What is a cooperative contract?

Cooperative contracts are most widely used in public procurement i.e.: state and local governments, however, you will also find cooperatives in both K-12 and higher education.  These types of contracts involve the sharing of contracts between organizations.   As defined in the American Bar Association Model Procurement Code for State and Local Governments, a cooperative contract is “A procurement conducted by, or on behalf of, one or more public procurement units.  When establishing a cooperative contract, the buying unit will identify a common requirement across multiple buying units.” 

As there are varying types of cooperative contracts, it is important to understand what these terms mean prior to participating in a cooperative bid:

• Third Party Aggregators:  An organization bringing together multiple organizations to present their requirements and manage the resulting contract(s).
• True Cooperatives: Two or more organizations combine their requirements and solicit a bid.
• Piggyback:  One or more organization represent their requirements and include an option for other organizations to use the contract as awarded.

Advantages for vendors:

There are many advantages for a vendor to participate in a cooperative bid.  Here are just a few of those advantages:           

• The vendor only needs to go through the bid process once to establish a contract for others to use.  This saves time and money as there is no need to visit multiple jurisdictions and negotiate.
• You can use the cooperative contract as a way for jurisdictions to not go through the bid process; most cooperative contracts have already been competitively bid.  However, not every public authority can participate in cooperatives and some entities prefer bidding themselves.
• Pricing is established up front and there is no need to negotiate pricing with each government entity, it is already set in the contract.  However, there may be some exceptions to this; such as unique sale pricing, distance of delivery, or end of a product line.

Where are the cooperatives:

There are many cooperatives and opportunities to make your contract available to a wide variety of customers.   I have provided some examples of cooperative organizations, which show there is a variety of organizations and opportunities.  This is a growing area of procurement, so do your research prior to participation.  To finish, when participating in a bid, look for the opportunity to either participate in a cooperative or if already established in a cooperative, use that contract as the first option. Good luck!

Examples of Cooperatives:

• State of Michigan MiDEAL :  http://www.michigan.gov/dtmb/0,5552,7-358-82550_85753—,00.html
• NASPO ValuePoint:  http://naspovaluepoint.org/
• US Communities:  http://www.uscommunities.org/about/
• National Joint Powers Alliance Purchasing Cooperative (NJPA):  https://www.njpacoop.org/about-us

If you have any questions on how MLC can help your business before, during, or after the procurement process, please feel free to contact me at 517.372.2560 or tony@mlcmi.com.

Michigan Legislative Consultants is a bipartisan lobbying firm based in Lansing, Michigan. Our team of lobbyists and procurement specialists provide a wide range of services for some of the most respected companies in America. For more on MLC, visit www.mlcmi.com or connect with us on LinkedIn and Twitter.