Public Sector Cooperative Purchasing: What You Need to Know

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Public sector cooperative purchasing, also known as group purchasing or joint purchasing, is a strategic approach used by government entities and public sector organizations to procure goods, services, and infrastructure more efficiently and cost-effectively. This method involves multiple public sector agencies or government entities coming together to aggregate their purchasing power.

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According to the National Institute of Governmental Purchasing, Inc. (NIGP): Cooperative Procurement is:

  • The action taken when two or more entities combine their requirements to obtain the advantages of volume purchases, including administrative savings and other benefits.
  • A variety of arrangements, whereby two or more public procurement entities purchase from the same supplier or multiple suppliers using a single Invitation for Bids (IFB) or Request for Proposals (RFP).

By combining their demand, these organizations can solicit contracts for commodities or services and aggregate purchasing volume, expertise, and resources to negotiate better terms with suppliers, including lower prices, improved service levels, favorable delivery conditions, and adherence to industry best practices, than could be achieved locally.

What is piggybacking?

Piggybacking occurs when an agency buys from contracts established by other agencies without being part of the original solicitation process. Although not originally part of the cooperative purchasing strategy, piggybacking still allows for significant time savings. 


NIGP states:

Agencies that piggyback on another agency’s contract are bound by the terms, conditions, and pricing set in the contract.

In contrast to a contract established through a joint solicitation process, a contract that allows for 
piggybacking does not inform the awarded supplier(s) of what the actual purchasing volume will be over the life of the contract. As a result, suppliers may not be in a position to offer the most aggressive pricing.

How are Bespoke Community Cooperatives Different from National or Regional Cooperative Purchasing Organizations?

Bespoke Community Cooperatives are owned by the group members within them. Using the terms and conditions of their member agencies, their contracts combine member spend to create joint procurements to drive better pricing and open the contracting process up to local and regional companies that may not otherwise qualify or be considered for a national contracting process.

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With the administrative support of the Bespoke management team, each Community Cooperative creates its own, powerful joint purchasing group to enhance the already strong benefits of cooperative contracts while bringing procurements home.

Benefits

  • Save Time Procurement processes can be notoriously time-consuming. Crafting contracts, negotiating terms, and coordinating between multiple parties demand considerable time and effort. 
 Bespoke Community Cooperatives offer extensive administration services that allow agencies to collaborate with peers without additional work, thus expediting procurements and saving valuable time and operational resources.
  • Enhanced Buying Power for Cost Savings Sharing resources through cooperative purchasing significantly amplifies buying power. When multiple entities collaborate on a contract, they can aggregate their demands, resulting in larger order volumes. This increased volume grants leverage during negotiations with suppliers, driving down costs per unit and providing a better understanding of expected contract spend for the supplier community. Bespoke Community Cooperatives management services assists in pooling your group spend prior to soliciting so you don’t have to!
  • Supporting Overburdened Procurement Teams Instead of multiple agencies spending months procuring the same goods and services, cooperative purchasing reduces the administrative burden on individual member agencies by eliminating the need for each to conduct separate bidding processes. Bespoke Community Cooperatives management team reviews your group spend and determines which group members can collaborate on upcoming solicitations and then shares the results efficiently with the entire group, reducing thousands of hours of procurement staff time.
  • Support for Socioeconomic Initiatives In recent years, there has been a notable push across industries to prioritize socioeconomic considerations in procurement practices. This includes supporting DEI businesses, promoting sustainability, and adhering to buy local initiatives. Cooperative purchasing facilitates these efforts by providing access to a diverse marketplace of suppliers. With the support of Bespoke Community Cooperatives, we help identify and support companies that align with the socioeconomic goals of the group.
  • Compliance Requirements Met Cooperative contracts offer a solution by incorporating necessary compliance measures. By leveraging existing contracts vetted for regulatory adherence, agencies can minimize the risk of non-compliance, providing peace of mind throughout the procurement process.

Conclusion

In today’s fast-paced and budget-conscious public sector environment, cooperative purchasing stands out as a strategic approach that not only enhances procurement efficiency but also strengthens community and economic development. Whether through leveraging volume for better pricing, saving time, or supporting local and socioeconomic initiatives, the benefits of engaging in cooperative models like Bespoke Community Cooperatives are substantial.

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By joining together with the additional administrative burden of single solicitations, agencies can meet their needs more effectively while upholding compliance and promoting fair and competitive procurement practices. Ultimately, the collaborative nature of these purchasing strategies fosters a more interconnected and supportive public sector, poised to meet the challenges of the modern economic landscape.