The advent of internet buying has provided the opportunity for huge strides in cost-savings and operations efficiency in city procurement through electronic purchasing. Most of the advertising in the public arena, on television, billboards and in magazines gives the impression that traditional ways of buying goods and services has been replaced by electronic commerce to provide these savings. But local governments must still comply with the law and procure goods and services through competitive bidding processes. So how can your city get in on the internet and e-procurement savings revolution while satisfying the legal requirements of competitive bidding? The answer lies in cooperative purchasing.

Cooperative purchasing, which combines the buying power of distinct groups of purchasers, is not a new concept. Local governments have been joining goods and service-buying cooperatives for decades. Usually, these cooperatives take the form of a regional buying group or a product-specific buying group. Regional groups often buy fuel, automobiles or regional services together. Product-specific groups might include hospitals or health clinics. Few groups offer cities and other municipal governments the opportunity to piggyback on national contracts for office supplies, computers, furniture, electrical, telecommunications and data supplies and other commonly consumable items used by most, if not all local governments.

Cooperative purchasing groups provide a number of advantages for most cities. Because a bid is completed by one public agency on behalf of many agencies, the time and monetary costs of the bidding and evaluation processes is substantially reduced for the group members. Significant discounts are achieved through the leverage of this group effort and combined market, as manufacturers and suppliers recognize the sales volume that the group represents. Additionally, since vendors do not have to re-bid on contracts in each jurisdiction, they can factor in savings on the product offerings that would have gone into staff resources used to respond to bids.

But a cooperative can demand much more than pricing considerations. For example, enhancements like free delivery, guaranteed fill rates, performance requirements and volume incentives can be included. To the extent that vendors are capable of providing electronic ordering and fulfillment systems, cities and municipalities can receive incentives for using electronic ordering systems. Frequently the internet-ordering process is implemented with minimal effort with little need for additional expense or resource expenditure. Cities may also be able to reduce or eliminate their costly warehousing systems, as Just-In-Time (JIT) buying assures that the vendor is providing the warehousing function.

Cooperatives may include some restrictive features as well. For example, a group contract may not have specialized purchasing requirements that some governments desire or demand. Some cooperatives may require membership fees and guaranteed buying volumes. Still others may not meet the social and local buying goals of the governing body.

The U.S. Conference of Mayors (USCM) sponsors the largest national buying cooperative for local governments in the country in conjunction with the National Association of Counties (NACo) and the National Institute for Governmental Purchasing (NIGP). This cooperative, called the U.S. Communities Government Purchasing Alliance or simply the GPA, provides contracts for office supplies, furniture, computers, software and peripherals, electrical, telecommunications and data supplies. Each contract was bid by a large local government on behalf of all local governments throughout the country. The pricing discounts, delivery and service conditions, and the contract terms are available to any city or local government that is allowed to piggyback on a national contract that was conducted by a local government.

The GPA program has no membership fees and no charges are payable by city or municipal government. There are no minimum dollar or volume purchase requirements. Cities procuring goods and services through the GPA always retain the right to purchase from other sources when or where required or desired. Volume and e-commerce incentives are offered in many cases. Additionally, the social and local buying needs of city and municipal governments are addressed by several of the program’s supplier companies.

Since 1997, the Government Purchasing Alliance has saved more than $50 million for local governments. More than 6,000 cities, counties, schools and special districts, including their various departments and dependent and independent agencies use the program regularly, some exclusively, saving from 15–60 percent on goods and services. The program’s steering committee is composed of city and county purchasing agents from across the nation and the program and its quality concerns are managed by USCM and NACo.

So, how much can your city or municipality save? Reports received from cities around the country confirm that both the monetary and operational savings are more than substantial. Louis Moore, Director of Purchasing and Materials Management at the City of St. Petersburg and former NIGP President is effusive in his praise for the benefits St. Petersburg has seen since introducing the program. "We have been using the Office Depot contract for the past two years. Initially, when we started using the GPA contract we were able to double the 31% discount we were getting previously. This contract allowed us to get a 62% discount. But what we are really excited about is the fact that we have been able to combine the cooperative agreement with the use of electronic commerce. With this (GPA) agreement we are able to order online and pay the bill with our purchasing card. Our staff is able to track orders on-line and use the Office Depot electronic catalog.

The most significant benefit is the reduction of paperwork. Before we went on-line with Office Depot’s GPA program, the city would get its monthly statement in a big cardboard box and we had to distribute the statements to each department. We are talking about 1,000 transactions a month. It took weeks to complete transactions because we would have a backlog of statements we couldn’t verify. The verification process was so time consuming. We would accumulate months of backlogged statements needing to be verified. Now, each transaction is completed within 72 hours, orders are tracked on-line completely eliminating the verification of reams of paper, and the city pays one statement for the entire month with Visa. We spend about $700,000 a year on office supplies and we are very pleased with the service".

John Miller, Purchasing Director, City of Baltimore notes "The City is very excited about the economic advantages that will develop as a result of our active participation in the Government Purchasing Alliance. We have been using the Graybar contract and have been very pleased with price, delivery and service". Similarly Jeanette Bendinelli, Purchasing Agent at City of Fairfax, Virginia reports saving of about 30% over previous contracts and adds "we are extremely satisfied with the services we are receiving through GPA’s Office Depot contract".

And so while all cities and municipalities can benefit from the savings that the USCM-NACo procurement program brings, it is even clearer that the larger the local government, the greater the savings. Cities large and small around the country are also reporting significant savings on computers and software. And with the recent addition of such suppliers as IBM, Dell, Gateway, MicronPC, Software Spectrum, Knoll Furniture and Graybar Electric to the GPA, the opportunities for even greater savings have just expanded considerably.

For more information on the Government Purchasing Alliance, contact Justin O’Brien at the Conference 1-888-828-8763. Send e-mail to: jobrien@usmayors.org or visit the Conference website at usmayors.org/solutions.

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