As school business officials know, the buying process for their agencies is certainly not like the consumer experience of finding supplies or hiring a contractor. Instead, the rules for school purchasing agents can be tricky, as the law imposes myriad protocols to make sure tax dollars are efficiently, fairly, and adequately distributed.
Buying anything for a K-12 school or district can turn complicated quickly — especially when the cost of goods reaches a state’s requirement for a formal bid from vendors.
The term for the point at which a district’s expenditures must be covered by a formal bid process is called a bid threshold.
Behind the scenes, oblivious to most other employees and parents, the costs of acquisition build up as the purchasing agent places legal ads in local newspapers and writes bid terms and conditions.
Purchasing agents must spend time creating product specifications that meet district requirements, but they must still be impartial and fair to competing vendors at the same time.
Meanwhile, time is money. Waiting for bid responses can take 30 days – often more. Upon arrival, bids must be evaluated based on 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 a 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. There’s a lot of money at stake for schools that prefer to spend money on instruction for kids rather than on red tape.
This is where purchasing cooperatives come into play. They do much of the administrative work of soliciting bids, so purchasing agents can spend their time on more important and cost-effective tasks.
Definition of Cooperatives
The National Association of State Procurement Officials (NASPO) has tried to define cooperatives because they come in many forms.
The Association of Educational Purchasing Agencies (AEPA) fits in the association’s definition of a “true cooperative” because it is an arrangement in which two or more organizations combine their requirements and solicit bids for goods, aggregating volume to enhance their purchasing power.
Another type of co-op arrangement under NASPO’s definitions is the option for “piggybacking,” the term for contract language that lets another agency share a lead agency’s purchasing contract with the consent of the awarded vendor under the same terms and conditions.
Finally, a third-party aggregator is a co-op arrangement where an organization – possibly a company, non-profit, or public agency – brings together multiple organizations to represent their requirements and manage the resulting contract or contractor.
No matter what their type, co-ops almost always support their bidding services and day-to-day administration based on a business model that includes a transaction fee, paid by awarded vendors as a cost of doing business, just as they would a utility bill or a credit card fee.
A common myth is, “Doesn’t this fee increase the final price of goods to school districts?”
No, because co-ops help businesses lower their cost of doing business. They get more business leads. They get more sales volume, and they reduce the number of solicitations they receive for bids and quotes.
Continuous Improvement
Co-ops have a long and storied history. While purchasing law is largely based on mid-20th century laws, co-ops have innovated and become more versatile. When they began, they were more narrowly focused on commodities and buying in bulk. Today’s co-ops support just-in-time purchasing that avoids the task of warehousing and intra-district deliveries.
Today co-ops heavily use technology for bid solicitations. They accept bids electronically. They use modern marketing techniques to publicize contracts and prices. Plus they use the resources of experts, the Internet, and artificial intelligence to develop better specifications than most antiquated purchasing laws could ever have imagined.
To learn more about the Association of Educational Purchasing Agencies, visit www.aepa.coop. Contact your member state representative or AEPA’s Executive Director George Wilson for more information.
