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Benefits of Procurement Alliance

Guide Overview

Each year, tens of thousands of state and local governments procure roughly $3 trillion to fund their operations and deliver much-needed services to their residents.  City staff often face the difficult task of balancing protective measures that safeguard taxpayers’ investment making the procurement process typically slower than the rate of innovation of the services requested.  While many would agree there is ample opportunity to reimagine and reform procurement, the focus of this guide is on interventions currently available to most public agencies. This guide makes the case for cooperative purchasing in procurement through various avenues and provides resources on purchasing alliances of which Passport participates. 

Procurement Workflow

Before deciding on a purchasing avenue, it is important to know where the service/product procured falls under local legislation. Most governments have a tiered system that imposes processes based on the size and scope of the purchase to allow for proper evaluation and accountability for the allocation of public funds. The tier amount varies by jurisdiction, but for simplicity can be summed up by purchases below and above the threshold

  • Purchasing below threshold

For purchases that are small in dollar value, there are usually no-bid requirements, meaning no competitive bidding process is required.  Thus, staff can purchase without seeking additional levels of approval. In smaller municipalities, the threshold can be as low as a few thousand dollars. Conversely, in larger cities like Sacramento, all purchases between $5,000 and $25,000 fall into the informal bid range. 

  • Purchasing above threshold

Once the dollar value of a purchase exceeds the threshold, there are more formalized procedures that dictate how purchasers engage suppliers and award contracts. These regulations dictate how proposals should be publicized, proposal evaluation, and checks and balances to approve purchases. The common assumption is that a competitive solicitation process is the only avenue to meet these requirements. However, there are several purchasing methods that satisfy competitive purchasing requirements on a quicker timetable than the typical RFP process. The remainder of the guide will focus on those options and how they can save time, money, and keep up with the pace of innovation. 

Purchasing above threshold→  Selecting a Purchasing Method 

For purchases above the threshold, there are various methods in addition to the competitive traditional bid that offer substantial benefit. Passport’s platform falls under managed technology services, which typically fall in the middle range between broad and detailed specs. The spec requirements, features, and services embedded in tech make alternative purchasing methods ideal to keep up with the rapidly changing nature of technology and routine innovation that occurs. 

Procurement Workflow Diagram

Option 1: Utilize a Purchasing Alliance 

During the research, agency staff may find an active contract for mobile pay, enforcement, or other solutions needed within a cooperative purchasing alliance. National, state, and regional purchasing agencies were established with the goal of reducing the costs of procurement and formalizing procurement collaboration due to the complexities and bureaucratic process of procurement.  Contracts from national cooperatives tend to be easiest to discover but sometimes are not as tailored to the spec. Contracts from local peer agencies can be harder to find, but oftentimes more relevant and specific to local conditions and needs. Through cooperative purchasing alliances, agency staff may buy off of the contract and negotiate unique terms. Collaborating on purchasing also increases the sharing of information for current market pricing and available suppliers. Most importantly, this option satisfies competitive bidding requirements while increasing regional collaboration. 

Municipalities that have partnered with Passport through Purchasing Alliances: 

  1. National
    • National Cooperative Purchasing Alliance (NCPA)
      • Municipalities who have procured using NCPA:

Included but not limited to: Albuquerque, NM; Key West, FL; Asbury Park, NJ; Richmond, VA; Newburgh, NY; Pelham, NY; Rochester, NY; Grand Rapids, MI.

  1. Regional
    • Metropolitan Area Planning Council (MAPC)
      • Municipalities who have procured using MAPC:

Included but not limited to: Providence, RI; Chelsea, MA; Worcester, MA; Lowell, MA; Revere, MA; Newburyport, MA; Watertown, MA; Massachusetts Department of Conservation & Recreation; New Bedford, MA; Salem, MA

Advantages: 

  • Due Diligence through Purchasing Alliance
      • When purchasing through an alliance, agencies can have confidence knowing that specs, bid evaluations, and bid advertising are done by experts in the space. This includes prospecting different vendors, working with municipal partners, and building relationships to ensure the best suppliers are rendered to provide the service. This is an extra layer of due diligence that is often not available through a traditional bid process due to resource constraints. 
  • Preferential and open pricing discussions
    • Purchasing Alliances are listed with discounted pricing and the ability to offer a variety of ways to charge fees. This enables agencies to choose from pricing options that most benefit the City vs. allowing vendors to set the price. 
  • Full line of contracted solutions
    • Instead of purchasing solutions in siloes, purchasing alliances allow agencies to choose the various products and services needed in tandem. This reduces friction and allows for a more seamless parking environment. 

Option 2: Piggybacking

When a government entity conducts a competitive solicitation and awards a contract to a supplier, a clause may be included allowing other public entities to utilize the contract they have awarded. Piggybacking is when another government entity uses that contract to purchase from the same supplier on the same terms. Important to note, the contract is only shareable if it includes language that permits other agencies to use the contract. 

Items to look for: 

  • Contract term: The contract must be active to be shareable. 
  • Contract scope: The solutions you want to purchase must be included in the contract scope. (You should be able to confirm this in the language of the contract and/or the attached price list.)
  • Lead agency: Must be a public agency. 
  • Competitive bidding: The contract was created through a formal competitive bidding process.
  • Cooperative language: The original bid solicitation and contract contain cooperative language.

Similar to a purchasing alliance, piggybacking satisfy competitive bidding requirements by utilizing the competitive bidding process another public agency has already done. Piggybacking on another agency’s contract saves costs and accelerates the purchasing process. 

Advantages: 

  • Save Time and Money
      • With a rigorous competitive bid process already satisfied, agencies can reduce the impact of budget cuts, protest, and reductions in agency staff. 
  • Regional Collaboration
    • Using the contract of a neighboring jurisdiction creates continuity of solutions and services across the region. Clients that have used this method have commented on its ability to increase cohesion and make for a more seamless experience for users. 

Case Study: Key West, FL

The City of Key West recently partnered with Passport to manage its mobile pay parking and digital parking enforcement. Prior to partnering with Passport, the city managed multiple contracts and vendors for permits, enforcement ticket issuance, and mobile payments. This created operational hurdles as the city had to manage multiple back offices, keep track of multiple vendors, and monitor various contract expiration timelines.  As a popular Florida vacation destination, this created numerous issues for the parking department and patrons alike. 

Early discussions between Key West and  Passport centered only on the City’s desire for Passport’s enforcement technology, in order to procure for each solution individually. However, the City soon discovered it could procure multiple solutions through its membership in the National Cooperative Purchasing Alliance “We quickly realized we were in need of a centralized solution rather than multiple vendors to manage our parking needs,” said City of Key West parking director, John Wilkins. Through the NCPA, Key West was now able to purchase various solutions through a single contract.  This eliminated the need to create multiple solicitations for the parking department’s enforcement, mobile pay, and permitting needs. Purchasing through NCPA also provided more agency for Key West to choose a-la-carte the solutions it needed, and get preferential rates on pricing. 

Ultimately, the City realized that its use of a purchasing alliance provided an advantage in time and cost savings, as well as the agency to purchase all needed solutions under a single contract. Of the decision, Wilkins said, “Integrating everything under one roof with Passport enables us to increase compliance, drive revenue and offer our visitors and citizens more choice.”