More vendors may rely on cooperative purchasing
The volume of government procurements through cooperative contracts is growing, according to a recent report from Seattle-based Onvia. In 2012, cooperative contract volume stood at 1.9 percent of total contract actions in the company’s public sector database. By 2014, volume rose to 2.2 percent nationwide. The estimate is based on contract awards in the firm’s database and not on the total marketplace, since not all agencies publish awards information.
Onvia provides current and future bidding opportunities as well as agency and competitive insights. The firm tracks over 600,000 new bids & RFPs that government entities issue each year.
Look for continued growth in cooperative purchasing in the future, predicts Travis Pearl, Onvia’s director of marketing. “We expect that the volume of cooperative purchases by governments will just naturally increase in the years ahead,” Pearl told GPN. He says that agencies will find more ways to work together through cooperative organizations.
His predictions of cooperative growth mesh with views of respondents to the 2015 Government Procurement (GP) Forecast Survey. Almost half of the 500 respondents to the survey said cooperative purchasing programs (45.6 percent of respondents) would significantly affect public procurement in the next couple of years. A total of six factors were listed in the survey questionnaire.
The seven-part Onvia report explains that for vendors, “profitable sales opportunities exist across many industry sectors as well as multiple levels of government agencies.” The report identifies which commodity categories are often acquired through cooperative buys. Some shares by industry include:
Transportation equipment—6 percent
Office equipment—6 percent
Information technology—5 percent
Construction and infrastructure—1 percent
Other parts of the cooperative purchasing report cover best practices for contractors; how cooperative purchasing usage varies by level and kind of government and frequency of purchases by size category-dollar amount.
Pearl describes cooperative purchasing as a huge efficiency play—that the cooperative purchasing process boosts efficiencies for both agencies & vendors. “We’ve heard from some vendors that they actually call on agencies that are purchasing products and services in their states, and they push them –the agencies– towards the cooperative contracts, because the cost of going to competitive bid can be so much higher than participating in an existing cooperative agreement.”
Pearl tells GPN: “Bigger vendors use coops. As you move up in government sales, and as you get bigger as a vendor, you are much more likely to expect positive impact from working with cooperative purchasing.” He says that firms with $20 million in government sales revenue are more than twice as likely to be engaged in cooperative purchasing than companies that make less than $5 million in government sales.
For vendors that are new to selling to governments and the government procurement process, the bureaucracy of public procurement may be intimidating, Pearl says. He tells GPN that cooperative purchasing mechanisms can streamline and simplify engaging through coops, and makes things much more efficient for them.
“I can imagine as the cooperative purchasing movement picks up, we may see more vendors enter the government market,” Pearl says. Some of these vendors, Pearl adds, may focus just on completing sales through cooperative purchasing processes. The reason: cooperative purchasing is similar to a catalog or an e-commerce-type transaction, versus having to go through a lengthy competitive bid process.
Michael Keating is Senior Editor at Government Product News, an American City & County sister brand.