials, on its Green Initiative Web site.
In addition, U.S. Communities is working closely with its suppliers, including Office Depot, Herman Miller, Ricoh, Home Depot and others to ensure that they understand the green purchasing needs of the cooperative’s members. Its outreach efforts include encouraging suppliers to provide information on which products have been certified by respected environmental standard-setting organizations such as EcoLogo and Green Seal and to provide additional environmental information that might be of interest to members.
U.S. Communities also is helping its suppliers share information about the suppliers’ internal green initiatives. Suppliers are now highlighting their own energy-efficiency and recycling efforts along with the various ways they have been recognized for their environmental performance. By promoting the environmental practices of its suppliers and highlighting the greener products that they offer, U.S. Communities is hoping to make it easier for its members to buy greener products from greener companies.
With the support of its members, U.S. Communities plans to include additional green clauses in future contracts and gradually transition its series of voluntary environmental initiatives into actual requirements.
Evaluating cooperative purchasing opportunities
There are hundreds of public- and private-sector cooperative purchasing organizations throughout North America. They differ in geographic focus, in the prices they charge for their services, in the type of agencies they serve and in the goods and services available on contract. Some are regionally focused; others are international in scope. Some focus on commodities for a specific segment of the government purchasing world, such as the Multi-State Corrections Procurement Alliance, which focuses on goods and services needed by corrections facilities. Others, such as WSCA and U.S. Communities, are more broadly focused.
When reviewing participation in a purchasing cooperative, consider the following questions:
- Is your organization eligible to participate?
- Will the cooperative’s contract(s) give you access to the products/services you need?
- How do the prices for representative products and services compare with the prices you are currently paying?
- What fees (if any) are required to join the cooperative?
- Does the cooperative do business with your preferred suppliers?
- How much and what kinds of customer service support does the cooperative provide?
- Does the cooperative source or make it easy to identify greener alternatives?
A better future
The success of WSCA, U.S. Communities and other purchasing cooperatives provides clear evidence that cooperative purchasing can provide better pricing, better terms and conditions, and better access to commodities and services. As the cooperatives increasingly include environmental considerations in their own contracting practices, they also will be able to provide a better future.
- For additional information on WSCA, including a complete list of contracts and current pricing, visit http://www.aboutwsca.org.
- For additional information on U.S. Communities, including a list of contracts, suppliers and green purchasing resources, visit http://www.uscommunities.org.
- NIGP provides a useful list of purchasing cooperatives focused on the unique needs of government agencies at http://www.nigp.org/PurchCoop.htm.
About the author
Scot Case has been researching and promoting responsible purchasing issues for 15 years. He currently is vice president of TerraChoice Environmental Marketing Inc., which manages the EcoLogo program to identify more environmentally preferable products. Contact him via e-mail at [email protected] or in Reading, Pa., at 610-779-3770.