Chapter 20 - Joint and Cooperative and GSA Contracts

20.1.4 Challenges in using or establishing a joint and/or cooperative contract

All government purchasing organizations operate under some form of procurement or statutory code intended to achieve best value for its citizens, protect against fraud and abuse, and ensure fairness, equity and transparency and to maintain public trust. However, there may be differences that impact your agency's ability to use or participate in creating a joint and/or cooperative IT contract. This list offers some examples:

• Legal compliance:  Although most procurement laws are similar, there may be differences in government procurement codes. Some governments require strict compliance with their own procurement laws when using joint and/or cooperative contracts awarded by other governments. Communication and participation in the procurement process by joint and/or cooperative members will help the joint and/or cooperative contract achieve universal compliance.

• Buy local laws:  Many jurisdictions have laws that favor or give preference to local suppliers. These laws may interfere with the ability of a public body to develop and award a joint and/or cooperative contract or may prevent agencies from using a joint and/or cooperative contract.

• Open competition:  Many government procurement programs maintain lists of suppliers who register to compete for contracting opportunities and are required to post public advertisements for invitations for bids or proposals. Notifying local suppliers of the joint and/or cooperative IT contract solicitation and advertising the solicitation in local publications will ensure that local suppliers have an opportunity to compete for the joint and/or cooperative IT contract. Commonwealth agencies are required to post all solicitations and awards on eVA and may publish solicitations in a paper of general circulation, while our localities are only encouraged to post on eVA.

• Small business participation:  Some small businesses including small businesses owned by women, minorities, and service-disabled veterans, as well as micro businesses, may be able to handle business for one state or local jurisdiction, but may not be able to handle the combined requirements or needs of multiple governments. Encouraging local delivery and service networks and utilization of small business subcontractors will provide opportunities for these small businesses to continue to serve joint and/or cooperative members.

• Forms and terms:  With the exception of federal statutory regulations, most state and local governments use unique procurement contract terms and conditions, therefore, a joint and/or cooperative IT contract awarded by one jurisdiction may not conform to the required terms and conditions of another. There are several methods to address contractual differences, including development of standard terms and conditions for joint and/or cooperative members, inclusion of all government contract variations in the solicitation and negotiation of participation agreements between the government and supplier. Differences in state or local requirements can be addressed in a contract addendum; as long as the sponsoring agency agrees up front in the solicitation that participants may have their own terms and conditions addressed in it. An example of a statutory regulation that may be unique to the Commonwealth is the requirement for suppliers to be and remain authorized to transact business in our state through the State Corporation Commission for the life of any contract.

• Attention to pricing:  Although most joint and/or cooperative contracts generate considerable cost savings for governments, not all joint and/or cooperative contracts achieve best value. Suppliers may offer higher prices because many of the joint and/or cooperative members are small or located in remote areas. If contract usage estimates are inaccurate, price may be based on much lower than actual usage. Pricing is much more likely to be unfavorable in piggyback contracts because usage is difficult to estimate beforehand. In addition, the supplier may price the contract high because of high administrative costs associated with the joint and/or cooperative agreement.

• Time and resources:  It takes more time and effort to award a contract that serves multiple governments and agencies than it does for a contract that serves one agency. . In theory, joint and/or cooperative IT contract time and resource investments are more than recovered by using joint and/or cooperative IT contracts awarded by other public bodies. Time and resource requirements can also be reduced by using volunteers from other governments to assist with the procurement, draft specifications or participate in the evaluation process.

• Watch piggybacking:  Since "piggyback" contracts are not based on aggregated volume, agencies “piggybacking” on another entity's contract may not benefit from true economies of scale. Piggybacking off of another public entity's contract does not always produce best value. In some cases, entities may piggyback off of an existing joint and/or cooperative but fail to notify the lead state or complete a participating addendum to the contract. This can result in undocumented contract activity and volume and impact volume discounts.

• Fees:  Many joint and/or cooperative purchasing programs assess usage and access fees to other governmental entities to use their joint and/or cooperative contracts. Fees range from one time or annual enrollment fees to transaction fees ranging from less than 1% to 2% of the value of every purchase. These fees may be collected directly by the joint and/or cooperative lead contract administering entity or from the supplier.