A quick dive in to what is happening in the world of Procurement in the eyes of Contractors and Governments.
Estrada Consulting Inc.
- National Institute of government Procurement states after conducting extensive due diligence and market research, public procurement should, where permissible by law or regulation, consider the use of cooperative contracts, in order to lower prices, lower administrative costs, increase competition, and obtain more favorable terms and conditions.
- The 2019 Survey shows a strong favor amongst all parties for more cooperative contracts
- By Introducing cooperative contracts, governments can help obtain quality goods and services to support effective and efficient government ensuring the prudent use of public funds.
This week the annual survey of State and Local Government Procurement Professionals was published through a collaborative effort between GovWin and Deltek which brought along with it some incredible insight in to the future of procurement from multiple angles; notably in this regard was the strong preference of cooperative contracts in the industry from both Contractors and Government’s.
What is Cooperative Procurement?
Cooperative Procurement is a term that refers to the combining of requirements of two or more public procurement entities to leverage the benefits of volume purchases, delivery and supply chain advantages, best practices, and the reduction of administrative time and expenses.
To understand simply, is that two or more organizations combine their resources in order to pull of a larger project that they would not have individually qualified for or been able to efficiently complete.
This allows for a more opportunity for growth and cooperation between organizations looking to gain contracts.
This survey was done by testing four potential motivations for making a purchase using a cooperative contract; Time, Money, Solutions, Gap Filling.
What does this mean?
The results were heavily skewed as most organizations would prefer having the ability to collaborate and cooperate with third parties in order to efficiently pull off a project.
From a contractor perspective, cooperative purchases among government buyers helps contractors to prioritize their sales efforts across both traditional and alternative channels.
Not all businesses can qualify for national contracts, but there are also regional co-ops and statewide contracts that are cooperative in nature. For those firms who can participate, these cooperative contracts offer lower marketing costs on a per unit basis, larger per-contract revenue on average, stability of income, and potentially better overall profits as a result.
Why do we need more Cooperative Procurement?
According to NASPO (National Association of State Procurement Officials): The primary role of public procurement is to obtain quality goods and services to support effective and efficient government ensuring the prudent use of public funds. Public procurement professionals add value to every government program by:
- Providing efficient delivery of products and services;
- Obtaining best value through competition;
- Offering fair and equitable competitive contracting opportunities for suppliers; and
- Maintaining public confidence through ethical and transparent procurement practices.
The benefits of cooperative contracts far outweigh the drawbacks, both contractors and governments have shown a strong inclination for it, and it will provide more competition and opportunities for all levels of contracting which will be a net positive for the taxpayers.