Using cooperative procurement contracts can be a time-saver
Rhonda Ulmer, Procurement Manager in Casselberry, Fla. (population 28,395) has worked in government procurement over the past three decades. During that time she says the cooperative landscape has evolved and is still undergoing changes.
For example, associations have transformed into cooperative purchasing organizations with third parties managing the requirements, solicitation and contract marketing. She notes that the transaction fees associated with cooperative contracts are typically paid by the supplier to cover administrative costs and are reflected in the price of the service or goods bought off of the contract.
Ulmer also says cooperative purchasing now involves agreements across different governmental agencies. She says this evolution became popular as a result of budget reductions and procurement departments being required to do more with less resources. “The agencies pooled their requirements for goods and services together to gain the best price for their local region based upon those estimated quantities. The lead agency would do the heavy lifting. This method is still alive and working well today,” she adds.
Another change Ulmer sees is procurement professionals using cooperative purchasing contracts to save time and resources. “They have become a necessity for smaller agencies that do not have the staff or resources to solicit every need.”
Ulmer says Casselberry uses cooperatives that are competitively bid and awarded by another governmental agency or lead agency. “The contracts, when utilized, help reduce the sourcing time and staff resources.”
Procurement professionals face a few challenges, when they consider using cooperative contracts, Ulmer says. Conflicts can include difficulties in locating or obtaining essential contract documents and resolving conflicting contract terms. She adds that there is an apparent disconnect related to pricing models in some cooperative pacts. These challenges often require the procurement professional to take additional steps so they can confirm that they have achieved the overall best contract and value for their agency.
Time-delays are possible, too, Ulmer says. It may take a few days to a few weeks for the procurement staff to obtain copies of the awarded contract and related solicitation documents for auditing purposes from the coop’s third party regional representative. In addition, the resulting contract terms and conditions may conflict with the agency’s standard terms. She says many procurement departments have developed a special piggyback contract which incorporates the agency’s terms and conditions to address this potential delay.
Large procurement cooperatives require providing coverage of goods/services coast-to-coast or on a multi-regional basis, Ulmer says. She notes that some local and small businesses may be incapable of servicing national agreements and are thus eliminated from these kinds of bids. Ulmer says that procurement professionals that act as the lead agency for cooperative contracts have the knowledge and tools required so they can enable small and disadvantaged businesses to participate in the contract.
Procurement pros also face the lack of cooperative contracts with pricing structures. “The agency is required to call the awarded contractor(s) to request a price proposal. Without a price benchmark, the buyer must then determine if the proposal is a fair and reasonable offer. The time required by the buyer to perform the research to confirm that the pricing is fair and reasonable varies and depends on internal procedures.”
In those instances, Ulmer says the buyer may explore other cooperative contracts to obtain like-for-like proposals. “The buyer can negotiate the discount and prices offered, or he/she can simply trust that the contractor is providing the best value.”
Ulmer notes that “If a pricing option, discount or other pricing structure was a condition of the solicitation, the ability of the buyer to expedite a procurement is greatly enhanced.” Ulmer urges cooperative procurement contract administrators to build a cooperative program with the procurement professional in mind. She suggests, “Build a cooperative procurement program in which the resulting contracts are relevant, easily accessible and inclusive of all appropriate price or fee structures.” Ulmer adds: “There is a need for cooperative procurement organizations to view the procurement process from a new perspective to help reduce existing obstacles.”
Ulmer says public procurement teams take the following steps to cope with increased workloads: Document and justify the need for additional staff; raise the solicitation threshold level, which enables the procurement professional to concentrate on larger procurements; delegate small dollar purchases to the buying departments; and, use local cooperatives and state and national contracts as authorized by their governing entity’s rules and regulations.
Michael Keating is senior editor for American City & County and the GPN web site. Contact: firstname.lastname@example.org