For our recent State and Local Procurement Snapshot of Q4 2017, we interviewed two leading thought leaders in the cooperative purchasing space to gather useful insights on cooperative trends among SLED governments and to help suppliers appreciate and consider this maturing form of government buying.
Part 1 of this 2-part series focuses on tracking and understanding where cooperative purchasing is today.
Tracking the Maturing Co-op Trend
Given the broad usage of cooperative purchasing in today’s government contracting landscape, we asked both our contributors to share their views on whether this trend was still “emerging” for these local and national co-op organizations or is in fact becoming “mature.” Tammy Rimes, Executive Director for National Cooperative Procurement Partners, explained “Adoption of the concept and use of cooperatives has become more of the ‘norm’ in recent years.”
She went on to say that as part of this growth and maturing process, co-ops have expanded to cover more types of purchases than ever before, helping reduce barriers to use: “Where cooperatives had once been primarily used for commodities – such as office and maintenance supplies or auto parts – they are now becoming more service and construction oriented,” Rimes said. “For example, their offerings may include services (i.e. landscaping or janitorial); an installation component (new gym floor or HVAC installation); or job order contracting for repetitive small construction or repair projects.”
Jeremy Schwartz, Director of Operations and Procurement at the National Joint Powers Alliance co-op, suggested that while the co-op trend is no longer “emerging,” it still has a ways to go before we can properly consider it “mature.”
I would suggest the practice of utilizing cooperative purchasing as a valuable component of a comprehensive strategic sourcing plan is more in a state of ‘adolescence’ rather than either ‘emerging’ or ‘mature’.Jeremy Schwartz, Director of Operations and Procurement at the National Joint Powers Alliance
Schwartz pointed to the fact that best practices for using co-ops are still being worked out. “Some work has been done in this regard, but an industry can often be gauged for maturity based on the maturation of best practices that support it,” he said. “My opinion is that we are working through the ‘first generation’ of best practice development focused on public cooperative procurement.”
Although most agencies use co-ops today, his team at NJPA is frequently working with buyers who are “asking basic questions with regard to applicability and compliance.” He indicated that there is “still much opportunity” for developing and refining these guidelines among buying teams. In addition, he noted that greater automation in co-op buying and better user experiences are “a necessity” and will need to be provided as the co-op industry shifts toward full maturity.
Reflecting on whether this process of moving toward maturity is universal across the types of government, Schwartz noted some differences exist based on the scale of the given agency. Larger governments, which may face more pressure for efficiency in purchasing, tend to be further along in usage of co-ops: “We certainly see varying degrees of recognition and adoption of cooperative procurement between different types of public agencies. There tends to be some correlation to awareness and adoption based on size.”
Understanding the Co-Op Trend: Key Drivers
Given the funding challenges of government since the Great Recession, seeking more value for each taxpayer dollar by pooling the purchasing power across agencies has always been an important consideration. But the second major consideration of saving staff time and getting things obtained faster should not be underestimated. Rimes provided additional commentary on staffing and funding challenges as key drivers of cooperative purchasing growth:
“With diminishing staff levels due to budget reductions and retirements, as well as the growing volume of procurement activities back to pre-2008 recessionary times, many procurement teams struggle to keep up with workloads.”
This perspective was echoed in our 2017 agency buyer survey, which reported that nearly 40% of agency buyers and procurement staff are overworked and their #1 top specific challenge was “pre-bid research and planning.”
This desire to free up staff time by reducing the need to put out time-consuming new competitive bids has had a profound impact on buying strategies and practices. Whenever buyers have opportunities to source purchases using a pre-negotiated contract, they will often take it, freeing up their time to prepare for the largest or most important new competitive bids and RFPs. “Procurement professionals are becoming more strategic,” Rimes said. “They are proactively determining if it really requires that their agency conduct the bid process, or if the solicitation can be completed by another agency or cooperative, so they can quickly garner commodities and services for their customer departments. It often makes better sense – both in time and value – to use an already solicited cooperative contract.” One of the other key benefits to purchasing from a cooperative contract is to let agencies select from among the very newest technologies – which may not have been available if they were limited to ordering only from a single vendor on a long-term contract.
“Some cooperatives have a wide range of options that allow for new technologies and interoperability,” said Rimes. “For instance, if an agency goes out to bid for a certain brand of computers and software, and then awards that contract for a 3- to 5-year term, it may limit their ability to take advantage of new technology. If a cooperative offers several IT vendors or pieces of equipment with upgrades, it may provide a greater capability to purchase new software that wouldn’t have been included in a more structured and limited long-term contract.”
You can see the full feature, as well as valuable insight into the state, local and education government contracting market, by downloading your free copy of the report today.
Meet the Experts
Tammy Rimes formerly served in the City of San Diego for over 20 years in management positions for Financial Management, Equal Opportunity, Community Service Center Program and Water/Wastewater departments. In her current role as the Executive Director for the National Cooperative Procurement Partners, she advocates and educates on the concept and use of cooperative procurement.
Jeremy Schwartz, in his current position as Director of Operations and Procurement for the National Joint Powers Alliance (NJPA), provides leadership and strategic direction for NJPA procurement including category development, competitive solicitation and contract administration. Additionally, Jeremy leads the NJPA Operations Team in implementing an Integrated Management System.