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Replacing cumbersome purchasing processes with digital tools can aid in rating and evaluating cooperative contracts

Replacing cumbersome purchasing processes with digital tools can aid in rating and evaluating cooperative contracts

  • Written by Michael Keating
  • 5th April 2022

Cooperative purchasing continues to demonstrate its value to public procurement departments. Indeed, procurement teams are relying more on cooperative agreements. In fact, cooperative purchasing buys will continue to expand at a faster rate than the overall state and local marketplace, predicts Paul Irby, principal research analyst, GovWin IQ for state, local and education (SLED). GovWin IQ from Deltek is a market intelligence platform that can help vendors win contracts with U.S. federal, state, local and Canadian governments.

“We estimated on a historical basis the sales from 13 national co-op organizations have grown at three times the rate of the broader market. We expect them to grow from $44.6 billion combined in 2019 before the pandemic to $61 billion by 2025,” Irby tells Co-op Solutions. He notes that businesses generally saw cutbacks in 2020 with the downturn and brief recession. “However, our information was showing co-ops continued to post slight growth due to increased use of short-term and emergency buying and cutbacks in custom, long-term projects.”

Irby notes that most local governments already use co-ops to some degree. “Nonetheless, there is still a lot more room to grow in the intensity of usage and based on more items and leading solutions being added to the lists of available products and services.” He believes that as cooperative buying becomes even more mainstream, and the pressures for efficiency in government purchasing do not subside, cooperative purchasing usage should continue to rise faster than the size of the total government market over the next five years.

State and local procurement teams continue to upgrade their technology. Irby notes that some state governments often have enormous legacy enterprise IT systems and may just try to re-program and re-configure one IT component. Local governments, on the other hand, have a range of needs and are in different stages in their lifecycle of technology systems, platforms and databases. Those local jurisdictions, believes Irby, will be more flexible and are more likely to implement a “one solution fits all” package or a robust “off the shelf” system that does multiple tasks.

Irby says a steady stream of governments continue to automate and improve their formerly manual, paper-based processes to achieve better efficiency and promote transparency and fairness in purchasing. He adds that these paper-based processes can often be cumbersome, and that adopting automated processes is not taking place across all government entities at the same time.

Irby predicts local governments will continue to buy eProcurement software and solutions, either as part of a larger comprehensive enterprise resource planning (ERP) system with many functions or as a narrow and dedicated tool, such as to help with automating parts of the solicitation and bidding process.

GovWin tracks these eProcurement software and solutions using its Smart Tags, which automatically classify bids, RFPs, planned future projects and contract awards into one of about 4,000 different industry niche slots, such as “procurement software” and “enterprise resource planning software.”

Irby offers this example of the scale of demand for these kinds of procurement tools: “In the last three full calendar years of 2019-21, there were over 500 advertised bid or RFP notices for either procurement software or ERP systems, with over 300 being issued by a local (not state or college/university) government.” He adds that GovWin analysts noticed that among the various procurement tools being bought recently, two major types stand out:

  • Tactical tools and solutions that seek to replace manual, cumbersome purchasing processes with digital ones (i.e., e-Bidding or “electronic bid management,” automated RFP creation and solicitation, managing lists of vendors, or managing awarded contracts specifically, etc.)
  • Strategic-level solutions that aim to add value by allowing deeper analysis, performance metrics and top-down management of the procurement process (i.e., “procurement management systems,” “contract lifecycle management solutions,” and the “Procure-to-Pay” (P2P) concept of having a fully integrated end-to-end system from the beginning of requisitioning to the end of accounts payable).

Irby says the future is clear regarding at least one aspect of cooperative contract usage: “We can expect that state and local governments will do everything they can to automate and simplify the process of rating and evaluating co-op contracts over the next five years. At first, this will likely be done on a more manual basis among procurement sourcing specialists at each public entity, using a variety of available procurement tools, spreadsheets and basic information-sharing among staff.”

Irby adds that the automated systems that governments adopt in the future will record co-op purchase data. This information, however, won’t necessarily have everything linked together or searchable across co-op and regular purchase types. What’s more, there won’t be a dedicated window or tool just for the purpose of “rating co-op deals” to help make a purchase decision. He offers this conclusion: “Over time, governments should begin to develop best practices and typically accepted metrics or methods of evaluating the suitability and relative scoring of these co-op “deals.” This can lead to the use of new custom apps or new features added to “off the shelf” standard platforms and solutions.”

Readers: don’t forget to fill out the American City & County Local Government Procurement Trends 2022 Survey. The survey may be sitting in your email in-box. If not, click here!

 

Michael Keating is senior editor for American City & County. Contact him at [email protected].

 

Tags: homepage-featured-1 homepage-featured-3 homepage-featured-4 Administration Cooperative Purchasing Procurement Co-op Solutions Administration Co-op Solutions Procurement Article

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