Fiscally Sound Procurement

Utilizing Cooperative Purchasing as a Tool

03/31/2010
school business
SUSAN MACDONALD

While cutbacks and budget shortfalls abound in education, it is essential for public agencies to practice fiscally sound procurement to ensure they are getting a good value for every dollar they spend. This can be more difficult than it sounds. Your staff must meet state purchasing laws while getting the exact items you need on your campus, from a reputable vendor, at a price your budget will allow.

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How does an understaffed purchasing office that may lack the technical knowledge to develop product specifications get a bid out in a timely manner? How does this same over burdened staff evaluate the too many hungry-for-work vendors who respond?

In the past, many have relied on vendors to supply technical specifications due to limited time, staff, and information at hand, hoping for a good outcome. Ken McCraw, executive director of Texas Association of Community Schools, thinks differently. “Today there is another way to get the best value through cooperative purchasing,” he says. “Co-ops write specifications that are not biased toward a particular manufacturer, and typically their staff has done product reviews to ensure that public entities are getting a good value for their money. And should a product not hold up to the bid standard, your co-op should be your advocate to see to it that the company fulfills its responsibility to your district.”

What exactly does a purchasing cooperative do for public procurement? A typical co-op acts as a purchasing agent that writes contracts and public entities can “piggyback” on the work the co-op has already done. But purchasing co-ops come in many shapes and sizes, from small local food buying groups or local purchasing consortiums to large national co-ops. Some are for-profit, non-profit or governmental entities. The small consortiums may offer a benefit where regionally purchased items are bought collectively. However, large national co-ops offer buying power many entities are not able to command on their own, and often offer national manufacturer vendors who deliver goods and services on a local level through a network of distributors. Governmental co-ops are the easiest to use as most states have a statute which allows for use of another governmental entities contracts.

The responsibility rests with the public entity to research which purchasing cooperative they are comfortable doing business with. Essentially, public entities should be looking to purchasing cooperatives to provide them with a contract already in place for a commodity or service so you don’t have to repeat writing the bid specifications, advertising, tabulating the bid and awarding the contract. Make sure the co-op you choose to do business with is transparent and forthcoming with all of the aforementioned documentation, as you will need this information to remain compliant with your state’s procurement laws. Also, it might be a good idea to call the co-op and see if you can speak to the person who actually wrote the bid specification or tabulated the bid. Inquire about their experience or qualifications. Ask who insures your states bid laws are being met. Not all co-ops have in-house professionals.

Speaking of the bid tabulation, isn’t the lowest price always the best value? Let’s just say no one has to explain accepting the lowest price bid! But best value is a completely different animal. Just ask the janitor who uses one jug of lowest price “blue water” each night to clean the floors. What he asked for was one jug of best value, slightly higher priced, “floor cleaner” that would last a month. When you choose a purchasing cooperative to work with, the person who tabulated the bid should be able to explain their best-value point system.

In these tough economic times, many public entities are coming together to share services as a means of cost savings, and cooperative purchasing is another tool schools should add to their tool box. This is not the economy for school boards and purchasing officials to have a “this is how we’ve always done it” mentality and expect your district to survive a cash strapped budget. An innovative approach to real value for every dollar spent and outside the box thinking for every purchase is a must.

Many public entities believe their state contracts are the only game in town, or believe the state must surely have their best interest at heart. In fact, some states don’t competitively bid their own contracts; instead they approve a list of vendors. Cooperative purchasing collectively pools the purchasing potential of schools, colleges and universities, cities, counties, municipalities, hospitals and non-profits to maximize savings of time, effort, budget dollars, and shortens your delivery schedule. This translates to fiscally sound public procurement at a time when we all need to be working smart.

For more information, visit the Cooperative Purchasing Network at www.tcpn.org.
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