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Cooperatives are a powerful force in business, often hidden in plain sight within some of America’s most recognizable brands. Some famous cooperative business examples that you may not know of are cooperatives, such as Sunkist, Ocean Spray, Best Western, Ace Hardware, and True Value Hardware. REI is the nation’s largest consumer cooperative for outdoor gear.
These examples illustrate how cooperation can create robust, successful businesses across various sectors. However, the power of cooperation extends far beyond consumer goods and retail. Cooperative purchasing organizations in education are helping procurement teams increase efficiency and cost savings.
In this article, we will explore national purchasing cooperatives in educational procurement, explaining how they work, their benefits, and the legal landscape. We will also debunk some of the common myths about cooperative purchasing organizations.
A national purchasing cooperative organization combines the purchasing power of multiple institutions to negotiate better prices, terms, and conditions with suppliers.
The concept of cooperative purchasing has roots dating back to the late 19th century, but it has gained significant traction in the education sector over the past few decades. This growth has been driven by increasing budget pressures and the need for more efficient procurement.
There are several types of purchasing cooperatives:
What are group purchasing organizations for education? They can be any of these three types, serving the education sector.
Typically, purchasing cooperative organizations follow a strict process to ensure compliance with federal and state laws. For example:
This process leverages the collective buying power of member institutions to negotiate favorable terms and conditions—and volume discounts—that they likely would not be able to achieve on their own.
Despite their benefits, there are several misconceptions about purchasing cooperatives. Let’s take a look at some of the common myths and the realities.
Truth: Cooperative purchasing processes are designed to meet federal and state guidelines. The bid processes are rigorous and transparent, ensuring compliance with procurement regulations.
In many cases, using a cooperative contract can help institutions meet legal requirements more easily.
Myth 2: Choosing a Coop Contract Is the Same as Sole-Source Procurement
Truth: Cooperative contracts promote supplier diversity. The bid process is nationally advertised, allowing a wide range of suppliers to participate. This can introduce you to solutions you might not know existed or suppliers that would otherwise not bid on your projects.
You can often share RFPs with your preferred suppliers, further enhancing competition and choice.
Truth: While cooperative contracts are designed to serve a broad base of institutions, they can often be amended to accommodate specific institutional or regional needs. This flexibility allows for customization while still maintaining the benefits of cooperative purchasing.
For example:
By understanding these truths, you can better leverage cooperative purchasing to meet your institutional needs while maintaining compliance and promoting competition.
What Are Group Purchasing Organizations for Education?
Group Purchasing Organizations (GPOs) can provide significant benefits for school districts, colleges, and universities. Here are just a few of the benefits.
GPOs leverage the combined purchasing volume of educational institutions to negotiate favorable pricing and terms with suppliers. This collective approach allows even smaller schools or districts to access pricing typically reserved for much larger buyers.
For example, a small rural school district might struggle to get competitive pricing on technology equipment due to its limited order volume. However, by participating in a GPO, this district can benefit from prices negotiated based on the collective demand of hundreds or thousands of schools nationwide.
Cooperative purchasing organizations often secure additional value-added services or extended warranties as part of their negotiations, further enhancing the cost-benefit equation for members.
Another big advantage of working with a GPO is the time it can save for procurement, reducing time-consuming tasks and administrative overhead for activities such as:
These time savings allow you to direct your time and energy toward more strategic initiatives, such as developing long-term procurement strategies and building stronger supplier relations. Instead of spending weeks developing an RFP for new classroom furniture, your procurement team can utilize a pre-negotiated GPO contract and dedicate your time to gathering educator input on optimal classroom configurations.
Top GPOs employ category specialists who possess deep knowledge of specific product or service areas. These experts are immersed in categories, helping them uncover market trends, emerging technologies, and industry best practices. This can lead to innovative solutions or more options for schools.
This expertise can be particularly beneficial in complex procurement categories such as:
By tapping into this expertise, you can make better purchasing decisions and get expert guidance to augment your procurement efforts.
Navigating the complex web of federal, state, and local procurement regulations can be challenging for even the most experienced procurement teams. GPOs design their processes to meet relevant regulations, helping you maintain compliance and mitigate legal risks.
Cooperative purchasing organizations document each phase of the sourcing, solicitation, proposal, and contract process so you get comprehensive transparency.
Purchasing cooperatives work to establish relationships with reputable suppliers, reducing the risk of partnering with unreliable or non-compliant vendors. This can be particularly valuable when sourcing from new or niche markets where your team may have limited experience.
When engaging in cooperative purchasing, you should have a legal review by your school’s attorney to make sure the process used meets your standards and requirements. You will want to focus on several key areas to ensure compliance, such as:
Ensure that the cooperative’s processes comply with state and federal procurement laws. While most cooperatives design their processes to meet these requirements, it’s ultimately your responsibility to confirm compliance.
Key steps to ensure compliance include:
Maintain transparency in your use of cooperative contracts. Be prepared to explain your decision-making and demonstrate the value gained from cooperative purchasing.
To enhance transparency:
Transparency ensures compliance and builds trust with your institution’s stakeholders.
Develop and enforce clear policies to prevent conflicts of interest. This is particularly important if your institution plays an active role in cooperative governance or contract development.
Consider implementing the following measures:
Even the appearance of a conflict of interest can damage your institution’s reputation and the integrity of your procurement.
Consider the ethical implications of your purchases. Many cooperatives now offer contracts that prioritize sustainability, fair labor practices, and equitable access.
To promote ethical sourcing:
Cooperatives often handle sensitive procurement data, so ensure they have strong governance policies for data security and encryption. Check on:
You can find a list of purchasing cooperatives on the National Institute of Governmental Purchasing (NIGP) website. When considering cooperatives, it’s crucial to evaluate their areas of specialization, geographic coverage, and the services they offer. Some may excel in technology procurement, while others might have strengths in facilities management or food services. The right cooperative for your institution will depend on your specific needs and priorities.
When you review the list, however, keep in mind that there is only one national purchasing cooperative that is a member-owned non-profit, solely focusing on the educational sector, that is, E&I Cooperative Services.
E&I Cooperative Services leverages the aggregated spend of 6,000 member institutions to produce significant volume discounts across hundreds of spending categories. Procurement experts and category specialists understand the education sector and negotiate pricing, terms, and conditions favorable to schools.
As a member-owned organization, procurement leaders at member schools take an active role in setting strategy and guiding RFP formation to ensure the needs of school districts, colleges, and universities are met in the cooperative purchasing process.
What are the largest purchasing cooperatives?
CCA Global Partners is the largest privately held purchasing coop with more than 3,000 locations, providing support for independent retail business owners and family businesses. In education, E&I Cooperatives Services is the only member-owned non-profit purchasing cooperative that focuses solely on education.
What are cooperative purchases?
Cooperative purchases are procurements made through contracts that have been competitively solicited by a cooperative organization on behalf of its members. These purchases allow individual institutions to benefit from the collective buying power of the cooperative’s membership, generally resulting in better pricing and terms.
How do purchasing cooperatives ensure competitive pricing?
Cooperative purchasing organizations conduct competitive solicitations that include a bidding process by suppliers. By providing access to more suppliers, schools have more choices.
Can small institutions benefit from national purchasing cooperatives?
Yes, small institutions can significantly benefit from national purchasing cooperatives. Smaller school districts or institutions can access pricing and terms typically reserved for much larger buyers. This levels the playing field and allows smaller institutions to achieve cost savings and efficiencies they couldn’t obtain on their own.
View available contracts to see how E&I Cooperative Services can help you leverage national purchasing power for your educational procurement needs.
