Cooperative Procurement’s Evolution
Seeking greater value for each taxpayer dollar is always a goal for public procurement teams. However, the old days of “low bid” are slowly fading. While price will always be a driving consideration, it’s not the only one to be evaluated. Other factors might include viability of the chosen supplier, responsiveness and customer service, standardization across the agency, attaining social goals, or unique customer expectations for client departments, like public safety, IT or fleets.
The type of due diligence required in a public procurement process – with its requirements of transparency and competition – takes considerable time and resources. Saving staff time and obtaining products and services quickly are gaining higher importance in the procurement process. This perspective was echoed in a recent survey of state, local and education agency buyers conducted by the SLED Market Analysis team at Deltek reported that “nearly 40 percent of agency buyers and procurement staff are overworked and their number one top specific challenge was pre-bid research and planning, followed by lack of staff and resources.”
Meeting these daunting challenges has resulted in exponential growth in the use and choices of cooperative procurement. The idea is simple. A public agency establishes a contract through a competitive procurement process for other agencies to “piggyback” on or adopt as their own contract. The saving advantages include: 1) price savings due to the increased leverage of combined spend from multiple agencies and 2) the savings in time and resources realized by the piggybacking agency in having the contract already solicited and awarded.
Departmental customers enjoy the benefits of getting the products and services that they want, when they need them, in less time. Piggybacking also allows agencies greater flexibility to select from the very newest technologies – which may not be available if they were limited to a single vendor on a long-term contract. Procurement teams, recognizing these benefits, have been a key driver in growth and utilization of cooperative purchasing.
With limited resources, quickly changing technologies, and higher customer expectations, public procurement’s role within their organizations is evolving and becoming more strategic in nature. Thus, the next evolution of cooperative procurement is approaching, with government teams leveraging this tool in new ways.
Concentrating Contracts Into One Comprehensive Option
Denver International Airport, the fifth-busiest airport in the United States — with more than 53 million passengers each year —needed to streamline their internal processes and reduce the number of contracts it manages. Each contract requires its own solicitation process, management, insurance renewals and monitoring. These administrative tasks, including managing individual vendor relationships, can become extremely resource intensive over multiple contracts.
The airport recognized their need for a more streamlined purchasing strategy and began researching other options. They decided to consolidate their data communications contracts into one contract – a WESCO Distribution cooperative contract. The result saved countless personnel hours issuing their own solicitation and executing the contract management processes. In addition, to leverage greater pricing, Denver International participated and combined spend with 65 surrounding city and county entities. By moving from a line-item contract with limited products to expanded product lines with more robust options available through the cooperative contract, each procurement department can meet their needs for electrical, lighting, voice and data communication, and maintenance, repair and operating supplies.
Having one contract that is used by multiple agencies is also helpful from the supplier side. “Our ability to support the broad array of products we distribute through one contract with a lead public agency creates a great offer that has been competitively bid. Making this available to all eligible agencies looking to streamline their vendor base creates leverage for both sides in the supply chain,” says Rob Bezjak, WESCO director and general manager for the commercial, institutional and government market.
Combining Commodities with Supporting Service
Uniforms are required for most government organizations – police, fire, utility and government personnel to clearly identify their roles to the public. And in some cases, labor union agreements require regular replacements and laundry options. One way to meet this need is the bundling of services with goods. Long Beach, Calif.’s uniform needs are extensive. With an annual budget of $446,000 uniforms are needed for departments across the entire organization, including airport, fleet services, gas and oil, harbor, library, police, parks and recreation, public works and water department, with service components such as rental, laundry; delivery and pick up. With a complex number of service requirements, it would be extremely difficult for the city to go out to bid to address every expectation, as well as cover all possible unknowns.
In this case, the city chose a cooperative solution with Prudential Overall Supply through a rental program covering uniforms for 900 employees, roughly accounting for 19,800 garments. Karla Lopez, buyer for the city’s procurement services division, says, “There are benefits of time savings in having the solicitation already done, and that helps us take a strategic look at what may be needed for the future. An additional benefit is that the contract is already in place and being used and vetted by other agencies nationwide. Knowing that it is a proven contract, with the ability to conduct reference checks, provides additional comfort in the ability of the awarded firm to handle our needs.”
