Challenges of National Cooperative Purchasing Contracts

Overview of National Cooperative
Rutgers University Public Purchasing Educational Forum and
NIGP Region II Annual Conference
April 30, 2014
Marc Pfeiffer, Principal, PfeifferGov, LLC
In the Beginning…
• Users bought whatever from whomever they wanted; then,
• Public procurement laws requiring open competition and
lowest responsible bidders; then,
• Development of state, then and regional NJ cooperative
contracts, then,
• Increased overhead of procurement process to ensure
transparency, fairness, and meeting public policy goals.
• Evolution in Lowest Responsible Bidder policy over time
and over jurisdictions creates new procedures
• Marketplace and technological evolution creates new
tools and opportunities
• National” cooperative purchasing develops and evolves
from the concept of volume aggregation to a new model
National Co-op Contracts
• “You can get anything you want, at Alice’s National
• Various type of structures – government agencies, 3rd
parties, non-profits, for profits
• Uncertain volume bids and RFPs – no commitment
• Everything from almost everyone under some contract
• Lowest responsible bids or request for proposals?
• “Best value” awards and “soft” criteria
• “Lowest” and “negotiated” and conflict with lowest
responsible bid
• Subject to each jurisdiction’s laws
• Fee for the service involved – built in to the proposal
pricing (usually 2%)
Today’s Procurement Process Trade
• Economy vs. Efficiency
• Competition vs. User Choice
• Commitment vs. Shopping
• Bottom line: many national co-ops are effectively
non-competitive, but efficient to use; so
prudency is required
• State law allows use of National co-ops, but with
rooted in DPP process, statutory and case law
So What’s a Purchasing Agent to
• Commit: to pledged demand programs?
• Price: is it competitive?
• Consider: how was the contract awarded?
• Controls: how was the item determined?
• Shop: is it the “best” deal?
The Process
• Local Finance Notice 2012-10 (P.L. 2011, c.139)
• Reviews the law
• Recommends process that is consistent with DPP
procedure and DPP process adapted to local units
• Is a National Co-op what you need? Economy vs.
efficiency questions:
Can you bid it yourself? Time and attention to bidding.
Do conditions of the marketplace warrant a national?
Is pricing competitive?
Basis of national co-op award?
Does the national provide added value services?
Do they meet the minimum state requirements?
State Standards for National Co-ops
• Co-op needs to have a competitive bidding
process that complies with the entity’s
requirements that is also an:
• Open, competitive, standard process
• Not a negotiation
• Awarded by a government contracting unit
• Advertised as a national; not after the fact
• Vendor must submit to NJ local unit:
• Statement of Corp Ownership
• P2P
• EEO Compliance
• Non-collusion (local option)
Additional Standards
• Price diligence: Must document cost savings
(considering all cost factors) over conventional
Compare to state contract
Compare to current contract or other NJ co-ops
Other comparable agency contracts
You don’t have to bid it yourself first
• Can consider cost and time of a separate
• Establish documentation that shows compliance
= audit protection
More Standards
• Process and vendor must meet state and any local
pay-to-play requirements
• Meaning the agency issuing the contract had to use a “fair
and open” process.
• Disclosure statements if not
• Agency must get verification
• Legal advertising consideration – a legal ad telling
other vendors you are thinking about a national
• State has to do it; advised, but not mandated for local units.
• Not applicable to public works/construction
services; or to GSA contracts
Best Practices
• Review LFN 2012-10
• Check to see if there is a NJ State or other co-op
contract to see if they have what you want
• Make sure there is sound justification for making
the vendor choice over other vendors
• Make sure there is compliance with any co-op
requirements and any other state requirements
• Check voucher or P-card payment procedures
• Comptroller reporting requirements $2M/$10M
• Document compliance
• “Justification for utilizing a cooperative contract”

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