Goodyear Tire & Rubber lets dealers offer U.S. General Services Administration pricing. As a result, Red Wing, Minn., deputy public works director Jay McCleary (right) gets the same low prices on tires for the city's 250 vehicles that federal agencies pay. “Public works is a business just like anybody else,” says director Denny Tebbe (left). Photo: City of Red Wing
HGACBuy also solicits bids through mass-circulation and minority-emphasis media, which satisfies most public works departments' formal competitive bid requirements. Many of the contracts HGACBuy makes available are for heavy equipment and vehicles for construction and public works applications.
Other national cooperatives, like U.S. Communities Government Purchasing Alliance and the Western States Contracting Alliance, exist to generate interest in and market the contracts, which are solicited by lead governmental agencies. Typically, vendors pay for this service, about 1% to 2% of sales, which they ultimately pass on to buyers through a slight price increase.
“Regardless of whatever model you choose, you need to be comfortable with what the cooperative is doing to put that contract in place—as well as all fees involved, be they supplier-paid or government-paid,” says HGACBuy manager Bob Wooten.
“Cooperative purchasing is a great thing, but there are several avenues you'll have to explore to make sure you can accomplish what you want,” says Jay Mc-Cleary, deputy public works director for the city of Red Wing, Minn., and one of the few public works managers to be certified as a professional public buyer by the National Institute of Governmental Purchasing.
McCleary saved almost $10,000 on a new Caterpillar motor grader by buying it off the state's cooperative purchasing contract (see photo). The city pays $500 each year to belong to the Minnesota Cooperative Purchasing Venture.
McCleary also uses Minnesota's Joint Powers Act to set up purchasing agreements with other government agencies. For about a decade, the city of Red Wing, the Red Wing School District, and Goodhue County have used the same contract to maintain common building elements such as elevators, alarm systems, and sprinkler systems.
“It was silly for all of us to contract out the same services separately,” Mc-Cleary says. Policies were passed by the three entities' governing bodies allowing them to use the same contract for such services. The contracts typically are for three years, and renewable for an additional three years. Vendor participation on each bid has been as low as two and as high as six.
Collaborative purchasing like this requires strong, consistent communication and the desire to share the associated administrative burden.
“Sometimes the savings are insignificant to us, but very significant to one of our partners,” says Red Wing public works director Denny Tebbe. “Sometimes it's the other way around.
“Either way, it's our job to deliver services to all our citizens as economically as possible. Working together allows us all to leverage our resources.”
Read the sidebar: But My Vendor Said: Dispelling the biggest myths about cooperative purchasing