How cooperative contracts can overcome procurement challenges
Meeting the procurement needs in Kirkland, Wash., a city of almost 88,000 on the eastern shores of Lake Washington, is a major task with increasing demands, says its purchasing agent, Greg Piland. The city has a $715 million biennial budget with two procurement professionals. Staffers at six city locations also make purchases that are assisted by Piland’s group. In Kirkland, the Purchasing Services office is within the city’s Finance and Administration department.
Kirkland is on a growth spurt. Its population and property tax base is flourishing, Piland (photo below on right) says. He outlined his views in a recent U.S. Communities webinar. “Lots of population expansion, growth and redevelopment will mean increased purchasing needs within all city departments, and growing city purchases.”
New construction is also a factor, Piland says. “We are seeing rapid growth in the city center. We expect 4,000 new residential units to be built over the next few years.”
Accelerated growth drives buying urgency, Piland explains. “Sometimes, individual city departments lack the patience to follow buying procedures and practices — to get three competitive quotes, doing an invitation for bids — they want to buy it now.”
Kirkland is leveraging technology so administrators and the procurement team can do a better job, Piland says. The city is replacing the enterprise resource planning (ERP) software package that it has used since 1999. New efficiencies are part of the package, Piland says. “It will affect human resources, finance and purchasing operations. It will change purchase order processing and contract management, but it will also offer a lot of room to help improve purchasing processes.”
To help his department be more efficient and effective, Piland and his team rely on cooperative contracts for some city purchases. State-enabling legislation has been key, Piland explains. “One of the great things we have in the state of Washington is RCW 39.34.030 which allows us to do a cooperative contract or a cooperative purchase. So for us, if there’s a purchase that goes above our $7,500 threshold, one of the first things we look for are cooperative contracts, to see if there’s a possibility of us buying the goods through a cooperative vehicle.”
Governments choose a variety of vehicles to produce competition, Piland says. “Whether it’s through invitations for bids, requests for proposals, requests for qualifications — whatever your organization needs to do when it goes out for competitive bids — you know just how long that process takes. It’s an incredibly lengthy process.”
Agencies that use cooperative contracts may be able to achieve efficiencies, Piland says. “If procurement professionals can take advantage of cooperative contracts that help limit the amount of time needed on the competitive bid process, they can save money against the goods and services the agency is purchasing.” Piland says his team still does its own research to make sure the agency is getting the best deal via the cooperative contract route.
Constant communication about cooperative agreements is important, Piland says. “I meet quarterly with all our departments and I let the directors know about new companies and products that might be added to cooperative contracts. I let them know how having a little bit more control from the purchasing side of things is really going to be beneficial to their people. Because, at the end of the day, they [the directors] can push that message back to their department staff, and their staff is going to listen to their department directors much more than they will listen to what I say. So making the department directors, or whoever’s in charge, your ally is a huge piece of advice that I would give to everybody.”
Piland estimates that using a cooperative contract easily cuts the acquisition time in half. He explains that a small portion of the cost of goods in an acquisition is employee time. “The cost savings really depends on the commodity purchased. Our division has begun tracking cost savings when soliciting competition, through cooperative contracts and from individual solicitation of companies. Since July 2017, our division has saved over $93,000 on acquisitions.”
What does the future hold for Piland and his procurement team? “I do think we will continue to rely heavily on cooperative contracts in 2018,” Piland says. “With two individuals in purchasing, going out for bids often is not something we always have time for. Many cooperative contracts also provide rebates that we can take advantage of as well.”
Michael Keating is senior editor for American City & County and the GPN web site. Contact: [email protected]