Opinions expressed by Entrepreneur contributors are their own.
Key Takeaways
- Growing your sales through cooperative price agreements opens doors to government entities that can buy directly from you without having to do a traditional RFP process.
- This will shorten your sales cycle to government and education from years down to a few months, making it worth your time to look into becoming a cooperative price agreement partner.
I am fortunate because my business primarily serves corporate, education and government markets. Many of you may run businesses that primarily serve private-sector businesses or the consumer market. However, I believe many companies are missing potential sales opportunities in the local and state government markets by not pursuing cooperative purchasing-style agreements.
Entrepreneurs and business owners sometimes avoid the state and local government markets because they believe the bid process is too cumbersome. In previous years, and in my opinion, that was indeed a correct assumption.
However, organizations such as NASPOs ValuePoint and RFxPremier use cooperative price agreements to bring suppliers and government entities together. The process is simple, so allow me to explain.
A brief history of public procurement
While some federal agencies purchase through cooperative price agreements, the process is different and more complex. That’s why, for this article, we will focus on state and local government purchasing.
State and local governments devote thousands of man-hours and billions of dollars to purchasing goods and services. For decades, the public procurement process centered around a competitive bidding process that involved a multi-step process:
Identify the goods or services needed
Establish bid requirements, timelines, etc.
Advertise the Request for Proposal (RFP) in various print and online publications
Open and evaluate received bids (usually in a public meeting)
Negotiate and award the contract to a qualified vendor
Monitor contract compliance
According to recent government statistics, there are approximately 20,000 incorporated cities, towns and villages in the U.S. Combine that with 3,144 counties and 50 states (excluding the District of Columbia and U.S. Territories), and pursuing state and local contracts can seem overwhelming.
In the early years of my business, I pursued government opportunities in and around Denver, Colorado, where my company is based. Being a small business, I had neither the time, manpower, nor budget to research and bid on government work in other states.
Like most entrepreneurs, I value where I allocate my working hours. Since starting my transcription business almost 16 years ago, I have spent an inordinate amount of time and resources pursuing government contracts. It was through my original relationship with NASPO ValuePoint that I discovered the amazing benefits of cooperative price agreements for small businesses.
Cooperative price agreements explained
State and local agencies can now combine their purchasing power to secure lower prices and more favorable terms for goods and services. These agreements are known as cooperative price or cooperative purchasing agreements.
By using joint solicitations, multiple organizations can bundle their needs into a single request, the part of the process also known as “cooperative.” When states and local entities implement a cooperative purchasing method, it eliminates the need for qualified vendors to have to keep responding to dozens of time-consuming and expensive competitive bids since the procurement process is streamlined through a cooperative price agreement led by a lead agency.
Cooperative price agreements allow vendors to more easily reach multiple public entities, including educational systems that purchase large quantities of goods and services.
Benefits of cooperative price agreements
The primary benefits for government entities of cooperative agreements in the state and local markets usually include access to pre-vetted vendors, significant cost savings and a streamlined procurement process. As I stated above, the benefit for vendors also involves saving time and money pursuing the same public opportunities over and over.
David Kundid is a procurement officer for the County of Fairfax, VA. Before relocating to the East Coast, Kundid worked in the central procurement department for the state of Iowa. It was during his tenure in the Midwest that David began using cooperative purchasing-style agreements to purchase law enforcement vehicles. I met Kundid at a recent procurement conference and asked him to explain how state and local government entities can benefit from using cooperative pricing agreements rather than the conventional RFP process.
First, he explained that the typical RFP process is challenging for many government agencies, especially for small agencies with limited manpower. When procurement staff discover cooperative price agreements, they realize that the time and costs of purchasing goods and services can be greatly reduced.
He also pointed out that some goods and services are best purchased locally, especially when smaller quantities are needed. Often, it makes sense to have a purchasing agreement with a local hardware store for purchases below a certain dollar threshold. However, the opportunity for most businesses isn’t in small purchases but in recurring purchases in the mid- to high-tier range.
How to explore cooperative price agreements
Cooperative price agreements typically start with a lead agency, which is usually a larger organization that has a dedicated procurement or purchasing team. These lead agencies handle most of the initial work, saving smaller entities valuable time and money. Additionally, larger agencies possess the purchasing power necessary to negotiate better contracts and access top suppliers that smaller agencies might not be able to reach.
Start by finding an organization that specializes in cooperative price agreements such as RFxPermier, NASPO ValuePoint, OMNIA Partners or Sourcewell. All specialize in certain aspects of state and local government procurement.
Some of the most common goods and services available in cooperative price agreements include:
Vehicles — for emergency and non-emergency use
IT products and services
First responder goods and services
Artificial intelligence (AI) platforms
Sport and athletic equipment
Background screening services
SaaS
Hardware (servers, laptops, monitors, etc.)
Uniform management and laundering services, to name a few
If you believe that your company can provide a particular product or service, then contacting one of the organizations above is a good start.
Why identifying additional revenue streams is vital for every business
As I mentioned earlier, the most recent breakthrough for my company came when I leveraged my State of Colorado contract into a cooperative price agreement with NASPO ValuePoint and RFxPremier. Instead of chasing individual RFPs, I can now contact state and local agencies to advise them that they can “piggyback” on my RFxPremier contract without conducting their own separate RFP.
Opening an additional revenue stream for my company through cooperative price agreements has had a tremendous impact on our bottom line.
According to Kundid, more state and local governments are taking advantage of cooperative purchasing programs. The cost and time savings are too great to ignore, especially when smaller government agencies are facing tighter budgets and reduced manpower.
Technology, especially AI, is changing the procurement process
There’s no question that recent technological advancements, especially AI, are affecting the government procurement process. As someone who has spent years in the procurement marketplace, Kundid sees AI as an advantage for both agencies and suppliers.
Government entities, both large and small, are implementing AI platforms to identify potential cost savings in procurement. The recent impact of federal tariffs is an excellent example.
Tariffs can affect the price of goods and services at various levels. Keeping track of a tariff’s impact on every item is practically impossible for both buyers and suppliers. AI platforms designed to evaluate the impact of tariff pricing will play a significant role in the coming years.
However, Kundid believes the true benefit of cooperative price agreements can be realized by smaller government entities and small to mid-size suppliers. He recalled a time when a police department wanted to purchase body cameras. In previous years, only one or two companies had the capacity to provide these devices. Once Kundid was able to find other providers, namely smaller companies with the same equipment, both the cost and delivery time were substantially reduced.
Cooperative price agreements are not for every company. Nonetheless, looking into how your company could benefit from these procurement arrangements is worth some time and effort. You might well find another revenue stream.
Key Takeaways
- Growing your sales through cooperative price agreements opens doors to government entities that can buy directly from you without having to do a traditional RFP process.
- This will shorten your sales cycle to government and education from years down to a few months, making it worth your time to look into becoming a cooperative price agreement partner.
I am fortunate because my business primarily serves corporate, education and government markets. Many of you may run businesses that primarily serve private-sector businesses or the consumer market. However, I believe many companies are missing potential sales opportunities in the local and state government markets by not pursuing cooperative purchasing-style agreements.
Entrepreneurs and business owners sometimes avoid the state and local government markets because they believe the bid process is too cumbersome. In previous years, and in my opinion, that was indeed a correct assumption.
However, organizations such as NASPOs ValuePoint and RFxPremier use cooperative price agreements to bring suppliers and government entities together. The process is simple, so allow me to explain.
