Cooperative PurchasingWho’s Looking Out for Your Interests?

Tony Des Chenes, DirectorCommodities 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 conditionsRelationships are not developed

PositivesDo not have to develop multiple bidsDo not have to negotiate various terms and conditionsStreamline 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) 373-9417

Deschenesa1@Michigan.gov