Key Takeaways

  • Cooperative purchasing contracts allow multiple government entities to leverage collective buying power to achieve lower prices and simplified procurement.
  • There are several cooperative purchasing models, including definite quantity, indefinite quantity, and piggyback contracts.
  • Cooperative contracts streamline procurement, reduce administrative costs, and ensure compliance with competitive bidding requirements.
  • Public agencies can join national or regional cooperatives like NIGP, Sourcewell, or OMNIA Partners to access pre-solicited contracts.
  • These contracts can improve efficiency, transparency, and value for taxpayers while maintaining vendor competition and contract integrity.

Cooperative contracts — also known as cooperative procurements or cooperative agreements — are agreements between the government and businesses, created in order to lower the costs of procuring goods or services that multiple entities commonly need.

What Is a Cooperative Contract?

Many of the earliest cooperative efforts involved bulk goods with standard specifications, such as the following: 

  • Gasoline and fuel 
  • Cleaning supplies 
  • Pick-up and disposal of hazardous materials or waste  

Today, there are more complex requirements due to the increase in technology, so cooperative contracts may include information technology services, consulting, and software.

More examples of items in cooperative agreements include the following: 

  • Digital copiers 
  • Office supplies 
  • Office furniture 
  • Printers 
  • Computer hardware 
  • Carpeting 
  • Wireless radios 
  • Paper 
  • Cell phones
  • Fleet vehicles
  • Industrial lab supplies 
  • Pharmaceuticals 
  • Infant formula 
  • Electronic defibrillators

How Cooperative Purchasing Contracts Work

Cooperative purchasing contracts operate through a lead agency that solicits and awards a contract on behalf of multiple participants. Once a competitive solicitation is completed in compliance with public procurement laws, other entities can “piggyback” on the contract terms to purchase goods and services.

The process typically includes:

  1. Lead Agency Solicitation: A public entity issues a Request for Proposal (RFP) or Invitation for Bid (IFB).
  2. Evaluation and Award: Vendors are evaluated based on best value or lowest responsible bid.
  3. Contract Availability: The finalized contract is made accessible to other qualified entities.
  4. Use by Participating Agencies: Cities, counties, schools, and other organizations can use the pre-approved contract to make purchases without repeating the solicitation process.

This model ensures transparency and compliance while eliminating redundant procurement steps. Many government entities prefer this approach for its ability to reduce administrative workloads and deliver faster purchasing cycles.

Cooperative Purchasing Models

There are various purchasing models, with distinct pros and cons to each.

Types of Cooperative Purchasing Agreements

In addition to standard purchasing models, cooperative purchasing contracts may take several forms:

  • National Cooperatives: These serve public entities nationwide and negotiate large-scale contracts for broad use. Examples include OMNIA Partners and Sourcewell.
  • Regional or State Cooperatives: Smaller networks focusing on local governments, such as school districts or counties.
  • Agency-to-Agency Agreements: Direct partnerships between local entities to share procurement responsibilities.
  • Joint Solicitation Contracts: Multiple agencies jointly develop specifications and evaluate vendors before awarding a shared contract.

Each structure provides flexibility based on an entity’s procurement needs, enabling both large and small participants to access competitively priced products and services.

Definite Quantity and Delivery

A direct economic relationship exists between risk and price. The lower the risk, the lower the price. In definite quantity contracts, cooperative members and respective requirements are clearly identified. These contract types also specify schedules and delivery locations.

The pros of this purchasing model include the lowest possible prices due to guaranteed demand. 

Disadvantages include the inability to predict and commit to specific schedules and requirements. It may also be hard to agree on common requirements in the contract. Being able to fulfill commitments to contractors is another challenge.

Indefinite Quantity and Delivery

In this purchasing model, governments may be able to cut down on administrative costs and achieve economies of scale. It's clear who the participants are. Requirements are estimated, and there's no commitment to specific purchases. Bidders' confidence in estimates is often determined by the price.

Pros of this model include the following: 

  • Solicitation may be easier since participants don't have to commit to definite quantities. 
  • Contracts offer more flexibility for members, which allows room for negotiations in terms and conditions or variations in requirements. 

