Is a Cooperative Agreement Legally Binding? What Higher Ed Sourcing Pros Should Know

What Is a Cooperative Agreement?

A cooperative agreement is a contract whereby two or more parties join together to work collaboratively. It can be as simple as an agreement to provide goods or services or significantly more complex, with legal obligations for all parties.

Not all cooperative agreements are the same. A general higher ed cooperative agreement brings together multiple universities to purchase goods and services. However, in some cases, a funder may have an active role, especially when grants are part of the funding. This might include active oversight of how funds are spent.

In cooperative purchasing agreements, funders are passive (if they are part of the equation at all). In this case, multiple colleges or universities purchase goods or services under a single contract that is pre-negotiated, typically by a group purchasing organization (GPO) or sourcing cooperative. Since the terms are already agreed upon, the institutions can utilize the contract.

These cooperative purchasing agreements enable you to take advantage of bulk buying to achieve lower rates. Suppliers benefit from economies of scale. That’s why procurement teams generally produce significant cost reductions when opting for a cooperative purchase agreement.

So, Are Higher Ed Cooperative Agreements Legally Binding?

Yes, higher ed cooperative agreements are legally binding documents, but you need to understand how these contracts work to know what parts define the obligations. Certain terms, conditions, pricing structures, and deliverables, that are part of the contract, will be enforceable by law.

When institutions agree to participate in the agreement, suppliers are bound by these terms. However, schools have flexibility in how these contracts are used. They are not purchasing orders. Typically, higher ed cooperative agreements spell out pricing for certain goods or services, providing access at a discount. Schools can still choose their level of participation. In some cases, the agreement includes pricing tiers, incentives, or rebates depending on purchasing volume.

Evaluating Higher Ed Cooperative Agreements

Before committing to a cooperative purchasing agreement, schools must understand its terms and conditions and their obligations in order to fullfill their part of the agreement. Due diligence avoids surprises later and ensures that the cooperative agreement delivers the expected benefits.

Understanding the Terms and Conditions

Pay special attention to:

• Pricing terms and discounts: Verify that the pricing structure is favorable and transparent. Be sure to understand whether the prices are fixed, subject to fluctuation/pricing resets, or based on volume discounts.
• Duration and renewal clauses: Understand the length of the agreement and any automatic renewal clauses. Some agreements may lock you into a contract for a specific term, so it’s important to consider flexibility for future needs.
• Performance metrics and deliverables: Review any service level agreements (SLAs) or performance benchmarks.
• Exit clauses and termination: Pay attention to the conditions under which you can terminate your participation in the agreement. In some cases, these provisions might allow you to exit early if performance standards aren’t met or if the agreement no longer serves your needs.

Compliance and Regulatory Considerations

Higher education institutions must ensure that cooperative agreements comply with a variety of local, state, and federal procurement regulations. There are also internal policies, such as those directed at competitive solicitation or sustainability goals.

If there are grants involved in funding the procurement process, you must also make sure these agreements comply with grant requirements.

Risk Mitigation

Although cooperative agreements often involve a pre-negotiated contract with favorable terms, you should make sure they account for:

• Liability and risk allocation: Specify which party is responsible for any damages or legal issues that may arise during the agreement.
• Dispute resolutions: Determine how any potential conflicts will be resolved, whether through arbitration, mediation, or other legal processes.
• Confidentiality and security: With increasing concerns over privacy and data protection, ensure that confidentiality agreements and data protection clauses are included, especially if the cooperative agreement involves sharing sensitive or proprietary information.

Monitoring and Managing Performance

Once you enter into a cooperative agreement, you still need to manage and monitor the agreement to maximize its value. This can include:

• Tracking deliverables: Keep track of the agreed-upon deliverables and timelines to ensure the vendor is meeting their commitments.
• Assessing supplier performance: Evaluate supplier performance over time and document any instances of non-compliance or failure to meet agreed standards.
• Building supplier relationships: Developing close relationships with suppliers can lead to innovation and collaboration.

Consistent r performance monitoring ensures that the cooperative purchasing agreement continues to deliver value, and reduces the risk of unmet expectations or missed outcomes..

Save Time and Money with Higher Ed Cooperative Agreements

E&I Cooperative Services has hundreds of competitively solicited, ready-to-use higher ed cooperative agreements. Competitively solicited on behalf of its more than 6,000 member institutions, these agreements include volume discounts and terms favorable to colleges and universities.

View available contracts and see how cooperative purchasing agreements can save you time and money.