Operations

Cooperative Procurement: Group Buying Power Saves Time & Money

Cooperative procurement allows government agencies to purchase equipment and vehicles under another government entity’s contract.

March 2010, Government Fleet - Feature

by Shelley Mika - Also by this author

At some point, government agencies must replace key equipment, such as fleet vehicles and maintenance equipment. These items take a hefty toll on an agency's budget, as do the staff hours related to procuring them. However, cooperative procurement offers a better way to approach purchasing fleet units and maintenance equipment, saving both time and ensuring a better price for these items.

Cooperative procurement allows government agencies to purchase equipment under another government entity's contract. A single lead agency establishes a contract for a product, an award is made, and other agencies can use this same contract to make purchases. Government-to-government cooperatives pool resources, offering multiple contracts with various lead agencies for a variety of equipment and vendors, and guaranteeing the lowest price.

Unfortunately for government agencies that establish their own contracts, the process of purchasing new equipment isn't Step 1, shop; Step 2, purchase. Instead, they must conduct research, develop specifications, conduct pre- and post-bid conferences, evaluate bid responses, and issue vendor contracts. This process literally can take months, consuming time, money, and manpower.

Skip the Bid Process & Secure Best Pricing

As co-op members, government agencies skip the bid process, letting the lead agency do the work, saving time and staff hours, and providing the best value to taxpayers. Further, because purchasing co-ops yield group buying power, they can secure the lowest guaranteed prices for equipment.

Steve Perlstein, government sales manager for Mohawk Lifts, a co-op vendor and contract holder for garage lifts, says by far, the biggest benefit of cooperative procurement is receiving the best price for equipment agencies need to purchase. As evidence, he cited one Illinois fleet that just built a multimillion-dollar garage and had to purchase lifts for this facility.

"Instead of taking the roundabout and time-consuming method, the city decided to join the Houston-Galveston Area Council (H-GAC) cooperative," Perlstein said. "They used that co-op as the basis of award for placing an order and saved upwards of $30,000 compared to what was quoted - and that was just the vehicle lifts in the building."  

Perhaps equally economical, government agencies don't have to spend money to save money. Participation in a co-op is free. Government agencies simply complete a form to join, determine the right products for their needs, and place the purchase order.

"If you think of the time savings involved, it's a ton of time," Perlstein said. "And in government, time is money."

Further, city agencies can use their states' contracts and don't have to take the (albeit simple) step of joining. Conversely, cities can also join a co-op on their own; any local government office or jurisdiction can become a member - not only state agencies.

Purchasing Co-ops Increase Bid Responses

Perlstein said joining a purchasing co-op can help government entities solve issues beyond problems associated with some bid responses. Occasionally, agencies issue a bid request that garners a weak response. With too few responses to a specific bid request, agencies must repeat the bid process again, wasting additional time and resources.

On behalf of co-op members, however, the agency in charge of a contract makes sure enough responses and vendors are secured for the product purchased.

Some states use U.S. General Services Administration (GSA) as a basis of award for a state contract. However, there are true co-ops such as HGACBuy (through the H-GAC cooperative), Western States Contracting Alliance (WSCA), Mid-America Regional Council (MARC), and Baltimore Regional Co-op Purchasing Committee (BRCPC).

While GSA serves the federal government, other contracts serve city, county, and school districts across the U.S.

According to Perlstein, finding the right co-op depends on the product an agency needs. However, agencies can belong to more than one co-op, and with no associated costs and non-expiring memberships, joining more than one is a smart choice. 

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