Cons include the following: 

  • Higher prices may result from uncertainty. 
  • Bidders may not offer their best prices due to a lack of confidence in requirement estimations.

Piggyback Contracts

When a government entity allows other jurisdictions to use a contract it's already established, it's known as “piggybacking” on the contract's terms and prices. Specific piggyback terms must be included in the contract, and the vendor has to agree.  

These are the most immediate purchasing resources, particularly for smaller communities. Large communities may benefit as well due to the pressure for lower prices to be created, leading to savings in administrative costs. 

Pros of piggyback contracts include the following:

  • They're easy to administer.
  • A wider variety of participants is possible due to the wider variety of contracts. 
  • Administrative costs are lower. 
  • Smaller governments can save money. 

Cons include the following: 

  • The cost savings could be minimal because participation can't be predicted.
  • Local vendors may see these contracts as unfair. 
  • Contract users don't get the full benefits if other entities join after the fact. 

Compliance and Legal Considerations

When using cooperative purchasing contracts, compliance with procurement laws and internal policies is critical. Agencies must verify that the original solicitation followed competitive bidding standards and that the contract allows piggybacking. Many states and municipalities require documentation showing the contract’s public nature and vendor authorization.

Best practices include:

  • Confirming the lead agency’s procurement compliance.
  • Reviewing contract language to ensure extension rights.
  • Maintaining records of cooperative purchasing justification and approvals.
  • Checking vendor eligibility within your jurisdiction.

Public entities should also ensure contracts align with local statutes governing public funds and ethical procurement standards.

How Cooperative Contracts Benefit Governments

Cooperative contracts result in lower prices. When products and services are standardized, governments benefit from the combined efforts of multiple organizations. This is particularly beneficial to small governments because they can enjoy the market share that larger governments leverage.

The quality of goods and services increases when cooperative contracts are used because the following are used to create better contracts: 

When large government agencies combine resources, small governments gain benefits as well. Sharing procurement professionals among entities allows for the reallocation of internal resources. 

One contract and one procurement process serve multiple entities. Because the preliminary work has been completed for more than one agency, administrative costs are lower.

Cooperative contracts are convenient because customers can choose goods and services from one contract instead of seeking bids, quotes, or proposals from various outlets. This saves time and effort.

Due to so many advantages of cooperative contracts — including a better application of resources and lowered total cost of government — these types of agreements are beneficial to citizens of large and small governments. They may not work for every type of business relationship, but they're worth considering for certain industries.

Joining and Using Cooperative Purchasing Programs

Public agencies can easily join cooperative purchasing programs by completing a membership registration, often at no cost. Once approved, members gain access to a portfolio of pre-solicited contracts covering categories such as office supplies, fleet management, IT equipment, and construction services.

Examples of popular programs include:

  • NIGP Cooperative Purchasing Program: Provides joint solicitation and piggybacking opportunities for government agencies.
  • OMNIA Partners: Offers contracts for public and private sectors, emphasizing compliance and best-value procurement.
  • Sourcewell: Streamlines procurement with hundreds of competitively solicited contracts designed for municipalities, schools, and nonprofits.

Membership offers significant advantages, including faster purchasing timelines, reduced legal risk, and improved vendor diversity.

Frequently Asked Questions

1. What is a cooperative purchasing contract? It’s a procurement agreement that allows multiple government entities to use a single competitively solicited contract to buy goods or services at pre-negotiated prices.

2. How do cooperative purchasing contracts benefit public agencies? They reduce administrative costs, ensure compliance, and provide access to favorable pricing through collective purchasing power.

3. Are cooperative purchasing contracts legally compliant? Yes. As long as the lead agency’s solicitation followed competitive procurement laws and participation terms allow sharing, they meet legal standards.

4. Can private organizations participate in cooperative purchasing programs? Some programs extend membership to nonprofits, educational institutions, and utilities, though eligibility varies by cooperative.

5. How can an agency join a cooperative purchasing program? Agencies typically register online with documentation confirming their public or eligible status, gaining access to pre-approved contracts after approval.

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