GO PRO reader feedback: Responses to cooperative purchasing conundrum

Is cooperative purchasing too successful? Steven M. Demel of the Tacoma (Wash.) School District asked that question in the February/March issue of Government Procurement (GoPro). Demel bemoaned the surge in “national” contracts that makes it difficult for a buyer to differentiate among the crowded market. “If every national contract offers the best deal, then none of them do,” said Demel. His letter prompted several responses (excerpted here), and the dialog will continue at govpro.com, where readers are invited to add their comments.

Factors to consider for best value

Multiple cooperative contracts provide the purchasing manager more options and greater competition. Local governments have created cooperative contracts for decades and states have long allowed political subdivisions to piggyback off of state contracts. In addition to local and state cooperative contracts, significant growth has emerged in regional and national cooperative contracts.

It is necessary for the public procurement manager to determine which cooperative contract provides the best value for his or her organization. Factors that we as public procurement professionals should consider in our due diligence efforts include, but are not limited to, the following:

• Public Agency Contract. Is the city, county, school district, university or state that is responsible for the source selection and contract formation a respected and a known public agency? Does the public agency buy for its own use from the resulting cooperative contract?

• Transparency of the process and documentation. Can you easily determine how the award was made and what the prices, terms and conditions include? Is this information public and available online?

• Auditability of the contract. Does the contract require the awarded supplier to conduct thorough audits internally and externally to ensure that the terms of the contract are being upheld?

• Expertise within the cooperative. Does the cooperative employ certified public procurement professionals in order to ensure that the processes and resulting agreements meet the high standards of our profession?

• Multiple Awards. Was the contract a multiple award to every responsible company submitting a bid? Was the award established like a GSA Multiple Schedule? If it was, watch out. Cooperative contracts provide the best value when the awards are limited to the best offers.

As we become a more strategic component within our organizations, the marketplace in which we work is forced to change. I don’t believe there are too many good cooperative contracts. Cooperatives and contracts that do not provide a good value will not be successful and will cease to exist. That is the nature of competition.

— Wayne A. Casper, C.P.M., CPPO,
Group Director, West For National IPA (Intergovernmental Purchasing Alliance)

Consider trust and who’s behind the organization

Discontinuing use of cooperative contracts for many agencies is not an option. It would mean missing out on the leveraged purchasing power that such programs can offer. It also would result in dedicating thinly-stretched purchasing resources to an increased load of solicitation activity at a time when it can be least afforded. Governments can better help themselves decide among options by considering the following questions:

• Does the procurement process and contract administration meet the highest standards of government procurement? A cooperative procurement contract must be able to stand up to the most intense scrutiny. The contracts offered through the U.S. Communities program are solicited and administered by a lead public agency. Its agencies are among the most respected in the country, and they compete these contracts both for their own use and for availability to other governments through U.S. Communities.

• Why does the cooperative procurement organization exist and who stands behind it? To provide agencies with an option to ensure the public interest comes first, NIGP joined 10 years ago with ASBO International, NACo, the National League of Cities, and the U.S. Conference of Mayors to found the U.S. Communities Government Purchasing Alliance

• Is the cooperative procurement organization a leader in meeting the evolving needs of government? U.S. Communities led the way in establishing nationwide cooperative purchasing 10 years ago and remains the trusted source for national cooperative solutions today.

— Steve Swendiman,
Managing Director/CEO at the National Association of Counties (NASCO)

Cooperatives need points of differentiation

The frustrations of selecting the best solution from among too many cooperatives offering similar products are indicative of a marketplace reaching maturity. From a consumer perspective, qualities of a mature marketplace include many similar products, many suppliers, fairly equal prices and high adoption by the market.

Cooperative programs know that to be successful they must differentiate themselves to stand apart from the other programs. That’s become very difficult to do within the paradigm from which they grew. It’s time to see how cooperative practices can be enhanced to meet the higher-order challenges faced by public procurement.

For example, can we find a cooperative solution that also supports our efforts to engage local suppliers; to meet SMWBE goals; or to achieve social and environmental sustainability targets? Do we push for cooperative contracts that represent “solutions,” not only “products”? Should all cooperative programs demonstrate the same high standards as government procurement professionals? Governments have increasing transparency requirements. How do the contracts we use support those requirements?

As with any definition of scope, if you don’t ask for it you can’t expect to get it. Redefine the scope of your expectations from a cooperative resource. Ultimately, you’ll receive even greater value when you incorporate cooperatives into your procurement plan, and the coops themselves will be glad to know what they can do to maintain their relevancy and sustain their growth in the marketplace.

— Brent Maas,
Marketing Director, National Institute of Governmental Purchasing (NIGP)

To read all the responses, and to voice your own opinions and observations, go to http://govpro.com/resource_center/cooperative_purchasing/national-contracts-frustration-201102/