SAN DIEGO – With the economy still recovering, and fire departments still looking to save a buck here and there, group or cooperative purchasing is a viable way of getting the most out of taxpayers’ money.
At Firehouse World conference, Crosby Grindle, executive director of FireRescue GPO and Bruce Busch, senior vice president of national Purchasing Partners gave a presentation titled “How Cooperative Procurement Works.”
In their presentation, Grindle and Busch explained the advantages and legal ramification of partnering with other departments to get better pricing on everything from fire apparatus to office supplies to cell phone service to bunker gear.
The practice has different regional titles like “piggy backing,” or “bridging” or as one conference attendee called it “tagging,” Grindle explained.
“It means third-party organizations are able to make purchases with national tier pricing,” Grindle said.
Busch said not only is the pricing better for most goods, there’s the advantage of time savings because someone else has already done the work of specifying, evaluating and negotiating the final contract award price.
“It’s a win-win for everyone,” Busch said. “You just have to navigate the legal jungle.”
Grindle and Busch walked the conference attendees through the maze of procedures and explained the benefits and a couple of pitfalls associated with cooperative procurement.
“The idea is to have departments working together to lower cost, get better bid responses and more bids,” Grindle said. “It’s as simple as you get all your neighbors to buy and you get a better price.”
Busch explained that when departments are looking to “piggy back,” the bids have to be fairly generic.
“You can’t be proprietary,” Busch said. “You’ll have to be willing to accept an industry equivalent.”
There are times, however, that fire departments can seek “sole source” status where only a particular vendor provides a certain item or feature the department desires.
“You have to be careful with that,” Busch said. “It can’t be ‘I want Coke,’ or ‘I want Pepsi.’ Is that really sole source?”
Group purchasing has been done by hospitals for years and the practice is starting to spill over into the municipal sector at a rapid pace, Grindle said.
Grindle acknowledge the piggy back practice has its critics. He said some say it’s too much bother, or they can get better prices negotiating on their own.
“And that may be true,” Grindle said. “But it doesn’t cost anything to try it.”
Grindle said there are many purchasing cooperatives around, including his own and as sell as others like General Services Administration (GSA).
“There are lots of cooperatives these days,” Grindle said, quipping that soon, departments will need requests for proposals just to pick an agency with which to work.
Most procurement companies provide their services free to participating departments, Grindle said, adding that there is obviously a cost, but that is borne by the vendors.
The fee to the vendor is typical one to three percent of the purchase, Grindle said.
“And they’re happy to pay that because it saves them time and money by not having to develop specifications and answering requests for proposal. That work is all done.”
For NPP, Grindle said the business model is the company has to provide value to the bidding process.
“We just don’t want to charge money because we’re standing in the way of the deal,” Grindle said. “We want to provide some service.”