Overview of National Cooperative Contracting

Rutgers University Public Purchasing Educational Forum and NIGP Region II Annual Conference

April 30, 2014 Marc Pfeiffer, Principal, PfeifferGov, LLC

In the Beginning…

• • • Users bought whatever from whomever they wanted; then, Public procurement laws requiring open competition and lowest responsible bidders; then, • Development of state, then and regional NJ cooperative contracts, then, Increased overhead of procurement process to ensure transparency, fairness, and meeting public policy goals.

Then…

• • • Evolution in Lowest Responsible Bidder policy over time and over jurisdictions creates new procedures Marketplace and technological evolution creates new tools and opportunities National” cooperative purchasing develops and evolves from the concept of volume aggregation to a new model

National Co-op Contracts

• • • “You can get anything you want, at Alice’s National Co-op” • Various type of structures – government agencies, 3 rd parties, non-profits, for profits • Uncertain volume bids and RFPs – no commitment • Everything from almost everyone under some contract Lowest responsible bids or request for proposals?

• “Best value” awards and “soft” criteria • “Lowest” and “negotiated” and conflict with lowest responsible bid • Subject to each jurisdiction’s laws Fee for the service involved – built in to the proposal pricing (usually 2%)

Today’s Procurement Process Trade Offs

• Economy vs. Efficiency • Competition vs. User Choice • Commitment vs. Shopping • Bottom line: many national co-ops are effectively non-competitive, but efficient to use; so prudency is required • State law allows use of National co-ops, but with rooted in DPP process, statutory and case law

So What’s a Purchasing Agent to Do?

• Commit: to pledged demand programs?

• Price: is it competitive?

• Consider: how was the contract awarded?

• Controls: how was the item determined?

• Shop: is it the “best” deal?

The Process

• • Local Finance Notice 2012-10 (P.L. 2011, c.139) • Reviews the law • Recommends process that is consistent with DPP procedure and DPP process adapted to local units Is a National Co-op what you need? Economy vs. efficiency questions: • Can you bid it yourself? Time and attention to bidding.

• Do conditions of the marketplace warrant a national?

• Is pricing competitive?

• Basis of national co-op award?

• Does the national provide added value services?

• Do they meet the minimum state requirements?

State Standards for National Co-ops

• Co-op needs to have a competitive bidding process that complies with the entity’s requirements that is also an: • Open, competitive, standard process • Not a negotiation • Awarded by a government contracting unit • Advertised as a national; not after the fact • Vendor must submit to NJ local unit: • • BRC • Statement of Corp Ownership EEO Compliance • P2P • Non-collusion (local option)

Additional Standards

• • Price diligence: Must document cost savings (considering all cost factors) over conventional procedures: • Compare to state contract • Compare to current contract or other NJ co-ops • Other comparable agency contracts • You don’t have to bid it yourself first • Can consider cost and time of a separate procurement Establish documentation that shows compliance = audit protection

More Standards

• Process and vendor must meet state and any local pay-to-play requirements • Meaning the agency issuing the contract had to use a “fair and open” process.

• Disclosure statements if not • Agency must get verification • Legal advertising consideration – a legal ad telling other vendors you are thinking about a national • State has to do it; advised, but not mandated for local units.

• Not applicable to public works/construction services; or to GSA contracts

Best Practices

• • • • • Review LFN 2012-10 • Check to see if there is a NJ State or other co-op contract to see if they have what you want • Make sure there is sound justification for making the vendor choice over other vendors Make sure there is compliance with any co-op requirements and any other state requirements Check voucher or P-card payment procedures Comptroller reporting requirements $2M/$10M Document compliance • “Justification for utilizing a cooperative contract”