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Cost-efficiency, streamlined processes, and strategic sourcing. It sounds simple, but putting these practices into action is hard work. Procurement teams in higher education face serious challenges, and it doesn’t appear they’ll get significant help anytime soon.
The financial outlook for higher education appears problematic. Moody’s Ratings, S&P Global, and Fitch Ratings all cite significant financial pressures ahead. S&P sees a mixed picture with regional colleges facing a downturn. Only schools with “broad geographic reach, steady demand, and sufficient liquidity and financial resources to navigate operating pressures” will be stable.
Fitch Ratings predicts a deteriorating outlook. “Variable enrollment, rising capital needs, and continued operating pressures will continue to chip away at more vulnerable higher education institutions in 2025, even if inflationary pressures ease and interest rates fall,” said Emily Wadhwani, Senior Director at Fitch Ratings.
Moody’s was the most optimistic, forecasting a 4% growth in budgets for the upcoming year. Still, that isn’t likely to overcome rising prices, an uncertain enrollment picture, and potential changes to governmental policies and funding.
Procurement and finance teams will need help to meet and overcome these challenges. Higher ed cooperative purchasing agreements will be an important tool to help optimize costs and ensure schools have the goods and services they need.
What are cooperative agreements, how do they work, and how can they help you achieve your goals? Let’s take an in-depth look.
A cooperative purchasing agreement allows multiple colleges and universities to leverage their collective purchasing power to secure better prices and terms for goods and services. These agreements are typically established by cooperative purchasing organizations that negotiate contracts on behalf of their members.
Unlike traditional procurement, where each institution negotiates contracts individually, cooperative agreements involve pre-negotiated contracts accessible to all members. This approach simplifies procurement, saving time and resources.
It’s a win-win for schools and suppliers. Colleges and universities benefit from greater volume discounts from aggregating demand. Suppliers benefit from economies of scale, reducing marketing and sales costs, and passing on cost reductions.
Higher education institutions also benefit from access to a broad variety of cooperative purchasing agreements that are pre-negotiated, accelerating procurement and reducing the administrative burden. Cooperative purchasing agreements ensure that institutions maximize limited resources without sacrificing quality.
Joining cooperative purchasing agreements from a sourcing cooperative like E&I Cooperative Services provides significant benefits, such as:
Here is how these two approaches to procurement compare.
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COOPERATIVE PURCHASING |
TRADITIONAL PROCUREMENT |
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Cost & Pricing |
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Time & Resource |
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Control & Flexibility |
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Compliance & Risk |
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Most colleges or universities employ a hybrid approach to procurement, using cooperative purchasing agreements when they make sense—especially for commodities or common goods and services—and reserving traditional procurement for highly specialized needs.
You can access cooperative agreements for just about any goods or services you need. Common contracts cover:
There are also specialty services, such as those helping colleges and universities manage evolving rules for Title IX or helping to meet sustainability or supplier diversity goals.
These cooperative purchasing agreements provide a streamlined path to access top-tier suppliers with negotiated discounts.
A cooperative purchasing agreement is a legally binding contract. It includes specific terms, conditions, pricing structures, and deliverables, which are enforceable by law. When academic institutions join cooperative contracts, they are bound by the terms included in the master agreement. However, these agreements typically offer a great deal of flexibility in how they are used.
These agreements legally bind a supplier to live up to the pricing tiers in the agreement on product catalogs or specific goods or services. However, schools have control over their level of participation. You may get certain incentives in the agreement, such as higher discounts or better pricing tiers, depending on purchasing volume.
Because a cooperative purchasing agreement is a binding legal agreement, you need to review it carefully so you know your obligations and avoid expensive surprises. You also need to make sure that your supplier delivers on what it promises as well.
There are also several key clauses that colleges and universities should review closely, including:
You’ll also want to ensure compliance. While cooperative agreements have standardized terms negotiated to meet broad compliance categories, you are responsible for complying with federal, state, and local regulations regarding procurement. You may also have internal policies and procurement initiatives to meet.
If grants are part of the funding, you may have specific requirements to adhere to when making procurement decisions.
You will want to get a legal review in most cases to mitigate risk. Common clauses to review include:
Once you agree to join a cooperative purchasing agreement, you will want to have mechanisms in place to monitor performance and ensure you get what you’ve been promised. This goes beyond price and should account for:
Regularly overseeing performance ensures the cooperative purchasing agreement continues to provide value while making sure you get the full value of your relationship.
A cooperative is an organization owned and operated by its members to achieve mutual benefits. In higher education, procurement cooperatives help institutions pool resources to achieve better procurement outcomes.
For example, E&I Cooperative Services is a nonprofit and member-owned organization that focuses exclusively on the education sector, aggregating demand from its 6,000-member academic institutions to achieve best-in-class pricing and favorable terms.
Procurement sourcing involves identifying and selecting suppliers to meet your needs. It’s a strategic process that balances cost, quality, and efficiency.
Colleges and universities use strategic sourcing to align procurement with institutional goals. Cooperative agreements enhance this by providing pre-vetted suppliers that are competitively solicited.
A higher ed contract portfolio is a collection of active contracts under management. A diverse portfolio ensures access to a wide range of goods and services and helps to mitigate potential supply chain disruption.
Managing this portfolio is another critical part of procurement. For example, finding ways to consolidate purchasing enables you to access greater volume discounts. Bringing more spend under contract reduces maverick or rogue spending and helps you achieve greater cost control. Cooperative purchasing agreements help you in both cases. They can also be a help when it comes to sourcing alternative suppliers. Cooperatives like E&I have hundreds of cooperative agreements available to help you find new suppliers. This can be especially helpful when your current suppliers run into problems or if you have an emergency and need to act quickly.
E&I also offers its members a no cost Strategic Spend Assessment (SSA). By analyzing your spending history over a 12-month period, E&I reviews and analyze your spend data for opportunities to reduce costs, bring more spend under contract, and maximize spend control and efficiencies. Data can typically be gathered from your Accounts Payable and P-card systems. This analysis helps you:
There is no cost to become a member of E&I Cooperative Services. Once you join and log in to the website, you can view a sample SSA report to see the type of analysis you get.
Which big businesses use procurement sourcing?
Major corporations like Amazon, Walmart, and IBM leverage strategic sourcing to optimize their supply chains. Companies of all sizes use procurement sourcing to achieve cost savings and build resilience with suppliers.
What are three examples of a cooperative?
Cooperatives can take several different forms. For example:
Retail or grower’s cooperatives bring together independent suppliers or farms to share marketing and bargaining power, enabling smaller entities to compete more effectively. E&I combines the purchasing power of education institutions to achieve better pricing. In each case, these cooperatives are owned and controlled by their members.
Are cooperative agreements only for public institutions?
No. Public and private institutions can use cooperative agreements to achieve their procurement goals and realize savings.
How do cooperative purchase agreements save time for procurement teams?
By offering pre-negotiated contracts, these competitively solicited agreements are ready to use and meet compliance standards for colleges and universities.
Connect with the cooperative agreement experts at E&I Cooperatives Services to discuss your higher education procurement needs.
