Apr 10 2015

States Join Forces with Cooperative Purchasing Agreements

Public contracts can offer significant savings on software, hardware and IT services.

When it comes to buying technology, banding together just might be the way to go. All levels of government have long tapped collective pur­chasing agreements to gain up to double-digit discounts on IT purchases, among other things.

Now, buying this way seems to be increasing in popularity as cooperative purchasing agreements expand to cover everything from cloud services to mobile device management.

California relies heavily on cooperative purchasing agreements when buying hardware, software and services, says Chief Procurement Officer Jim Butler, who leads an award-winning 200-person division in Sacramento.

The state leverages the California Multiple Awards Schedules, the National Association of State Procurement Officials ValuePoint and the state’s Software Licensing Program, among others.

Shared Strength Through Cooperation

Butler came to state government from purchasing roles at companies in the private sector, including Levi Strauss. “In the public space, cooperative procurement is much more developed than it is in the private space,” he says. “I don’t have to beat another state. There is no putting some other state out of business.”

The procurement official plays a leading role in the NASPO ValuePoint public contract cooperative, which includes representatives from all 50 states as well as Washington, D.C., and the U.S. territories.

“We freely share all kinds of information with each other — things like pricing and terms and conditions,” says Butler. “Sunshine laws require that we open up this information. Anyone from the public can access any of our contracts at will. That knocks the barriers down.”

However, California’s most expensive IT investments generally don’t go through these purchasing vehicles.

“When you’re buying an enterprise resource planning system, it’s highly configured for your needs,” says Butler. “With full and open competition, we get a better deal.”

Likewise for commodity hardware, Alan R. Shark, executive director of the Public Technology Institute, cautions that cooperative agreements may not net any extra savings. “If I need to buy 1,000 laptops, there isn’t going to be that much price change except for the volume,” he says.

The Three-Step Purchasing Approach

California’s purchasing agents use a template, developed in conjunction with the NASPO ValuePoint, to evaluate the applicability and desirability of an existing cooperative purchasing agreement.

Keep in mind that agencies are likely to be governed by their own unique rules and practices. “Each state has individual laws that govern cooperative purchasing,” cautions Krista Ferrell, director of strategic programs for NASPO. “Everyone has to evaluate a contract in accordance with their own state’s law.”

With that in mind, here’s California’s three-step approach to evaluating cooperative purchasing agreements:

1. Assess the contracting process

The purchasing analyst determines whether or not the contract under consideration was awarded through a competitive, transparent process that meets the standards of public-sector contracting in California.

This step requires reviewing all documents leading up to the agreement, including solicitation documentation, the evaluation criteria published in advance of the bidding process, award documentation and detailed processes established for the vendor to protest the awarding of a contract if they feel it did not comport with standards. In California, the agreement must meet the stand­ards of fair dealing in the areas of process; scope and requirements; evaluation methodology and supplier selection process; cost; and supplier responses.

2. Evaluate terms and conditions

Next, the purchasing agent evaluates whether or not the terms and conditions governing performance of the contract meet the requirements of the state.

For example, California requires all of its vendors to offer same-sex partner benefits and to comply with laws against unfair labor practices. The team evaluates this aspect on an ongoing basis as new sections are added to the law. “There can be nothing that violates any of those terms and conditions,” says Butler. States tend to differ substantially from each other in this area, so be sure to examine the terms and conditions closely.

3. Run the numbers

Finally, the agent evaluates the financial terms and conditions to determine if the agreement represents a good deal. Though it isn’t uncommon to obtain a discount of up to 30 percent or more thanks to a cooperative agreement, there are cases where it doesn’t make sense. The IT department may want a different model or need more customization than what is covered.

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