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NOTES
A MANAGERIAL APPROACH TO INTERGOVERNMENTAL PURCHASING
FACTORS TO CONSIDER*
The policies discussed below should become factors in a municipality=s approach to, and
functioning in, a multi-jurisdictional purchasing plan. These factors are basically concerned with
maximizing economic gains and benefits from such a purchasing operation.
POLICIES
PRICE INFORMATION - Municipal purchasing officers should continually obtain price information
on commodities to be purchased. A price survey is a critical step prior to the solicitation of bids for
various commodities. Unless price information is obtained participants will not know the market
price range of a given commodity. At best, they have information on the “bid price,” which may or
may not be the “market price.” As a result, the bid may be more costly than necessary, and the
participants would not be maximizing their economic benefits by awarding a contract to the lowest
possible bidder.
The conduct of periodic price surveys appears to be a most appropriate undertaking for
councils of governments. The intergovernmental approach would reduce costs and may improve a
survey=s quality and validity.
MAXIMIZE ECONOMIC BENEFITS. Given the fact that local governments have a number of
alternatives which they can exercise in obtaining commodities, a municipal purchasing officer should
explore all options to insure that the jurisdiction obtains the most economical price. There are at
least four options available:
- individual municipal purchase
- county contract hitchhiking
- state contract hitchhiking
- joint bid process
The critical factor in all instances is maximizing the economic benefit for the purchasing
jurisdiction. No one plan should be continued or utilized unless it can meet this criterion.
FORWARD BUYING. Municipal purchasing officers should periodically determine if there is a
most “favorable” market for purchasing various commodities. The forward buying of seasonal
commodities, such as antifreeze and anti-skid materials, can yield substantial savings to participants.
A critical element in any forward buying process is the avoidance of merchandise
warehousing, which ultimately adds the cost of commodities. Contracts should be written so that
they become effective when commodities are needed and used.
_______________________
*Southwestern Pennsylvania Commission, Cooperative Purchasing Options - A Guide and
Handbook.
IX-32
Revised May 2006