Overview of National Cooperative Contracting 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. Then… • 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 Co-op” • 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 Offs • 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 Do? • 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: • BRC • 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 procedures: • • • • 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 procurement • 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”