Reasons for Cooperative Procurement Reform

Our free market society is based on competitive bidding which guards against favoritism, improvidence, extravagance and corruption. Simply put, the consumer should have a choice as to the services and products they purchase. The AREP believes that cooperative procurement is an excellent means to purchase commodities as long as there is a competitive bidding system comparing apples-to-apples. Done properly, cooperative procurement, as a collaborative effort, can achieve benefits in pricing, product quality, and contract process efficiencies.

However, without free, open and competitive bidding, the system simply does not work. In addition, capital projects and new construction do not lend themselves to be purchased “in bulk” as a commodity. Without robust competition, and when used for non-commodity products and services, the cooperative procurement process has inherent limitations. These limitations can include:

• Impeding the fiscal responsibility in public procurement process because the process does not allow for transparency in the bidding process.
• While under the guise of saving taxpayer’s dollars, the opposite effect sometimes occurs.
• Oftentimes, even contracts for commodities are not compared on an apples-to-apples basis.
• Representatives from municipalities, school districts, government officials and anyone using cooperative procurement can be improperly influenced by manufacturers and their representatives.
• Bid specifications often limit, rather than encourage competition as some specifications are written in such a manner as to only allow for one type of product, application or material to be used.
• Limited bid notice periods may only benefit pre-selected “insiders” and eliminate competition.
• Disqualified or excluded bidders may have limited ability to challenge or appeal bid awards.

In the instances of capital projects and new construction, the limitations in the cooperative procurement system can include the following:

• Loss of pricing benefits because the nature of the contract requires the supplier(s) to cover costs that may not be applicable for a specific project. Each project is unique and the fiscal benefits of mass procurement dwindle, especially when the purchaser is not in close geographical proximity to the service provider. To this point, local contractors, qualified to fulfill the contract, are unable and, in many cases, unaware of these contracts because through the very nature of the procurement process, projects do not go through the bidding process.
• Lack of provisions for “professional services.” In the case of capital improvements and new construction, the process does not allow for architects, designers, specifiers, engineers and other third party consultants to evaluate the projects.
• Potential for non-compliance to local codes. Because professional services are not a part of the cooperative procurement process, capital improvement projects and new construction may not comply with local codes.
• Cooperative procurement may limit the use of third party consultants and evaluations, sometimes in direct conflict with state building codes.

For these reasons, the AREP is seeking a reform to the cooperative procurement process. The AREP strongly advocates that a transparent and open bidding process be adhered to by purchasing agencies to insure competitive bidding and fiscally responsible use of taxpayers’ dollars.