Best practices for using co-ops
The following is the first of a three-part series on Government Cooperatives.
As Joseph Procop, procurement manager of the Central Arkansas Transit Authority, began looking for 15 buses to replace some older models, he found a contract in a Louisiana county that he thought promising. By piggybacking onto an existing contract, his agency could pay much less for the buses than if it went out to bid on the relatively small number that it needed.
But when he looked into the details behind the Louisiana contract, he learned that the county could not offer to extend its contract outside of the state. Instead he had to turn to a contract issued by a city in Pennsylvania that could offer him buses at a good price.
“We needed to look at all of the legal hurdles,” he said of the experience. “We have to make sure that everything is squared away from a legal standpoint.”
Gaining a firm understanding of the legal aspects of a cooperative contract is just one of the many practices that procurement officials follow when deciding whether to take advantage of a cooperative agreement.
Whether piggybacking on another community’s contract or buying through one of the many national cooperatives that provide purchasing options for governments throughout the country, government officials are finding more options than ever to speed up their procurement process at good prices with limited staff.
Yet, they also point out that they take considerable care to make sure that the purchase they are pursuing fits the requirements of their employer.
“You’ve got to be careful about a cooperative bid,” says Joel Manning, who buys for Charlotte/Mecklinberg County Library system. “You have to look and see who’s driving the bid.”
Procurement officials take advantage of many new technologies that help them scour the marketplace to find out what is available that meets their needs. Often, they consult with their colleagues on the availability of contracts that might best work for them. Finally, especially on larger-cost items, they talk to vendors about contracts that the vendor has already signed in other governments that might work for them.
“Our eyes and ears are always open to anything out there,” says Adam Boeche, director of public works and engineering in Mundelein, Ill.
Following a process to find a co-op
Carolyn Ninedorf, purchasing agent for Dade County, Wis., says that she follows a process to determine the suitability of a cooperative agreement for her county’s purposes. “I look at what’s behind the contract,” she says. “Does it have a good cost, is the quantity I need available? Is the contract good for us? Can we get good value by using the contract?”
Purchasing officials especially like the additional flexibility that cooperatives provide their operations, since most do not require any commitment to buy. “We use co-ops as a comparison against other opportunities,” says John Holmes, a buyer in La Plata County, Colo. “We have the right to buy off the bid, but the fallback is we can withdraw if we find a lower price.”
As part of its process, the county spot checks the co-op price against other bidders, including local vendors. “Sometimes the co-op bids are higher,” he says. “They might have to be available for a full year, so they have to include an escalation against inflation. If I need something the next Monday, I would get the current market price.”
Another factor might be the cost of shipping, if the contract provider is father away. A local vendor might be able to fulfill the bid at a slightly higher price, but not charge for shipping. In the end, the county might be better off going local.
Buying local also has a secondary positive effect, says Angelo Salomone, purchasing administrator for Coral Springs, Fla. “The local vendor is service oriented; they have boots on the ground,” he says. “It’s important to have a strong local presence.”
Increasingly, though, vendors have become responsive to the concept of selling to one entity as part of a broader contract. This can be a win-win for both sides of the contract, procurement officials say, since the vendor gets a bigger sale for the same effort and the buyer can take advantage of the economies of larger purchases.
“We depend on vendor communication to some extent,” says Dan Marron, contracts and risk manager for Sparks, Nev. “They hear what’s best out there, which contracts we might be able to piggyback onto. Everyone has a co-op contract. It’s the first thing the buyer asks.”
With so much opportunity, governments are finding that cooperative buying has become a good channel for meeting their purchasing needs and that experience has brought increasing confidence in the best practices to ensure that the government entity is getting the right product or service for the right price.
“The industry has evolved.” Marran says. “There’s an alphabet soup of co-ops. The largest co-ops, we know they do good work. We’re not as concerned with the process.”
Next: Cooperatives are expected to grow.
Robert Barkin is a freelance writer in Bethesda, Md.