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:
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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:
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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”