Cooperative Purchasing Who’s Looking Out for Your Interests? Tony Des Chenes, Director Commodities Division Purchasing Operations

What is Cooperative Purchasing  As Defined By NIGP:  A Procurement conducted on behalf of two or more public procurement units (True Cooperative)  The combining of requirements of two or more public procurement units in order to obtain the benefits of volume purchases and/or reduction in administrative expenses  A variety of arrangements whereby two or more public procurement units purchase from the same supplier using a single ITB or RFP

What is Cooperative Purchasing  Piggyback Option: One or more organizations represent their requirements and include an option for other organizations to “ride” or “bridge” the contract as awarded  Third Party Aggregators: An organization brings together multiple organizations to represent their requirements and manage the resulting contract

What Are the Benefits?  Depends on how and who you participate with.  Benefits:  Buying Power  Communication  Solicitation Process Convenience  Qualified Vendors and Product Flexibility  Vendor Management or Compliance  Changing Technology

Types of Cooperatives  This has changed over the years:  Regional  Commodity or Service  Education  Governmental  Service Providers

How About the Vendor  Vendor:  Negatives  Could lose pricing established with customers who join consortium  Lose the ability to negotiate individual terms and conditions  Relationships are not developed  Positives  Do not have to develop multiple bids  Do not have to negotiate various terms and conditions  Streamline the product offering across multiple organizations

What About Me?  Positives  No need to go through the bid process  May get better pricing  Ability to customize  More offerings  Time  Negatives  Threatens staff  May not get what you want  Lose the personal touch  Relying on other agency to negotiate contract

How Do You Pay For This?  Some organizations charge an administrative fee  This fee is usually collected from vendors based on sales  In some cases participating entities may also have a fee

Challenges to Cooperatives  Legal Compliance  Buy Local  Open Competition  Small Business Participation  Forms and Terms  Time and Resources  “Piggybacking”  Fees

Issuing A Solicitation  Identify a lead agency  Require participating members to sign a “participation” agreement  Include those who are participating in the development of the RFP  Survey members on estimates  Get buy-in on the solicitation

Evaluation  Have cooperative members on JEC  Have terms and conditions that meet legal requirements  Make sure vendor can supply to all cooperative members, especially with large geographical areas  Competition is important

Using a Cooperative Contract  Make sure it conforms to your laws and guidelines  Make sure you are getting the best value  Work with the lead agency to make sure you are eligible  Work with legal counsel if necessary

Examples of Cooperatives  MiDEAL – State of Michigan  GSA- Federal Government  National Association of State Procurement Officials – NASPO  US Communities  The Michigan Inter-governmental Trade Network-MITN  E & I Buying Cooperative- Education

Conclusion  Benefits  Time  Money  Staff  Concerns  Lose control  Savings  Restrictions

End  Questions/Comments Tony Des Chenes, Director Commodities Division Purchasing Operations (517)