Option Targets Cost Savings, Compliance
County governments exist in all sizes, with judges, commissioners and staff offering a wide range of purchasing and technical expertise. Nevertheless, all counties, whether or not they have purchasing staff or technical expertise must follow procurement laws 1, which require purchases of more than $50,000 per category annually to be competitively bid. The competitive bid process involves researching the specifications of what is needed, writing a Request For Proposal (RFP)/bid, advertising to solicit responses, receiving responses, evaluating them, checking references, then recommending the vendor offering best value to the governing board, which awards the contract. In addition, there are special rules for construction procurement. 2
An easy and economical way to achieve compliance with the law is to use a cooperative that has procured contracts for governmental entities to use through shared government-to-government agreements. The law specifies that a governmental entity may use another government’s awarded contract if they have an interlocal contract between them. (Gov’t. Code Ch. 791-Interlocal Cooperation Contracts) Once the interlocal contract is signed by both governing boards, a governmental entity may use the contracts awarded by the other. To make a purchase legal, the purchase order must reference the contract number; e.g. “per Government Cooperative Name awarded contract number 12-345A.” The contract holder must send a copy of the purchase order to the awarding entity, thus completing the documentation and making the purchase legal.
Cooperatives provide numerous legal, competitively bid contracts to save time and money for purchasing agents of governmental entities. Frequently, timing can prohibit bidding, so a cooperative purchasing contract is used to get a product or service more quickly than the RFP process will accommodate. The cooperative takes the responsibility to document the legal bid process and to manage the contract, assisting the awarded vendor as needed to ensure the governmental entity is well-served by the contract.
Using cooperatives also provides transparency for county commissioners and judges. Allegations of inappropriately awarding a contract to a vendor are nonexistent when using a cooperative contract, since the cooperative is responsible for the advertising, evaluation and award. All the county needs to do is ask the cooperative for evidence of the due diligence for the competitive bid/proposal.
Bell County has relied on cooperative contracts, including using a Job Order Contract through a cooperative for quite a number of projects. The county has undertaken major capital improvements in the last few years, spending “approximately $100 million in the last 10 years” as they have grown, according to Bell County Commissioner Tim Brown.
The process worked very well for “small projects that were scaled in such a way, we didn’t want to go through the full RFP/RFQ process, hire a design team, advertise, and so on. Sometimes on a small project you end up spending more on the process than the project,” Bell explained. “The technical language that goes into that document [the RFP or RFQ] is critical. It’s a very, very complicated body of law, especially given the limited scope of county authority.”
Frequently, once a county discovers the benefits of participating in a cooperative, they approve interlocal contracts with multiple cooperatives. Cooperatives may have an area of specialization, from acquisition of technology, big road equipment, or specialty items to facility services contracts.
According to Michael Forbes, Cameron County purchasing agent, Cameron County participates in “about eight cooperatives – each one seems to have its own advantages.”
While cooperatives generally have similar missions, they operate slightly differently, so counties should ensure that each cooperative can provide evidence of the due diligence for each contract and is willing to provide details of the contract for their members when it is requested. Because each RFP and awarded contract differ, it is important for the member to know what the terms and conditions of the awarded contracts are. For example, if you are ordering an item that requires installation, does the cooperative contract include that? Does it include shipping? Does the cooperative allow the vendors to negotiate a lower price?
Cooperatives can award multiple contracts in one category, and may include a best value contract that may not be the lowest bid, but one that is extremely competitive, with added value items and a higher quality product/service. Also, because of the cost to the proposer, one-shot responses to a RFP/bid may be higher than the pricing the vendor might offer to a cooperative. Consequently, a county might get a better value with a cooperative than they could get by independently doing a RFP or bid.
“Sometimes we find that the pricing in the co-op is actually lower,” Forbes maintained.
Nueces County is just completing a $7.9 million energy efficiency and building retrofit project through a cooperative purchasing contract. The county expects to save enough to fully finance the project through the savings in utility costs, which are estimated at $500,000 annually.
“It made sense to do these two facilities [courthouse and connected jail] in this way,” said Nueces County Judge Loyd Neal. “The combination of Johnson Controls having an awarded contract available through [a facilities purchasing cooperative] and the availability of money all came together.”
The county used loan funds provided by the American Recovery and Reinvestment Act disbursed through the State Energy Conservation office. The project included installing solar electric panels on the courthouse roof, solar thermal panels on the jail roof, changing out light fixtures, upgrading the boiler plant and chiller system, replacing thermostats, and installing water conservation controls.
“We’re looking for big savings,” Neal stated. “Unless we were badly fooled, this is a win-win for everybody. We really appreciate how cooperative everyone’s been who made this happen.”
Tyner Little, with Nueces County governmental affairs, said the cooperative purchasing process “satisfied the county attorney and legal requirements.”
With the project already competitively bid and the due diligence complete, the county was able to immediately begin the project, working with the facilities cooperative vendor they selected, Neal explained.
Nueces County also participates in other cooperative efforts, including buying power through a cooperative.
“It is a joint process that has really worked for us,” Neal said. H – By Louise Henry, marketing officer, Harris County Department of Education
Texas – Based Cooperatives Serving Government Entities
v BuyBoard was created by the Texas Association of School Boards, but today serves all governmental entities. Member organizations get a percentage back from their purchases.
v Choice Facility Partners, a division of HCDE, is the only cooperative in the state devoted to facility services contracts. Introduced to the market in 2007, they are known for their technical and Job Order Contracting facility contracts.
v DIR – Created by the Texas Department of Information Resources, they specialize in technology contracts.
v Gulf Coast Food Cooperative – Hosted by HCDE since 1993, they provide competitively bid food products and free commodity processing to participating members.
v Perhaps the oldest purchasing cooperative in the state is HCDE Purchasing Cooperative, which was established by Harris County Department of Education in 1963. Until the last decade, this cooperative primarily served Harris County schools, but today serves many governmental entities across Texas.
v HGACBuy – Houston Galveston Area Council created HGACBuy, which is known for big equipment contracts, e.g., road maintenance, etc.
v Purchasing Solutions Alliance is a smaller cooperative created by the Brazos Area Council of Governments.
v State of Texas Cooperative – The Texas Procurement and Support Services Cooperative Purchasing Program (State of Texas CO-OP) was created by legislation in 1979.
v TCPN – Created by Region 4 Education Service Center, TCPN has grown substantially since early 2000 through its technology and office supply contracts.
v Several other Education Service Centers (ESC) also have cooperatives; TIPS/TAPS created by Region 8 ESC in Mount Pleasant, Huntsville area Region VI ESC Interlocal Purchasing Cooperative, Texas 20 Purchasing Cooperative in the San Antonio area at Region 20 ESC, specializing in food and commodities, and one recently created in the Region 16 ESC Amarillo area called TexBuy, which is affiliated with the Association of Educational Purchasing Agencies [AEPA].
v TXMAS – Texas Multiple Award Schedule
H – List provided by Louise Henry, marketing officer, Harris County Department of Education