Photo by Dean hochman is licensed under CC BY 2.0
Cooperative purchasing programs are big in the United States. So big, in fact, that there are more than 11,000 of them and they serve more than 1 million members. However, the number of cooperative purchasing programs serving public officials is much smaller – about 20 credible ones in all – but, these organizations handle billions in transactions.
The programs save time, money and effort because goods and services have already been vetted. That’s the reason public officials love them. They can make purchases quickly and without the hassle of launching a formal solicitation process.
Recently, the SPI Research Team conducted a project to determine what purchasing programs were most popular in each state. Interestingly enough, there were no superstar programs that transcended all jurisdictions in any state. In fact, the commonality was that in almost every state, preferred programs fell into jurisdictional categories. For instance, educators preferred programs administered by professional educators. State officials made purchases from state-run cooperative programs. Municipal officials rarely preferred programs that are most popular with the higher education community. But, overall, public officials really appreciate the ease of making purchases when products and services have already been vetted. And, since most purchasing programs are Internet-based, the Web sites allow government officials to quickly compare various options.
Public cooperative purchasing programs allow discounted prices in exchange for large volume purchases. Vendors must provide both warranties and strong pricing discounts. Many programs also have a rule that if products or services are ever sold for less than is quoted through the program, vendors may lose their eligibility or be asked to offer the lower price to all buyers. Some government contractors participate in more than a dozen purchasing programs because they sell to buyers in all jurisdictional levels of government.
In 2014, the city of Little Rock saved more than $260,000 when purchasing tires through the Arkansas State Procurement Contract. But, the vendor was happy to provide a discounted rate because the department spent $576,706.31 and the vendor was not required to produce a well-scripted proposal or wait for months on a decision. The city of Little Rock currently uses three different cooperative purchasing programs: the Arkansas State Procurement Contract, the Houston Galveston Area Council (HGAC) and the National Joint Powers Alliance (NJPA).
Also in 2014, the government fleet division in Moline, Illinois, which manages 380 off- and on-road pieces of equipment, partnered with a joint cooperative purchasing program to purchase tires at discounts for as much as 46 percent off retail price. The contract that allowed the discounts was originally only available to the State of Illinois. Recently, however, the contract was expanded to all subdivisions in the state. When that happened, the number of purchasers increased so significantly it triggered an additional decrease in the price. These two examples are oversimplified, but they illustrate the value proposition the programs offer. Large volume purchases result in lowered prices and both parties benefit.
Collaboration is alive and well in the United States and it’s good to see that both public entities and taxpayers are reaping the rewards.