The Power of Collaboration: Exploring Cooperative Purchasing in Public Procurement

In the world of public procurement, government entities face a myriad of challenges. As the safe keepers of the public trust, they must balance the need for fairness and obtaining the best value while also delivering goods and services to their constituents efficiently. In addition, many government entities also use their procurement process to further their policy goals such as the development of the local economy. It is a complex balancing act, and one potential tool to pursuit some of these goals is cooperative purchasing.

Cooperative purchasing is a strategy that allows multiple government entities to join forces, pooling their resources to procure goods and services. This approach can streamline the procurement process, offering a potential solution to some of the challenges faced by public entities. However, it is not a one-size-fits-all remedy. The benefits derived from cooperative purchasing depend on factors such as the size, resources and primary goals of the participating entities.

Different Approaches to Cooperative Purchasing
There are several ways to engage in cooperative purchasing. One method involves cooperative arrangements between two or more government entities. Under this approach, several entities combine their resources to solicit the goods or services that they need. The arrangement can include anything from coordinating to develop the specifications of the procurement and conducting the selections process to sharing warehousing facilities or capital equipment.

Another approach is the “piggyback” option, where a government entity includes a provision in a contract that allows other entities to use the contract. In Florida, government entities must ensure that the contracts they piggyback on are procured following the user entity’s procurement code and that the terms, particularly price and scope, remain substantially the same.

Third-party cooperative purchasing programs are also available. These programs are developed by organizations dedicated to developing solicitations and conducting procurement processes on behalf of member organizations. These third party providers work to ensure that the procurements they conduct follow the rules of their member organizations so that the members can use the contracts made available by the program. There are different kinds of programs targeting different kinds of organizations. For example, some programs cater to specific types of public entities, such as higher education, while others are based on location.

Finally, the U.S. General Services Administration (GSA) offers programs that enable states and local governments to purchase commercial products and services through the GSA’s multiple award schedule contracts. These programs are particularly beneficial for disaster and health emergency-related purchases.

The Benefits of Cooperative Purchasing
Cooperative purchasing can offer significant advantages. It saves time and administrative resources, especially for smaller governmental units that may lack the capital and human resources they need to conduct the procurement process independently. By sharing resources or tapping into the resources of larger entities, these units can obtain goods or services more quickly. Moreover, for highly technical procurements smaller entities or entities who are pursuing the procurement for the first time can benefit from using the expertise of the larger or more experienced entity.

Additionally, cooperative purchasing allows for the development of regional approaches to regional issues in states where procurement is decentralized.  Larger governmental units with adequate resources such as the State or large Counties can procure contracts and make them available to smaller government units to encourage these smaller governmental units to pursuit uniform solutions that aim to address a regional goal. These arrangements also permit governments to test a particular solution before investing significant time and resources into developing a full-scale program. 

Miami-Dade County’s use of a state contract to launch a solar panel installation program on county-owned buildings is an example of using cooperative purchasing to develop a regional approach to climate change and test the program before full-scale implementation.  Because of the program, the County has installed two of three planned large-scale solar power systems at County facilities and has announced issuing an RFP for solar power at other County facilities.  

Challenges and Considerations
Despite its advantages, cooperative purchasing does not always guarantee the lowest prices. Vendors are typically able to offer their most competitive pricing when they know the quantity and delivery schedule of the goods or services that are being procured. However, cooperative contracts often involve open-ended solicitations, which prevent vendors from offering their most competitive prices due to the uncertainty of volume and delivery locations. Therefore, participants in a cooperative purchases looking to obtain the lowest prices should aim to provide definite quantities and deliveries. However, this level of detail requires additional coordination and may prove difficult. 

Another challenge to cooperative purchasing is that the solicitations may not focus on the jurisdiction of the user entities, potentially excluding local businesses from the procurement opportunities. Many local and state governments use procurement as a tool for economic development, providing preferences and incentives for local businesses. Therefore, the extensive use of cooperative purchases may curtail these efforts. 

Conclusion
Cooperative purchasing arrangements offer a unique opportunity for government entities to save resources, benefit from the success of similar entities, and deliver services more efficiently. While they may not always result in the lowest price, they can help governments meet other priorities, such as efficiency in delivery, saving resources, using the expertise of other entities, or testing a solution before investing significant resources on it. Ultimately, the decision to engage in cooperative purchasing should be guided by a clear understanding of the entity’s goals and whether the arrangement aligns with those objectives.