Using Cooperatives for Construction
Construction is a major category of spend for most governments and it is often a lengthy contracting process. Lubbock, Texas, is comprised of a population of more than 252,500 people, three universities and 380 facilities. Dallas, the largest nearby city is a five-hour drive and most surrounding communities reside within a three-hour vicinity. Because of this relative isolation, Lubbock suffers from limited competition amongst its construction contractors. This is problematic since many of the structures around the city were built nearly half a decade ago. Lubbock began seeking out new alternatives to get its construction projects completed.
The city looked to cooperative procurement options for a possible solution and discovered job order contracting to expedite repairs and renovations of its facilities and infrastructure. Specifically, Lubbock has benefited from Gordian’s ezIQC solution – an alternative construction procurement method available through various national and regional cooperative purchasing networks. Since its introduction over a decade ago, project timelines have been reduced significantly and the number and use of local contractors has increased.
Wes Everett, director of facilities for Lubbock, states “It’s tough if you only have one bidder, and then after award, things go bad. Having multiple contractors participate raises the quality of the responses, and competition helps maintain higher standards. We expect the highest value for the taxpayer dollar.” The auditability of the process has been crucial in ensuring taxpayer dollars are going to best use. To date, Lubbock has spent $14 million on 725 ezIQC projects.
Changes on the Horizon for the Cooperative Industry
With the recognition of cooperative procurement as a best practice, coupled with the increase of cooperative choices, there has been evolution within the cooperative industry itself. On June 6, 2018, the National Joint Powers Alliance (NJPA), based in Staples, Minn., officially launched a re-branding effort. According to Executive Director and CEO, Chad Coauette, “We’ve been working to reshape our brand, as we recognize that much can happen in the life of an organization over the course of 40 years. The change of our name (NJPA) to Sourcewell is part of a complete branding evolution that demonstrates how we are purpose driven, attentive, and relationship oriented with our members. We are rallying around these concepts and several other organizational projects focused on providing an exceptional experience for members.” With this re-branding effort, Coauette says, “We have started a new chapter in our history that will renew and refresh our journey and commitment to service. Our new name and logo help us better communicate what we hope to be for our members.”
Acquisitions and merging talents and companies is another change on the horizon. In May 2018, OMNIA Partners finalized the purchase of Communities Program Management, (CPM), the organization that staffs and manages the operations of the U.S. Communities Government Purchasing Alliance (U.S. Communities). OMNIA Partners is a national group purchasing organization composed of four subsidiaries: National IPA, Prime Advantage, Corporate United and now, U.S. Communities. “As the procurement industry evolves, it is important to provide incremental value to all stakeholders,” says M. Todd Abner, President & CEO of OMNIA Partners. “In the public procurement sector, we have found these two companies to be highly complementary, which will become even more clear as we take a methodical approach to operate the organizations.”
While some cooperatives strive to provide contracts across all sectors, some have chosen a different route. Focusing primarily on one sector – education – is the central theme for E&I Cooperative Services, based in Jericho, N.Y. E&I believes that concentrating on one sector ensures the contracts offered to higher education and K-12 institutions meet their unique needs, both in terms of products and services, as well as contract terms and conditions. Taking that focus one step further, E&I’s approach is to select a category such as sciences and develop a full suite of contracts to meet its members’ needs across that entire category. For example, a university research and development lab may cover all their laboratory and scientific equipment purchases within a focused set of contracts. According to Sabra Schell, E&I’s executive director of marketing, “In this way, end user departments can leverage E&I contracts across the entire spectrum of their procurement needs, creating efficiencies and making contract consolidation easier.”
The cooperative industry has also formed a new Association – the National Cooperative Procurement Partners (NCPP) – to serve as the educational arm and legislative advocate for cooperative procurement. Formed just two years ago, its growing membership established a mission to “support all stakeholders in leveraging and utilizing a cooperative procurement strategy to best serve the public good.”
With educational materials such as the “Road Map to a Cooperative Procurement Strategy” and an active speaker’s bureau, NCPP strives to keep abreast of all activities related to cooperative procurement and to serve as a free resource in this ever-developing marketplace. Crosby Grindle, NPPGov president and NCPP board member states “no longer is the idea of cooperative procurement a “fringe” idea for government. It is now regularly exercised as a mainstream procurement option and will continue to evolve as a time and money saving tool essential for government procurement teams to meet their increasingly complex demands.”
Tammy Rimes is executive director of the National Cooperative Procurement Partners.