Cooperative purchasing allows government and corporate entities to pool their purchasing power and resources to obtain quality goods and services at reduced costs. It provides efficient delivery, best value through competition, fair contracting opportunities, and transparent practices. As workloads and budgets increase, cooperative purchasing helps procurement officials continue meeting objectives. Examples of goods and services commonly purchased cooperatively include office supplies, IT, vehicles, and lab equipment. While it saves time and money through volume discounts, cooperative purchasing also faces challenges around flexibility, participation levels, and local preferences that require attention.

1. Presented by Cynthia Rudell
March 2016
1Source: National Association of State Procurement Officials NASPO

2. Cooperative Purchasing
The primary role in cooperative purchasing is to obtain quality goods and services to
support effective and efficient businesses ensuring the prudent use of funds.
Procurement professionals add value to every cooperative purchasing program by:
 Providing efficient delivery of products and services;
 Obtaining best value through competition;
 Offering fair and equitable competitive contracting opportunities for suppliers;
and
 Maintaining public confidence through ethical and transparent procurement
practices.
As contracting workloads increase, purchase requirements become more complex and
budgets and resources decline, procurement officials strain to continue to meet these
objectives and seek new and innovative tools to deliver effective and efficient support.
More and more, procurement professionals are turning to various forms of
cooperative purchasing to ease the strain.
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3. Cooperative Purchasing
In the last decade or so, corporate and governmental purchasing departments have
implemented entity-wide cooperative purchasing of goods and services. The savings
realized through increased volume purchases are no surprise, given that the aggregated
spend is a win for both the purchaser and the supplier. Furthermore, including in those
arrangements additional discounts or rebates beyond the initial volume-driven lower per-
unit pricing is just icing on the cake. Significantly, that cooperative purchasing strategy has
also been implemented by private equity-backed companies as a way of reducing portfolio
company costs and increasing profits.
The US government and Corporations apply Cooperative Purchasing
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4. Growth of Cooperative Purchasing
Cooperative procurement contracts are initially based on the common
requirements of multiple governments. Most early cooperative purchasing
efforts involved bulk commodities with standard specifications, such as
cleaning supplies, gasoline and fuel, or services such as the pick-up and
disposal of hazardous waste or used oil.
Today, more complicated requirements, including information technology
services, software and consulting are often targeted for cooperative
purchasing contracts. Other examples of cooperative contracts include office
supplies and furniture, digital copiers and printers, carpeting, computer
hardware, industrial lab supplies, pharmaceuticals, electronic defibrillators,
hazardous incident response equipment, wireless radios and cell phones,
paper, and fleet vehicles.
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5. Advantages of Cooperative Purchasing
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1. Saves Time – By leveraging existing contracts and products, buyers can quickly evaluate and obtain
products and services
2. Saves Money – Pricing is based on high volume contracts which offers a lower price
3. Promotes Shared Services – Buyers across various government and corporate buyers share the
value of pricing and reduced time
4. Purchasing Power – Cooperative purchasing enables buyers of any quantity to receive the same
benefits
5. Competitive Bidding – Purchases that meet thresholds are required to be competitively bid
Time
Purchasing
Power
Shared
Services
MoneyBidding

6. Disadvantages of Cooperative Purchasing
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1. Time - Governments are often unable to predict and commit to specific delivery schedule or agree
on common contract requirements. Fulfilling commitments to contractors may also be a challenge
2. Money - Uncertainty usually results in higher prices. If bidders are not confident in the estimated
requirements or government participation or if the contract permits wide variation, bidders will not
offer their best prices.
3. Shared Services - When an entity joins after the fact, contract users don’t get the benefits and
leverage of the full volume. Contractors may offer minimal discounts and benefit from windfall
profits when participation and usage exceed estimates.
4. Purchasing Power-All products and services may not be offered and buyers do not have an option.
There may be restrictions on the contracts that do not allow purchasing power.
5. Competitive Bid – Not all products and services are available from multiple suppliers.
Time
Purchasing
Power
Shared
Services
MoneyBidding

7. Conclusion
Cooperative purchasing is a very effective tool that procurement managers can use
to obtain effective, best-value solutions for governments and corporations.
Aggregated volume creates significant price breaks, sometimes in the double-digit
figures. Cooperative purchasing is not without its challenges, however. They include
the need for a careful legal framework outlining the terms of the cooperation, and
attention to compliance issues. Local legal and political barriers may need to be
overcome, including concerns from small and minority/disadvantaged businesses and
in-state vendors or resellers. Key procurement values such as competitive bidding
should be maintained. Administrative fees and rebates to lead or participating states
and/or to the cooperative itself, need to be reasonable.
Knowing and paying attention to the best practices and challenges will result in a
contract that is beneficial for all participants through cost savings and a reduction in
time to procure items by aggregating knowledge, spend and technology. Not only are
savings achieved by combining requirements into cooperative contracts, but further
cost savings are realized though a reduction in administrative expenses. Cooperative
contracts also serve as a forum for the exchange and sharing of resources and
technical information. By establishing solid cooperative purchasing processes and
procedures, maintaining clear channels of communication , and working together
closely, state and local governments can create a “win-win” situation for taxpayers and
suppliers.
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