WHAT IS COOPERATIVE PURCHASING?
Cooperative purchasing, also referred to as cooperative procurement or co-op contracts, allow two or more government entities to combine their purchasing power and buy through competitively solicited contracts. Co-op contracts can be used to purchase goods and services. Participation in cooperative purchasing contracts is not limited to federal agencies: state, cities, counties, school districts, higher education institutions, non-profits (and more) can all take advantage of the greater buying power.
Benefits of cooperative purchasing
Leveraging the benefits of more than one partner in government contracting certainly has its advantages. Cooperative purchasing agreements:
- Lower prices by aggregating purchasing power [buying in higher volume = price savings]
- Lower administrative time and expenses because it reduces the time spent preparing and soliciting a bid [increase operating efficiencies]
- Generally they are free to join and free to use
- Free up resources for “mission critical” processes by driving down total costs
- Obtain more advantageous terms and conditions
Challenges of cooperative purchasing
Cooperative purchasing agreements have different processes, methods and structures than a more traditional government contracts which may create unique or additional challenges associated with creating or participating in one. Different localities, states or regions may restrict the use of cooperative contracts under certain situations. Indeed, there are not many market research studies conducted on the widespread use and/or effectiveness of cooperative contracts, raising the following questions for contractors:
- Legal compliance - changing the scope of requirements of established cooperative contracts might be trickier with more entities in the mix. What are the legal implications of amending a cooperative contract? Are there less flexible contract requirements when using a co-op contract?
- Open competition - does cooperative purchasing disadvantage local, small or disadvantaged suppliers? Or does it level the playing field?
- Effective efficient use of time and resources -it can be more difficult to accurately predict order quantity and timing (may result in an indefinite date indefinite quantity (IDIQ) contract). Are government agencies able to predict or commit to specific requirements and delivery schedules or agree on common contract requirements?
“Piggybacking” is a type of cooperative contract. It allows a government entity that was awarded a contract to extend the same pricing and terms to another public agency. So, an individual, lead government agency can allow other agencies to “piggyback” on their contract’s conditions. It works well for agencies that are in need of the same products or services to purchase under an existing contract and might be strained on resources. The difference between traditional cooperative contracts is that generally, access to a piggybacking contract is made available to other entities after the contract has been competitively bid and awarded, whereas other types of co-op contracts require entities to collaborate prior to approaching the market.
Cooperative purchasing agreements offer government agencies and other public and private entities a chance to spread their time and resources further, thereby maximizing efficiencies. Co-op contracts are an established contracting approach that could prove beneficial for a meeting a variety of business needs, and could are opportunities for vendors to enter the government contracting market.