Cooperative Purchasing Information

The following information is taken from Resourceful Purchasing, a purchasing guide developed by Alameda County Source Reduction and Recycling Board.

CHAPTER 12
COOPERATIVE PURCHASING

Cooperative purchasing is a method to join with other jurisdictions to buy identical or very similar products. Centralized purchasing within a community is much the same. Within a community, needs are combined in a single invitation for bids. All departments order the quantities they need from the resulting contract.

When buying cooperatively, a "lead agency" is the central purchaser for several jurisdictions that order from the same contract. The lead agency may be different for each commodity. Cooperative purchasing is useful for recycled products because it reduces duplicate research and expands total product demand.

PURPOSES OF COOPERATIVE PURCHASING

Cooperative purchasing has numerous benefits. By joining with other people who are doing exactly what you do, you can save time and money. The key advantages and disadvantages are:

Lower Costs: Unit costs go down when the volume of purchases increases.

Lower Administrative Costs: Only the lead agency prepares, advertises and analyzes the bid and administers the resulting contract. Participating jurisdictions simply determine the quantities they will need during the term of the contract and share their vendor lists.

Increased Volume of Recycled Product Purchases: The more jurisdictions involved, the more recycled products are used.

Increased Availability of Recycled Products: Some vendors require minimum orders before stocking recycled products. Others simply pass along the costs of special ordering small quantities of recycled counterparts to the buyer. When cooperative purchasing increases total demand, vendors may relax minimum quantity requirements to individual users because they have the stock on their shelves.

Standardized Definitions and Recycled Content Percentages: With more jurisdictions using the same contract, fewer variations of the same product will be required. This helps vendors to stock products with the same recycled content requirements.

Local Preferences Do Not Apply: There is one major drawback for some communities. There is no guarantee that a local company will win the bid. Local preferences do not apply in circumstances when the participating jurisdictions stretch beyond the borders affected by local preference policies. Thus, local preferences hinder recycled product purchasing.

TYPES OF COOPERATIVE PURCHASING

Cooperative purchasing can be formal or informal.

Informal Cooperative Purchasing

The informal method is simple. First, determine if you have the legal authority to buy from someone else's contract. Then, when you are ready to buy particular products, seek organizations that have the products on contract. You merely review the contract to be sure the products, prices and terms meet your needs, then establish separate billing and delivery requirements with the vendor holding the contract.

Vendors have the right to accept or reject potential sales to other jurisdictions. Many county, state and some city contracts allow sub-divisions of governments to buy from them. These organizations circulate lists of such contracts to interested parties. Most jurisdictions in Alameda County use this type of cooperative purchasing.

If the process is successful, it can continue indefinitely with the organization that initiates the bids. If you do plan to continue this way, be sure to share your quantity estimates with the "lead agency" so you all can take advantage of lower unit costs for higher volumes.

Formal Cooperative Purchasing

Formal cooperative purchasing arrangements take more time initially but they will continue to work over the long term. Each participating jurisdiction must give up its purchasing autonomy to be part of the general agreement and each participant must plan ahead to coordinate the timing for the bid. There are ten critical steps:

  1. Determine your legal authority to buy cooperatively.
  2. Select the lead agency to prepare specifications, solicit and evaluate bids, administer the contract and monitor participation.
  3. Survey potential participating jurisdictions to determine interest and product requirements. Since bidders will not offer lower prices unless they are confident of the quantities, everyone who agrees must participate.
  4. Obtain information from participating jurisdictions, including: quantities, product requirements, purchasing schedules, delivery points and potential vendor lists.
  5. Research recycled product opportunities and requirements and obtain information from potential vendors.
  6. Prepare and advertise the bid. Determine whether vendors must respond to all or part of the bid and whether one or multiple contracts will be awarded. Determine whether the vendor will be required to report actual sales quantities for each participant to one or more agencies.
  7. Obtain and evaluate the bids.
  8. Resolve disputes and any implementation difficulties.
  9. Report all contract details to all participants and publicize the results.
  10. Analyze the successes and failures to prepare for the next bid.

SOURCES

There are many opportunities for cooperative purchasing open to governmental agencies in Alameda County. You will find addresses and contact information in Appendix III: Resources under General Recycled Products - Recycled Product Contracts in Place.

Existing contracts are good sources for comparative price information too. Bear in mind that prices vary according to time and quantity. Just because a large organization achieves a specific price six months ago, you should not expect identical pricing for your own bid.

Alameda County

The Purchasing Department in the General Services Agency actively seeks recycled products. Many of its contracts allow outside agencies to use them. On request, staff will send a list of recycled product contracts to all jurisdictions allowed to buy from them.

RECOMMENDED CLAUSES FOR COOPERATIVE PURCHASING

Policy Documents

The [purchasing entity] is authorized to participate in, and encourage
other public jurisdictions to participate in, cooperative purchasing agreements.

Bid and Contract Documents

Alameda County uses the following clause successfully to encourage cooperative purchasing agreements with its contractors.

Other tax supported agencies in the State of California who have not contracted for their own requirements may desire to participate in the contract. The contractor will be requested to service these agencies and will be given the opportunity to accept or reject the additional requirements. If the contractor elects to supply them, orders will be placed directly by the agency and each agency will make payment directly to the contractor.