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Cooperative Purchasing

Cooperative Purchasing . Who’s Looking Out for Your Interests? Tony Des Chenes, Director Commodities Division Purchasing Operations. What is Cooperative Purchasing. As Defined By NIGP: A Procurement conducted on behalf of two or more public procurement units (True Cooperative)

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Cooperative Purchasing

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  1. Cooperative Purchasing Who’s Looking Out for Your Interests? Tony Des Chenes, Director Commodities Division Purchasing Operations

  2. What is Cooperative Purchasing • As Defined By NIGP: • A Procurement conducted on behalf of two or more public procurement units (True Cooperative) • The combining of requirements of two or more public procurement units in order to obtain the benefits of volume purchases and/or reduction in administrative expenses • A variety of arrangements whereby two or more public procurement units purchase from the same supplier using a single ITB or RFP

  3. What is Cooperative Purchasing • Piggyback Option: One or more organizations represent their requirements and include an option for other organizations to “ride” or “bridge” the contract as awarded • Third Party Aggregators: An organization brings together multiple organizations to represent their requirements and manage the resulting contract

  4. What Are the Benefits? • Depends on how and who you participate with. • Benefits: • Buying Power • Communication • Solicitation Process Convenience • Qualified Vendors and Product Flexibility • Vendor Management or Compliance • Changing Technology

  5. Types of Cooperatives • This has changed over the years: • Regional • Commodity or Service • Education • Governmental • Service Providers

  6. How About the Vendor • Vendor: • Negatives • Could lose pricing established with customers who join consortium • Lose the ability to negotiate individual terms and conditions • Relationships are not developed • Positives • Do not have to develop multiple bids • Do not have to negotiate various terms and conditions • Streamline the product offering across multiple organizations

  7. What About Me? • Positives • No need to go through the bid process • May get better pricing • Ability to customize • More offerings • Time • Negatives • Threatens staff • May not get what you want • Lose the personal touch • Relying on other agency to negotiate contract

  8. How Do You Pay For This? • Some organizations charge an administrative fee • This fee is usually collected from vendors based on sales • In some cases participating entities may also have a fee

  9. Challenges to Cooperatives • Legal Compliance • Buy Local • Open Competition • Small Business Participation • Forms and Terms • Time and Resources • “Piggybacking” • Fees

  10. Issuing A Solicitation • Identify a lead agency • Require participating members to sign a “participation” agreement • Include those who are participating in the development of the RFP • Survey members on estimates • Get buy-in on the solicitation

  11. Evaluation • Have cooperative members on JEC • Have terms and conditions that meet legal requirements • Make sure vendor can supply to all cooperative members, especially with large geographical areas • Competition is important

  12. Using a Cooperative Contract • Make sure it conforms to your laws and guidelines • Make sure you are getting the best value • Work with the lead agency to make sure you are eligible • Work with legal counsel if necessary

  13. Examples of Cooperatives • MiDEAL – State of Michigan • GSA- Federal Government • National Association of State Procurement Officials – NASPO • US Communities • The Michigan Inter-governmental Trade Network-MITN • E & I Buying Cooperative- Education

  14. Conclusion • Benefits • Time • Money • Staff • Concerns • Lose control • Savings • Restrictions

  15. End • Questions/Comments Tony Des Chenes, Director Commodities Division Purchasing Operations (517) 373-9417 Deschenesa1@Michigan.gov

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