Guest post from Michelle Hermelee, President, BH Sky Associates
Many vendors are aware of the cooperative purchasing trend in State, Local and Education (SLED) government, but not all have considered the potential of these contracts. Defined simply as instances where two or more government agencies purchase from the same contract to obtain better pricing and efficiency in procurement, these purchases are growing steadily: Approximately 15,000 awards in Onvia’s database of nearly 800,000 awards since 2012 are cooperative purchasing agreements. The increased utilization and availability of these agreements saves time and money for SLED agencies that struggle with tight budgets and modest growth in revenue from taxpayers in recent years.
There are a number of co-op associations or joint buying groups. The two largest programs are NASPO ValuePoint (formerly WSCA-NASPO) and GSA Schedules Cooperative Purchasing Program; together they account for about half of the awards issued from these groups in Onvia’s database since 2012. This article focuses on the growing market opportunity in GSA’s State and Local Cooperative Purchasing Program.
Millions in SLED Spending through GSA’s Cooperative Purchasing
GSA’s Cooperative Purchasing Program provides access to thousands of nationwide, prevetted vendors that offer a wide array of products, solutions and services. The cooperative purchasing program is open to government agencies in 50 states, all counties, municipalities, cities and towns, tribal governments, public authorities, school districts, and colleges. The program allows state and local governments to purchase a variety of supplies and services under two GSA Schedule contracts – Schedule 70 (General Purpose Commercial Information Technology Equipment, Software and Services) and Schedule 84 (Total Solutions for Law Enforcement, Security, Facilities Management, Fire, Rescue, Clothing, Marine Craft and Emergency/Disaster Response).
From 2009 to 2014 SLED agency spending increased from almost $600M to nearly $750M for Schedule 70 and from approximately $25M to over $75M for Schedule 84 — a very healthy increase considering the economy was in a severe recession during that period. IT vendors should note that almost 50% of Schedule 70 expenditures go towards wireless services. For vendors whose offering is relevant to Schedule 84, the largest spending category is law enforcement and security equipment supplies and services.
The Benefits of GSA’s Schedule Program
In addition to the standard benefits of cooperative purchasing, top program perks of GSA for vendors include:
Longer Term Contracts:
GSA contracts provide stability to vendors because their contract term is for a base five year period with three five year options to extend which is, in essence, a 20-year contract (VA contracts are base five year with one five year option to extend).
Convenient System for Customers to Request Quotes:
State and local government buyers can request quotes electronically from approved GSA Vendors across the full range of products and services offered through the program using the GSA eBuy system.
Visibility and Exposure:
Vendors with a GSA contract have their approved products and services listed on the public comprehensive online shopping superstore, GSA Advantage!
Key Takeaways for State and Local Government Vendors
Cooperative purchasing, though a relatively small segment of the state and local government procurement marketplace, is growing in popularity and volume. This growth can be attributed to not only the operational cost savings on the agency side, but also for the potential of greater contracting volume and the procurement efficiencies gained by vendors. Vendors should consider participating in cooperative purchasing - working with a top co-op association or GSA’s Cooperative Purchasing Program is an opportunity for vendors to increase exposure to agency buyers, gain the advantage over competitors and grow their government revenue.
This is a re-post from Onvia's State, Local and Education (SLED) Procurement Snapshot for Q2-2015