Baltimore Regional Cooperative Purchasing Committee Cooperative Purchasing Presented

Baltimore Regional Cooperative Purchasing Committee Cooperative Purchasing Presented by Debbie Groat, C. P. M. , CPPB, ACG Coordinator, Baltimore Regional Cooperative Purchasing Committee 1

• NIGP defines this as “combining of requirements of two or more public procurement entities to leverage the benefits of volume purchases, delivery and supply chain advantages, best practices, and the reduction of administrative time and expenses. • This is different from piggybacking in which “an entity is extended the same pricing and terms of a contract entered into by another entity. ” The economies of scale are perceived to be realized because the solicitation contains a clause that allows for piggybacking. Deborah Groat, Coordinator Cooperative Purchasing Cooperative Procurement 2

• Lead Agency Model • No Fee • Aggregate Volume • Piggybacking • Local rules are followed using competitive procurement methods • http: //www. baltometro. org/ourwork/cooperative-purchasing/brcpccontracts Deborah Groat, Coordinator Cooperative Purchasing Baltimore Regional Cooperative Purchasing Committee 3

• Legislatively permitted to function as a purchasing agent for its membership. Deborah Groat, Coordinator Cooperative Purchasing • Lead Agency Model • No Fee • Aggregate Volume • Piggybacking • Local rules are followed using competitive procurement methods 4

Mid-Atlantic Purchasing Team Volume + Expertise + No Fee = Greater Savings Who • Covers the Maryland, Virginia and Washington D. C. region. • Baltimore Coordinator position is funded by City and County governments in Anne Arundel, Baltimore, Carroll, Harford, & Howard geographic areas for the purpose of cooperative purchasing. • BRCPC – Debbie Groat; dgroat@baltometro. org • WCOG – Jalene Duressa; jduressa@mwcog. org What • A supplier’s dream… • Volume • Logistics • Density • • Savings and Profit Lead agency model No commission to lead agency MAPT: formula is designed to gain additional discounts when piggybacking reaches certain pre-described spending thresholds. 5

MAPT Strategy • Considers Day 1 contract value • The value of the lead entity and any participating with their specification needs and buying volume • The value of those that choose to ride/piggyback once the contract is awarded and the results are measured • Utilizes usage reporting data to facilitate: • A more informed buyer • A more informed vendor community • This strategy supports your small and minority vendors with better information to price their bid and negotiate with their suppliers • Negotiation of lower pricing when volume increases suggest it is appropriate (negotiations may not be necessary if the Bid Work Sheet called for additional discounting with additional contract value) Deborah Groat, Coordinator Cooperative Purchasing • Considers Day 2 and beyond contract value 6

• HGAC Bids • Fee based • Share to BRCPC for its membership • Member participation only • Competitive procurement methods are used by HGAC direct bidding Deborah Groat, Coordinator Cooperative Purchasing HGACBuy 7

Deborah Groat, Coordinator Cooperative Purchasing The Cooperative Industry is strong. How do you select a cooperative? 8

• Compare available COOPS and ask “ Is the use of a COOP appropriate? ” • Does the COOP Contract meet your competitive requirements? • Does the COOP Contract conform to applicable law and best practices? • Factor the costs of conducting a procurement • Review terms and conditions to determine that the COOP Contract produces best value • Ensure your local T&Cs are incorporated in the contract • Remove offensive or unenforceable T&Cs by written agreement • Contact lead agency to verify contract application and eligibility Deborah Groat, Coordinator Cooperative Purchasing Due Diligence Checklist 9

Deborah Groat, Coordinator Cooperative Purchasing NIGP 10

Deborah Groat, Coordinator Cooperative Purchasing Coalition 11

Risk Assessment The Basic Risk Factors: • Identify the risks • Qualify the risks • Assess for impact to the procurement • Assess the probability of risk happening • Plan for risks • How will you handle if it does occur? • Monitor and manage risk • Contract administration and action plan 12

Cooperative Risk Models Individual Bidding • • Narrow volume Piggyback clause usually included Supplier will market contract No risk to supplier National Consortiums • Assumed exposure on national market • Joint advertising of contracts • Joint sales team that promotes contract that may also include the lead agency • A calculated risk for supplier MAPT • Bid day includes volumes from participating entities • Advertising of contracts on websites and via email communication • Supplier sales team focused • BRCPC and WCOG advertising of contract awards • Escalating discounts in consideration of piggyback volumes that increase overall value of contract • No risk to supplier. 13

What are we doing today? • • What we do: Participate in a cooperative purchase Monitor a cooperative purchase Piggyback best cooperative purchase Bid but don’t evaluate usage Bid after evaluating total usage of contract Include an escalating discount based on escalating purchase volumes Bid individually What they know: • Volumes are known to all; buyer and suppliers competing • Volumes are known to incumbent • Volumes are incorporated and known to all • Volumes are recognized as they increase and “considered” by all • Volumes are known individually and true piggybacking volume by incumbent 14

Office Supplies Where is the risk? Risk • Products purchased in volume • Products purchased in small quantities • Products priced at different profit margins • Delivery • Order value • Unknown increases in purchasing volumes MAPT Strategy • Consider present value and piggyback value • Split bid work sheet by industry categories • Allow suppliers the option to charge shipping for small dollar value purchases, and communicate value of consolidated orders to your users • Structure Bid Work Sheet to allow for lowering bid prices with added volume. • Saving participants 4 -13% on conversion year. 15

16

17

18

19

Buyer Responsibilities • Application of law, policy and procedures • Approval of specifications • Restrictive/nonrestrictive • Development of bid list • Development of bidding strategy • Supplier responsibilities • Owner responsibilities • Pricing strategy • Balance risk • Contract administration 20

• Understands the cooperative industry and what organizations operate in a manner that is acceptable to their organizational policies and procedures • Capable of determining when it is appropriate to use a cooperative agreement • Understands how to leverage cooperative buying power and communicate that opportunity to the employer, and bidders • If they choose to bid, they incorporate a benchmarking step in their bid tabulation and bid evaluation process to ensure the best overall results were achieved • Obtains annual reporting to determine the aggregate usage • Utilizes post award negotiations to ensure that the best overall results are maintained; lower unit prices when volume increases support it. Deborah Groat, Coordinator Cooperative Purchasing The New Buyer 21

• Not all cooperative organizations are designed the same • Is the cooperative organization you are using have your best interest in mind • Use due diligence in your selection process • Evaluate where you can provide added value • Evaluate where functioning as a lead agency will bring even more value Deborah Groat, Coordinator Cooperative Purchasing The Decision is Yours! 22

23 Deborah Groat, Coordinator Cooperative Purchasing