The state & local market is evolving: Agencies aim to be more agile in their procurement processes and one important trend is cooperative purchasing. However, agencies have different buying approaches to cooperative purchasing. Different agency levels (defined as state, county, city, school district and special district) vary their usage based on their unique needs. Learning these differences can help government contractors better understand the cooperative purchasing trend and how to market to state & local agencies.
Introduction: Types of Cooperative Purchasing
Onvia’s recent report, Leverage Cooperative Purchasing to Grow Your Government Sales, defines cooperative purchasing to include both buying from co-op associations (either regional or national) as well as buying from another agency’s existing contract not tied to a co-op group (commonly known as “piggybacking”). This broader definition is supported by the National Institute for Public Procurement (NIGP). As part of our research, we examined nearly 800,000 total awards published since 2012 and identified over 15,000 cooperative purchases.
Co-op Association Purchases – Differences by Agency Level
As the chart below indicates, co-op associations see more activity from state agencies (36%) than counties, cities, school districts and special districts. One reason for this is that the dominant co-op association NASPO ValuePoint ($10.5B sales) is set up as an association of state governments. Solutions are developed primarily to benefit their state government members who collaborate in decision-making for all new products and services offered.
City (21%) and county (13%) agency buyers do make purchases through co-op associations. However, local agencies seem to prefer the “piggyback” approach and buy from their own state government contracts or contracts from neighboring local agencies.
Co-op Association Users vs. Overall Procurement
Piggyback Purchases – Differences by Agency Level
Piggyback purchases are dominated by cities (41%) with only 5% coming from state agencies. State agencies do not need to “piggyback” because they are often large enough in purchasing volume to have better pricing leverage than an individual city, county, school district or special district. Contractors need to identify which new bidding opportunities allow for piggybacking when making the decision to compete. Around 5,000 bids and RFPs in Onvia’s database since 2012 mention “piggyback” status.
Piggyback Purchasing Users vs. Overall Procurement
Takeaway for Contractors
Understanding “level of government” purchasing approaches can help you identify which type of cooperative purchasing contracts to target as well as understand the requirements of each type. To learn more about how to strategically target your cooperative marketing efforts, we encourage you to download our free Leverage Cooperative Purchasing to Grow Your Government Sales report today.