Cost containment, right sizing, tight budgets and just plain better management forces local government purchasing to become more efficient with less people. Gone are the days when we could throw people and money at a problem.

  One of the most immediate and effective tools is the COOPERATIVE (COOP). However, many buyers and purchasing mangers fail to optimize this concept or fail to recognize situations of opportunity. Before we discuss the "how to", let's cover what types of bids or contracts should or should not be considered for COOPs.

  Commodities (Goods): Quantifiable requirements supplies are ideal for a COOP project. Every participant or entity identifies the number of items they will utilize for each year of the contract. Some degree of accuracy is needed, and estimates should be on the conservative side so as not to steal from the vendor who stretches prices based upon your promise to purchase at least that quantity. Once the contract is awarded, each participant can then place orders or purchase orders with the vendor. This is the simplest and easiest type of COOP bid or contract.

  Services (MRO):  COOPS might be applied to landscape maintenance, janitorial services and similar services. It is more difficult to define or obtain the quality of services demanded by each entity or user department. The specification writing effort requires more effort and better descriptions of the differences in services between each location. A method of inspection or measurement of the quality of the service must also be very detailed.

  Professional Services and Consultants: These are not good subjects for COOPS because each project is too individualized and must be addressed by the entity desiring the service. However, these should be considered for a "Joint Project", such as two entities going into a single building or conducting a single study.

  HOW TO:  There are at least four approaches to establishing a good COOP. The most common is the informal organization where all entities combine their quantities then each entity approves an award of the contract in the amount needed by their users.

  The second method is to officially form the COOP with prior approval and signatures by each entity so that the entity that controls the bid can award the contract on behalf of all other participants. The third solution is a COOP with a third party. Each entity assigns temporary staff to the operation in order to make sure that the resulting contracts include each entity's requirements, any special contract terms and conditions, along with limited supervision.

  Lastly, standard commodity purchasing could be privatized or contracted out to a commercial firm that specializes in obtaining goods in the open market pursuant to the legal restrictions or the standards imposed by law or required by elected officials. This privatization contract would have to include the entity's right to audit and inspect.

  An entity that is contemplating an attempt to start or join a COOP should not overlook the opportunity of admitting private firms as members, if the laws and ordinances can be so interpreted. These firms would have to be active participants and also not be potential vendors to any of the COOP members. Good examples of such firms would be hotels, private schools and churches.

  Disadvantages: Most entities currently staff up to conduct all of their own purchasing. They realize that it is not efficient because of the lack of quantities for large discounts, small staffs with no ability to be experts in all commodities, the lack of time or expertise to write defect-free contracts, handle customer complaints and provide contract administration.

  There are several entities using the informal method of throwing their requirements together, but problems occur when the responsible buyer/entity is not as proficient as needed to create an exceptional contract/bid; or one of the entities decides it does not want to award its share of the requirements that provided the exceptional low price; or one entity wants to terminate the vendor while another wants to renew the agreement. A by-product of any COOP bid is the reduced utilization of small local vendors, especially minorities who do not have the financial backing or other resources to service large agreements.

  Even though efficiency is improved by the pre-approved COOP venture, many entities view the loss of control at award or during administration problems as not being in their best interest because they cannot address their constituent's complaints. Elected officials are also leery of the appearance of meddling when they have to make a request to purchasing and especially a purchaser of another entity.

  Those last two methods are the most progressive, but will be the standard in future successful purchasing operations. Even though they suffer the same handicaps as the first three types and also require an assigned administrator and/or auditor, they provide the means by which efficient, small staffs will be the most cost effective. A word of caution to each member would be to not fall into the purchasing trap of "complacency." Make sure the contractor's operation is monitored for compliance with all terms and conditions. The purchasing managers in these future relationships will have to have advanced skills in management as well as good relations with their peers and upper management, along with the ability to communicate well with the elected officials.

© 1998 by Donald L. Woods, All Rights Reserved