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TOTAL PRICE AND F.O.B. CONTRACTS. Prior to the development of commodity volume data
for an intergovernmental purchasing venture, officials of each participating jurisdiction should
analyze the impact of F.O.B. contracts with respect to total price. If the fiscal impact is negative or
“costly” for one or more participants their needs should not be considered in the bidding process as
their volume would provide a vendor with inaccurate volume information. An alternative method
would be to develop specifications so that multiple delivery points are provided in the purchasing
organization's area. This approach should provide a vendor with more realistic volume estimates and
optimize cost savings to participating municipalities.
SPECIFICATION COMPLIANCE.* Inasmuch as specifications are a critical key in multijurisdictional
purchasing arrangements, individual participants should:
A. Maintain appropriate commodity purchasing and performance so as to determine any need for
specification changes, and
B. Establish a procedure to determine whether purchased commodities meet the requirements set
forth in the specification.
The purpose of the first policy is to provide a means whereby performance and related
information about commodities is formally recorded. This type of information is critical in
evaluating and reviewing specification requirements. Without it, specification content and mandates
would be difficult, if not impossible, to evaluate in a rational manner. Performance records also can
become an important ingredient to the implementation of a total cost purchasing operation. A total
cost system is one where both acquisition and operating costs are in selecting the lowest responsible
bidder.
Establishment of a compliance policy is also recommended as it addresses the need for a
verification process if specifications are to be meaningful and adhered to by those supplying products
and materials to participants. Without some form of testing or inspection to ensure compliance
specifications become useless in a purchasing operation.
COMMONALITY AND VOLUME. Commodity volume is a must if intergovernmental purchasing
plans--particularly the joint bid arrangement--are to prove worth and provide members with
maximum economic benefit. Without appropriate volume cost savings potential will not be realized.
The Planning Commission's commodity price survey supports this conclusion.
Given the importance of volume, participants in such purchasing ventures must organize the
membership so that their total needs produce a commonality of need and, hence, volume. This can
be done by involving governmental units which have service programs similar in quantity or quality,
or which have major or comprehensive activities. Other participants may be involved in only a
minor way in such activities. However, the combined needs of the major and minor contributors will
produce commonality and the needed volume.
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*This policy also is most appropriate in any municipality regardless of the purchasing scheme
used.
IX-33
Revised May 2006