Can Cooperative Purchasing Help Stretch Your Budget?
By Tammy Hurst, AEPA President
Purchasing anything for a K-12 school or district can turn complicated quickly — especially when the cost of goods reaches a state’s purchasing threshold and a formal bid is required.
As school business officials know, the process is certainly not like the consumer experience of finding and hiring a contractor. Instead, the rules for school purchasing agents can be tricky, as they impose myriad protocols to ensure that tax dollars are efficiently, fairly, and adequately distributed.
Behind-the-scenes costs build up as the purchasing agent places legal ads in local newspapers and writes bid terms and conditions. Purchasing agents must create product specifications that meet district requirements, but they still have to be impartial and fair to competing vendors at the same time.
Meanwhile, time is money, and waiting for bid responses can take 30 days. Upon arrival, bids must be evaluated on the basis of specifications, criteria in terms and conditions, and state law. To gauge the ability of vendors to perform, the purchasing agent also delves into bidders’ past responsiveness to predict potential performance. If necessary, they will mediate bidder protests and more — all before the bid is even awarded.
Once the award is secured, the purchasing agent must go back to building and nurturing relationships with other companies because the next bid journey is right around the corner. Although school bidding might sound “easy” to outsiders, it’s a complex process with many moving parts, and there’s a lot of money at stake for schools that prefer to spend money on kids rather than on administration.
Reducing Nagging Bidding Pain Points
The process of seeking competitive bids proves tedious for purchasing agents, cumbersome for employees who want supplies, and toxic for the district’s bottom line.
What tops the list of pain points? The writing of product specifications, the 30-day (at minimum) wait period for bids to come in, and the potential to field bad bids or unreliable bidders.
It’s not unusual for a school district to spend upward of $5,000 in staff costs and $500 in advertising when conducting bids.
When bids come in, low bidders might not have the “get-along” personalities needed to do the best job for a district. All of this proves frustrating for schools.
So many of those pain points center on the siloed procurement process among schools, which is why many districts tap cooperative purchasing programs for streamlined procurement that is legal, faster, and cheaper. When school districts get together, efficiencies increase for purchasing agents, prime vendors are accessible because buying power increases, and cost goes down for individual districts.
Benefits of Cooperative Purchasing for Schools and School Districts
Just like buying in bulk can provide a huge return on investment, so can working with a cooperative purchasing entity. In general, all ROI can be divided into two buckets: hard and soft savings.
Hard savings are easy to measure because they’re direct, like the cost to announce and advertise a bid. Soft savings are a bit harder to define because they’re indirect. For example, the time staff members take facilitating their own bids can be labeled a soft cost.
In the soft category, a simple bid can cost as much as $5,000 in staff time. Large enterprise-level purchases can cost five times that much. A cooperative purchasing contract removes the paperwork and bureaucracy so that purchasing agents can spend time on more important tasks, like developing strategies and offering needed management consultation.
A Quick Overview of the Cooperative Purchasing Agreement Process
When it comes to the pain points associated with the school bidding process, cooperative purchasing systems like the Association of Educational Purchasing Agencies (the AEPA, for short) can provide instant and long-term relief.
AEPA, as an umbrella organization, uses the leverage of 29 state-level purchasing cooperatives to aggregate national demand. It centralizes the hardest parts of bidding: the development of specifications, the writing of terms and conditions, the solicitation of bids, and the evaluation of offers.
But the association respects respective state procurement rules and allows each state to make its own award decisions for contracts that have passed through the AEPA’s evaluation and recommendation process. Therefore, the state-level cooperatives serve as curated sources for awarded bidders representing a variety of purchasing categories.
By making the bidding and purchasing process less cumbersome, AEPA helps schools and school districts make the most of their financial resources. At the same time, vendors appreciate leveraging the ability to serve educational clients across state lines without having to submit countless bid proposals. Once a vendor has been approved, the vendor’s original bidding contracts can be renewed annually for up to four years. That’s a clear incentive for the vendor to offer an unbeatable price.
How Does AEPA Approach Cooperative Purchasing?
Interested in learning more about how cooperative school district purchasing differs from a traditional procurement strategy? Here’s how a generalized AEPA-initialized bidding process works.
First, AEPA assigns an oversight committee made up of K-12 peers to a specific bidding category (such as office supplies, instructional materials, or security solutions). With the assistance of an expert consultant, the oversight committee studies the bidding category and identifies possible vendors.
Then, the oversight committee puts bid terms, conditions, specifications, and evaluation procedures into a bid document. Any category-specific terms are merged into a package with general legal terms and conditions common to all participating agencies. The oversight committee loads the bid solicitation package into an electronic bidding platform, which is then distributed to hundreds — if not thousands — of potential bidders. Concurrently, each of the participating AEPA member agencies places bidding advertisements in newspapers within their jurisdictions to encourage submissions and comply with state laws.
After that, vendor companies submit bids electronically, and a separate bid committee evaluates bidders’ paperwork before turning in correctly completed documents to the respective oversight committees. The oversight committees evaluate all bids on specification compliance and price and then submit their results to the full AEPA board. Board members vote to make formal award contract recommendations to the respective state-level agencies.
Next, individual state members consider the AEPA board’s recommendations. If they believe the recommended bidders meet their state laws, rules, and regulations, they bring the bids to their local agency boards for a formal contract award. Each state member executes paperwork to implement the contract according to specific procedures. The awarding state agency and vendor work together to promote contract usage within the state.
Awarded vendors and state agencies report sales to AEPA quarterly. Likewise, contracts are reviewed yearly for performance and sales volume. Those that receive positive recommendations by the oversight committee are eligible for a one-year renewal in all AEPA state jurisdictions.
Is Your School District Using AEPA Cooperative Purchasing Contracts?
Through one or more of the 29 member agencies of AEPA, school districts in all 50 states can take advantage of purchasing contracts that have already been bid, evaluated, and awarded.
Why waste days, weeks, or months? Get projects handled fairly and legally faster and more cost-effectively.
Tammy Hurst of Ohio is the president of the Association of Educational Purchasing Agencies. She holds school business licenses from the state of Ohio as both Treasurer and Education Business Manager. She earned her Masters of Business Administration from the University of Akron, and she is a frequent presenter on school business topics, such as “Maximizing Purchasing Power in a World of Shrinking Resources.”