Coop purchasing best practices, part 2
More government agencies are relying on cooperative purchasing to get needed goods and services. A recent cooperative purchasing e-survey of Government Procurement subscribers shows 90 percent of respondents expect their agencies to maintain at current levels or expand their use of cooperative purchasing over the next three years.
Approximately 47 percent anticipate their use of cooperative purchasing will increase over the next three years, while 43 percent say it will stay about the same. Only about 3 percent think it will decrease. More than 720 people responded to the online survey. The survey was conducted in partnership with NIGP: The Institute for Public Procurement.
GPN reached out to veteran public purchasing pro Hal Good (photo below on right) to learn cooperative purchasing best practices. Good has over 30 years of experience in public and private procurement, e-commerce and supply chain management. He has served as director of procurement and contracting in Frederick County Md., and Palm Springs, Calif.
Good continues to serve the public procurement profession. He directs social media for the Pennsylvania chapter of NIGP, the Pennsylvania Public Purchasing Association (PAPPA). Good will be conducting a couple of workshops at the 2015 NIGP national Forum in Kansas City. He has served on NIGP’s national board and has been a member of NIGP throughout his career. Good owns the Procurement Pros group on LinkedIn. The by-invitation-only group has about 1,300 members. Here are Hal Good’s views.
GPN: It’s been said that cooperative purchasing saves time for public purchasers. How do you feel about that statement?
Hal Good: I agree with it. One of the big pressures that public procurement agencies have now, is that they have limited resources—and the pressure is on them to contribute more to the organizational bottom line, to become more strategic. But to become more strategic, you have to have more time available from your professional staff. So it means that you probably can’t afford the time to put a competitive process together for each and every type of item or each individual item that you buy.
So by using cooperative purchasing, it frees up the time of your professionals to dedicate to what’s defined as strategic activities. At the same time, through cooperative purchasing, your agency is probably getting a better deal almost all of the time. Cooperative purchasing leverages the strength and clout of multiple agencies that have volume-based buying power. That power exceeds what you have as an individual agency.
GPN: What are some cooperative purchasing best practices for directors of local government buying agencies?
HG: As procurement officers, we have to first look at what the needs are of our organizations. Our users—the people who use the agency—define those needs. The overall objectives of the organization also play a role here. And then, with that in mind, you look at what’s available on a cooperative basis.
I’m not of the mind that one particular coop fits every occasion. I think that you have to look in terms of what you are buying, i.e., if you are buying electricity or natural gas, you are probably going to buy that from a group that’s put together on a regional or a local basis. The reason is, because you have the same service providers, the same conditions in terms of climate and all those things. And so the intelligent thing to do in those situations is probably to go local or regional with the coop. In other circumstances and when buying other commodities and products, you may determine that it makes sense to leverage buying power on a national basis through a national contract.
GPN: Are there any other cooperative purchasing best practices?
HG: You want to make sure that what you are buying into on a coop basis really fits your needs. Sometimes people buy into a coop situation where the lead agency had a very specific need that was unique to them, and if you buy into that, you may have to substitute items or add items, and sometimes the provider says the discount only applies to the base product that I bid on or competed on, and everything else is at list price.
That practice specifically comes to mind in my experience with buying fire apparatus. Because you can get a great deal on a fire truck, but you also have to consider the expensive gear and equipment that goes on the truck. If your needs are not the same as the organization/agency that put that competitive process into place, you can wind up paying list price for all the accessories and equipment, and that can add up to a lot of money.
One of the other best practices for all public procurement directors to look at is what does your entity’s enabling legislation allow you to do? Some enabling legislation says you can only participate in a cooperative award if it was competitively bid on specification and price. Other forms of enabling legislation give flexibility to participate in negotiated contracts that are more the results of an RFP and the negotiation process. So each individual has to look at what they are able to do in their jurisdiction, and they need to make sure that if they are buying into a coop, that it conforms to all the needs and requirements that their organization has, specific to legal and process conformity.
GPN: What are the basic questions that public buyers/purchasing managers should ask the coops when they are investigating whether coops are best for them?
HG: I think there are a couple basic questions. The most important question is: What process do they follow? The process needs to conform to what’s recognizable by standards such as those established by NIGP: The Institute for Public Procurement and the other professional organizations. It’s got to be really a public process in terms of openness, transparency, access to and for everybody in a fair evaluation process. It has to be a fair award process, and that has to be uppermost. That’s because you want to make sure that the award was developed in a process that conforms to what your requirements are.
Another basic question to ask: Do our coop buying plans mesh with the enabling legislation? You have to be sure that you have the enabling legislation in place to allow you to do business with that particular coop for that particular type of process. Those are some of the most important things that are out there for people to consider.
GPN: Hal Good, are you an officer in NIGP, or do you serve on NIGP boards or committees?
HG: I do social media for the Pennsylvania chapter of NIGP. It’s called the Pennsylvania Public Purchasing Association (PAPPA). And I will be doing a couple of workshops at the NIGP Forum.
I served on NIGP’s national board a while back and I’ve been a career-long member of NIGP. I don’t have any other status other than I’m permanently retired, and I’ve gone into private consulting after retirement.
GPN: You also own the Procurement Pros Group on LinkedIn. How do you see the online group developing in the future?
HG: To me, the Procurement Pros Group is a giveback to my profession that means so much to me and has been so meaningful over my career. What I try to do in the LinkedIn group is provide a forum for all procurement people—public, private and stakeholders. Through the group we share information, best practices, new technology, better ways of doing things, successes and failures, and I don’t have a brand name on it.
Since I don’t have any brand loyalties, I find a lot of people that do publishing for a brand also publish on my site, because it’s a neutral place. I believe the site gets a lot of play because it isn’t branded. And people feel comfortable putting their views out there.
The Procurement Pros Group has been a lot more successful than what I had anticipated, and I’m happy about that. It’s a volunteer effort — I don’t make any money off of it, but it’s fun to do.
GPN: The group has almost 1,300 members?
HG: Membership in the group is open to any procurement people or stakeholders or shareholders. We are increasingly attracting more members from fields such as risk management, marketing, legal and other activities aligned with procurement. In a way, if you look at an organization, almost everybody in it is in some way a shareholder in procurement outcomes.
GPN: Thank you, Hal Good, for your views.
Michael Keating is Senior Editor at Government Product News, an American City & County sister brand.