Imagine this: you have the ability to buy in bulk from vendors in your area. You are able to take advantage of competitive pricing to realize administrative cost savings. And, you can build a relationship with the vendor that’s giving you supplies.
Don’t believe it’s possible? Then, you need to learn more about cooperative purchasing contracts. These contracts establish agreements between state agencies, vendors, businesses and regional or national associations group purchasing.
In turn, each entity has the ability to save money and succeed. Those benefits of cooperative purchasing then spread to other businesses, though the use of piggybacking within the cooperative purchasing organization.
To learn more about cooperative purchasing agreements and how piggybacking works, keep reading. We have everything you need to know.
What Is a Cooperative Purchasing Contract?
A cooperative contract is an agreement between a vendor and several businesses. These entities sign a contract to lower the cost of goods and services via economies of scale. Since businesses already need these goods and services, it’s a great deal.
Sometimes, cooperative contracts are referred to as cooperative procurements or cooperative agreements.
While cooperative contracts used to focus on gasoline, cleaning supplies, and hazardous waste disposal, now cooperative contracts are extremely complex and inclusive of a variety of goods and services. (The recent rise in technology plays a huge role in the ease of this process.)
Here are some common supplies included in cooperative purchasing contracts (These are common no matter whether it’s a regional or national cooperative):
- Digital copiers/printers
- Electronic defibrillators
- Industrial lab supplies
- Commercial roofing services
- General contracting
- Carpeting and flooring
- Computer hardware
- Wireless radios
The list goes on and on.
What Is Piggybacking in a Cooperative Purchasing Program?
Piggybacking happens when a business uses a contract that it’s already established. Thus, this business is piggybacking on the terms and prices that the contract details.
To take advantage of piggybacking, there must be piggybacking terms in the contract. Piggyback contracts are quicker purchasing resources than other avenues because companies and agencies bypass the request for proposal (rfp) process. It’s useful for small and big businesses alike.
Essentially, piggyback contracts create price cuts that normally only larger businesses can take advantage of. Contracts like these encourage vendors to offer lower prices and businesses to strike a deal while the price is hot.
Thus, businesses save money and vendors are able to offer streamlined cooperative purchase options without having to deal with solicitation.
- Piggybacking contracts are easy to administer
- With a wider variety of piggybacking contracts, you’ll bring in more participants
- Businesses, state agencies, schools, etc. can lower their administration and procurement costs
All in all, piggybacking in cooperative purchasing helps everyone involved, in particular, businesses and government agencies that save money on large expenditures. And, it’s a quicker option for businesses that want to take advantage of an existing deal.
How Does Using a Piggyback Contract Save Time?
If one business isn’t on an existing cooperative contract, you may think that they should find other businesses to form a new one. But, this isn’t as easy as it sounds.
To form these contracts, governments and businesses have to search for months. They have to speak with vendors and compare deals via competitive bidding to find the deal that they’re looking for.
On top of that, there are administrative costs and timing issues to worry about.
In short, piggybacking and utilizing an existing cooperative purchasing organization skips many steps and allows companies to get started faster.
What Are the Drawbacks of Piggybacking in Cooperative Purchasing?
Unfortunately, when the government and businesses are saving money, vendors often realize leaner margins because the contract offers a bulk price (so the vendor isn’t making as much money as they normally would per unit).
However, the vendor is forming multiple relationships with a variety of organizations and is offering a very particular service/product for a set price.
Another potential downfall is that cooperative purchasing contracts need signers. If few businesses sign on, the savings could be minimal.
With more signers, businesses save more per unit. If there are fewer signers, the savings may not be enough to support an entire agreement.
Even if businesses sign onto the agreement later, this could be unfair to the contracting agencies that are already a part of the agreement. Depending on the agreements, the original contract users may not get the full benefits that they signed for.
How Does Piggybacking Help Governmental Entities and Other Public Agencies?
Overall, cooperative purchasing contracts result in lower prices. This is because these contracts set a standard for the goods and general services that are listed in them.
When goods and services are standardized, governments (and vendors) benefit. In particular, these agreements help small governments, because these agreements can help small local governments get access to the same kinds of resources that larger government agencies get.
It’s also important to note that the quality of goods and services in a cooperative contract is often better. This is because vendors have been vetted by the cooperative and the public procurement process was put in place by several individuals overseeing the cooperative:
- Procurement officials
- Technical evaluation committees
- Specialized specification writers
These kinds of professionals know how to get what they’re looking for in these kinds of contracts. Thus, governments enjoy having better quality items and services. Thus, by joining a contract with larger public entities, smaller governments may be able to benefit greatly.
Cooperative Purchasing and Commercial Roofing
Overall, piggybacking in cooperative purchasing can save time and money. Plus, it may lead to higher quality goods and services.
That’s why our team here at Tema Roofing Services is part of two cooperative purchasing organizations–The Interlocal Purchasing System (TIPS) and OMNIA Partners. We’re the only commercial roofing company in the Youngstown, Ohio area with cooperative contracts, and we’re proud to give our clients the ability to explore alternative purchasing options.
We encourage you to check our cooperative purchasing process if you’re interested in learning more!