Taking the lead on cooperative contracts can offer sizable rewards

This article originally appeared in the Q3 issue of Government Procurement.

Serving as the lead agency on a cooperative contract brought legitimacy to the buying process, says Lisa Cummins, procurement manager in Rochester Hills, Mich.’s purchasing division. The contract covered sewer trucks and was managed by National IPA (now a partner of OMNIA Partners).

“The initial reason Rochester Hills got involved as a lead agency with OMNIA Partners was due to difficulties we were having with a specific commodity purchase (sewer trucks). We had a market that had a very dominant vendor who was very pushy, and not about playing by the rules and that liked to manipulate local agency procedures in order to win business,” Cummins said.

She explains that city administrators felt that the purchase process for the sewer trucks was going to be difficult to keep clean. “We needed to bring some validity to what we were doing and how we were conducting the process.” City officials then reached out to OMNIA Partners (at the time National IPA) to discuss the potential opportunity to create a cooperative contract in the public sector for this commodity.

Cummins says the cooperative contract that Rochester Hills oversaw brought validity to the process. “It created an environment that all vendors participating in it felt was extremely fair, open and transparent. It sent a message that we were serious about what we were doing.”

Hosting the cooperative agreement gave the Rochester Hills procurement team an opportunity to learn a lot about sewer trucks. “There was a lot of research that had to be done and things that from a national perspective had to be considered, evaluated and negotiated that you typically wouldn’t deal with at a local level. We partnered with some other surrounding agencies to aggregate our purchasing power in order to try and drive pricing down on a very expensive piece of machinery,” Cummins says.

Collaborating among the agencies to generate best value was a priceless experience, Cummins says. “Many agencies started looking to us for advice, using our practices and solicitations as guides for them in their agencies, and relying on us as almost consultants for them when they ran into issues. It brought some recognition to the value that a skilled procurement department can provide.”

Rochester Hills’ city council also took note of the procurement team’s role as lead agency on the cooperative deal, Cummins explains. “It brought another level of recognition to the things we were doing down here in purchasing, and how we were bringing value to the organization in our processes and with our expertise that they were not aware of. Purchasing is regarded highly in our organization now and respected by all of our elected officials. Part of that is due to the city engaging in opportunities and partnerships such as these. I see it as a win-win for sure. It’s a lot of work, but that work does pay off in many different ways in the end.”

Rochester Hills currently serves as lead agency on OMNIA Partners’ cooperative contracts for groundskeeping materials and street sweepers.

Yes, becoming a lead agency could be in the future of many public procurement managers, says Tammy Rimes, executive director of the National Cooperative Procurement Partners (NCPP), the professional association for cooperative procurement. She notes that the adoption and use of cooperative contracting has been accelerating each year.

“Being the lead agency ensures that your own organization’s purchasing needs are met, and contract requirements can be augmented to support your organizational goals,” Rimes explains. Wearing the lead agency hat is a good way to provide solid contracting options for other agencies to use, particularly those with limited procurement resources. “By driving savings and efficiencies for others, it is a way to support and give back to the procurement contracting community,” she adds.

And don’t forget about the money from a cooperative contract that can flow to lead agencies, Rimes says. “A huge reason for many entities to become leads is that the contract can also be a revenue source, as a portion of the proceeds come back to the organization to recognize the work to award the contract, as well as the need to support it until its expiration.” Rimes says that for those agencies looking for additional revenues or to self-support their procurement department, these potential revenues can serve as a key decision-making point.

These contract revenues can be important, says Keith Glatz, purchasing and contracts manager in Tamarac, Fla. “I have found that in our city’s case, this annual revenue actually exceeds procurement’s annual operating needs (less salaries and benefits), and can help to support the procurement function in general, or at least to assist the overall budget of the agency.” Tamarac has been a lead agency on an OMNIA Partners’ contract; Glatz’s agency also serves as a lead agency for the Southeast Florida Governmental Purchasing Cooperative, a regional cooperative effort.

Other benefits accrue to lead agencies, Glatz says. “The value of being a lead agency includes the improved credibility and reputation that the agency receives for performing the work. The lead agency also gets to drive many of the terms of the agreement that impact sustainability and diversity issues. The lead agency is able to have an influence on encouraging the use of environmentally sustainable products for government agencies across the nation.”

City initiatives to aid small and disadvantaged companies can get a boost through agency-led cooperative deals, Glatz explains. “Diversity goals for the use of minority, women-owned, and small businesses can be advanced on a national basis as well, by requiring the prime contractor to provide sub-contractors or suppliers who can assist in meeting an agency’s diversity goals in contracting.”

Advice for prospective lead agencies

James Foley is deputy chief procurement officer in Maricopa County, Ariz., which is an OMNIA Partners lead agency for paint, paint supplies and other products and services. Foley suggests that agencies that are thinking of becoming a lead on a cooperative contract should be prepared to:

• Follow your normal competitive bid requirements.
• Respond to questions from participating agencies.
• Ensure that you drive value and benefits for your agency and participating agencies.
• Leverage networking opportunities with other lead and participating agencies.
• Support and use the contract award to lead and inspire others.
• Create a package of all the solicitation and award documents that can be posted online for other public agencies to use in completing due diligence requirements.
• Meet with the cooperative contract vendor to on a semi-regular basis to address contract-related issues covering all users.

Serving as a lead agency requires a high tolerance for accountability, says Chris Robinson, procurement manager for Sourcewell, a service cooperative created by the Minnesota legislature that is goverened by locally elected municipal officials and school board members. The cooperative holds hundreds of competitively solicited cooperative contracts ready for use.

Before taking on the role of a lead agency, Robinson urges procurement teams to consider benchmarking their organization against the standards for the Achievement of Excellence in Procurement Award or the NIGP’s Accreditation for Quality Public Procurement Departments (QPPD).

Robinson suggests that prospective lead agencies should also consider having one or more of their procurement professionals join NCPP at no cost. “The NCPP resources and training are great ways to gain an understanding of the cooperative purchasing landscape,” he says.

Prospective lead agencies need to realize that others will be reviewing your policies, procedures and the way in which your team conducted the cooperative procurement process, says Rimes. Those “others” can include media, taxpayers, competing firms and nearby entities. “A lead agency has to be extra diligent in ensuring proper public procurement processes and practices were followed,” she cautions.

Michael Keating is senior editor for American City & County. Contact him at [email protected].