Cooperative procurement makes better use of an organizations’ time and resources by reducing the number of administrative processes and sharing the procurement and contract management process workload. Efficiencies may be derived from conducting one procurement process and maintaining one contract in lieu of many.
With cooperative procurement, participants are usually also able to leverage better prices and services arrangements when they consolidate their procurement needs.
Cooperative procurement is used most often by governmental entities, since they are required to follow laws mandating competitive bidding for purchases above certain thresholds.
Once called “piggybacking,” cooperative procurement has progressed over the past few years to the point of that virtually every state, county, city or transit shop uses it. Basically, cooperative procurement enables the use of a procurement contract by more than one government agency. This allows local government entities to secure a greater return for the expenditure of public funds by securing the price advantage of larger volume purchasing.
Cooperative procurement can be achieved through either a joint approach to the market and/or where an agency or agencies establish a contract or standing offer arrangement that allows other agencies access.
For those agencies that use a request for proposal (RFP), request for quotation (RFQ) or a bid process to acquire products and services, a best practice is to think about the total cost of procurement (TCP). TCP includes not only the purchase price but the time and costs from dealing with many vendors, tracking orders, reconciling invoices, monitoring costs by department, fixing mistakes, etc.
The TCP can be lowered by taking advantage of procurement contracts that have already been established by other government agencies or organizations.
Going out to bid can end up costing more than was planned. A particular transit agency, instead of using its state contract, chose to go to out for a public bid. The reasoning was that the agency always saves money over the prices available on the state contract.
In this case, the transit agency spent $35,000 for a vehicle lift that was available under the state contract at a price of more than $10,000 less. Think what a shop could buy with an extra $10,000?
There are a number of options and opportunities available to participate in government-to-government procurement cooperatives. They can be found at www.govlifts.com.
Choosing the appropriate cooperative to use will save purchasing time and budget dollars, plus allow equipment purchasers to focus more on the job of running their operation rather than writing bid specifications for the equipment their shop needs.
With some products, such as vehicles, there is often a state contract in place because school buses, trucks and police vehicles have a set life cycle, and these fleets commonly turn over a certain percentage of their vehicles annually.
Take a state contract for police cars, for instance. Typically, the state police would be the agency that initiates a contract for police cars. Cumulatively, however, the county sheriff’s departments and local townships buy more police cars on a state’s contract than does the state police.
There are also government cooperatives for a less frequently, non-cyclically purchased items, such as a truck lift or a tire changer. Check to see if there is a state contract for such equipment.
State contracts are competitively bid, with specific terms and conditions, such as lowest government pricing, prepaid freight and a vendor-managed website that provides technicians, fleet managers and buyers with complete information and details.
If there is no state contract, every state has procurement laws and codes that allow an agency (state, county, special districts or transit garages) to avail itself of another state’s contract.
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