The FSG Blog

News & Insights

The latest company updates, industry news, and expert analysis from FSG.

There is (Buying) Power in Cooperative Purchasing

The benefits for public entities utilizing cooperative contracts

For facility managers, it sometimes feels like the work is never done.  There’s always something to be maintained, updated, or repaired.  Keeping a property in top shape requires focus and discipline. When the job involves a large project at your facility, like an LED lighting retrofit or the installation of whole-building disinfection technology, you need partners you can trust to help you meet your facility goals.

But how do you find the right vendor or service provider to deliver project success for your facility?

In recent years, the answer increasingly lies within the approved vendor list of a group purchasing organization (GPO) or a purchasing cooperative organization (Co-Op). GPOs and Co-Ops have been around for years.  Both organization types provide members with the leverage they need to negotiate lower prices for goods and services. 

GPOs and Co-Ops both allow customers better leverage and pricing on purchasing deals

Beyond that common feature, however, there are some important differences between GPOs and Co-Ops.  Let’s take a look at some of the ways GPO’s and Co-Ops differ from one another.

GPOs and Co-Ops: What’s the Difference?

Group purchasing organizations (GPOs) leverage the buying power of many companies to deliver deep discounts.  For member companies, the benefit is that you’re free to purchase goods and services to meet your individual needs.  A purchasing code delivers a negotiated rate for group members, and vendors enjoy the large sales volume the group delivers.  

For many privately-owned businesses, GPOs allow greater flexibility in purchasing decisions, and in many cases make the difference between business success and failure.  With a wide range of product and service offerings available to members, GPOs effectively facilitate winning solutions for both members and vendors.

Purchasing cooperative organizations (Co-ops), on the other hand, are typically specific to certain industry sectors and are administered by their members who share in the organization’s profits and losses.  The organization of Co-Ops is more formal than that of GPOs, with differences in state laws driving issues related to competitive bid requirements, vendor selection, and financial reporting.

City of Greenville, S.C. Case Study

Co-Ops represent for their members the opportunity to participate in an industry-focused organization that delivers lower prices on products and services.  This is accomplished when one agency – the lead agency – executes a state government-approved competitive bid process and awards contracts to approved vendors.  

Thereafter, all other Co-Op members are free to “piggyback” on these pre-vetted vendor contracts.  Depending on the industry focus of the purchasing cooperative, these members might be local municipalities, nonprofits, dentists, plumbers, school districts, commercial property managers, or other members from the sector the Co-Op was created to support.

School districts are one such industry in which purchasing cooperatives are frequently utilized. The wide range of products that are available and the simplification of the buying process make the purchasing process easier for schools. Many school districts such as Frisco ISD in Texas already utilize Co-Ops to make purchasing decisions.

LED lighting is one of the many product types available on a cooperative purchasing agreement

Co-Op members are only able to purchase what the group sells, so the offerings are typically more limited than those associated with GPOs.  However, the contracts managed by the Co-Op are for goods and services that are generally viewed as critical to the members and their businesses.

In the end, the idea of cooperative purchasing brings higher efficiency to Co-Op members because it allows there to be one procurement process rather than many.  Because they don’t have to allocate resources to the task of managing a competitive procurement process, many smaller organizations find that Co-Ops allow them to focus more completely on their main organizational goals.

Co-Op Culture

According to the National Cooperative Business Association (NCBA), purchasing cooperatives around the world generally agree on seven principles that govern their operations:

1. Voluntary and Open Membership – Anyone can join a Co-Op—they don’t discriminate based on gender, social, racial, political, or religious factors.

2. Democratic Member Control – Members control their business by deciding how it’s run and who leads it.

3. Member’s Economic Participation – All co-op members invest in their cooperative. This means people, not shareholders, benefit from a Co-Op’s profits.

4. Autonomy and Independence – When making business deals or raising money, Co-Ops never compromise their autonomy or democratic member control.

5. Education, Training, and Information – Co-Ops provide education, training, and information so their members can contribute effectively to the success of their Co-Op.

6. Cooperation among Cooperatives – Co-Ops believe working together is the best strategy to empower their members and build a stronger Co-Op economy.

7. Concern for Community – Co-Ops are community-minded. They contribute to the sustainable development of their communities by sourcing and investing locally.

* Source: NCBA

With guiding principles such as these, Co-Ops play a critical role in delivering economic success to organizations of all sizes and are widely recognized as a vital component of the modern economy.

The requirements to join a Co-Op primarily depend on the state in which the organization operates.  Currently, all 50 states allow for national purchasing cooperatives, but state laws governing the particulars of their use can differ. 

FSG Works Hard for Co-Op Customers

At FSG, we’re very proud to be affiliated with a number of national and state-level purchasing cooperatives.  Through our cooperative purchasing affiliations, we can match our LED lighting and facility disinfection products, as well as our turnkey electrical service offerings, with member organizations that are ready to go on projects that are important to them. 

Through organizations like the BuyBoard National Purchasing Cooperative and the Association of Educational Purchasing Agents (AEPA), FSG has been able to provide excellent products and services to Co-Op members across the country.   

Because of our placement on vendor lists included in the state of Texas’ Multiple Award Schedule (TXMAS) and the US government’s General Services Administration Multiple Awards Schedule (GSA MAS), FSG has been able to complete many important state and national projects that support the quality of life for all of us.

Most importantly, we understand that how we end up meeting our next customer is secondary to the fact that each new project represents another opportunity for us to deliver top-shelf products and services.  That’s what we do, every day.

If you’re an AEPA member with school buildings to maintain, or if your Co-Op makes use of BuyBoard National Purchasing, keep us in mind when you’re ready to address your next facility challenge.  From ground-up electrical construction to retrofit work that saves energy and money for your organization, FSG is ready to answer any questions you may have about how to get your job done to the highest professional standards.

Call (877) 295-6374 or fill out the information below to see how the spirit of cooperation can help you!

Related Articles