Implementing new projects can be difficult without the proper assets or resources to move forward. It can be stressful to make improvements with limited resources, budget and staff. As park and recreation agencies look ahead and develop strategies for the year, it is beneficial to consider the use of cooperative purchasing, an effective tool to help save time and money. In an economic climate where parks are pushed to do more with less, cooperatives can easily assist with purchasing needs.
What Is Cooperative Purchasing?
Cooperative purchasing combines the collective buying power of multiple agencies in order to provide a contract that can be utilized by other public agencies. A cooperative contract can improve the overall effectiveness of the purchasing process by providing volume discounts, administrative savings and other benefits. Some cooperatives operate nationally and some locally, so it is important to research each contract individually.
Benefits of Cooperative Purchasing
The use of a cooperative ultimately reduces the total acquisition cost through economies of scale. For example, if you go to a car dealership to buy one car, the salesman will bend over backwards to make you feel like you got a great deal — but the numbers may reveal that the markdown won’t save you as much as you originally thought. Now, return to the car dealership to buy a hundred cars, and the price for each vehicle will go way down. You are almost guaranteed a good deal simply because you have purchasing power. The concept of cooperative purchasing aims to place this power in the hands of public agencies, nonprofits, school districts and more — especially smaller agencies — to give them a greater advantage.
Cooperative purchasing can also increase an agency’s administrative efficiencies by eliminating the need to go through a bid or RFP process. It’s no secret that the public sector continues to deal with budget and staffing issues — park and recreation agencies, especially, can find themselves dealing with funding concerns. A cooperative contract is designed to help these agencies receive competitively solicited pricing for goods and services as well as save staff time and resources. It is an impactful, user-friendly way to achieve savings.
Cooperative Best Practice — Lead Public Agency Model
Many different types of cooperatives exist, so it is important that an agency perform due diligence on each contract to ensure it meets your state laws regarding intergovernmental purchasing. Some utilize a lead public agency model (LPA) in which a government entity handles some part of the solicitation process. Cooperatives, such as U.S. Communities, that use a LPA for the entire solicitation process are the model for cooperative best practices. The LPA issues the RFP or ITB, advertises it nationally and regionally, and makes use of a national evaluation team (made up of public procurement officials from two to five public agencies across the country) to give the award. The LPA then manages various aspects of the contract, such as extensions and amendments, and stays available for questions about the solicitation from users. Although each agency may have different purchasing procedures to follow, applying the competitive bid requirements of an LPA usually satisfies these requirements for most state and local government agencies. While users ultimately make the final call in which contracts to use, lead agencies have years of purchasing expertise that brings credibility and confidence to the process.
What to Consider When Choosing a Cooperative Contract
Cooperative purchasing can and will be an effective addition to your toolbox of cost-saving measures. A few additional questions to consider include the following: Is the procurement process offered substantially similar to the process your park and recreation agency is required to use? Does the cooperative organization have independent and broad oversight of the program and its operations? Does the supplier have multiple cooperative contracts, and if so, which is best? Does the cooperative provide third-party oversight, or audits, to ensure contract compliance? Park and recreation agencies can make good use of their time and money in 2016, and beyond. Be sure to consider taking advantage from this centennial to the next!
Jennifer Sulentic is a Program Manager at U.S. Communities.
When Should an Agency Use a Cooperative Contract?
James Foley, deputy chief procurement officer in Maricopa County, Arizona, recently addressed this question. His agency’s goal is to maximize the county’s buying power, and he explains that even though Maricopa is the fourth largest county in the United States, “We can’t get a better deal, say on office supplies, than some of these larger coop organizations. Sometimes it works for us to make purchases through cooperative buys.”
Foley said speed is the primary reason to use coops. “The coops are already out there, and they are ready to go as opposed to us trying to develop our own solicita-tion process on specific products.” In cooperation with the Arizona Capitol Chapter of NIGP (AZNIGP), Foley’s agency has developed a cooperative purchasing checklist. A few of the questions include:
- Will volume-pricing advantages be applied to purchases?
- Are there any fees associated with use of the contract? Are they reasonable and justified?
- Did the cooperative or lead agency have the expertise of quality contracting for the good or service being procured?
“We go through the checklist each time we want to use a coop,” he says. “Before you do the RFP or transaction, you need to do your due-diligence. There are many coops out there — which one meets your needs?”
Source: Government Product News, December 7, 2015.