What is a Buying Group?
A Buying Group (or Cooperative) is the coming together of organizations, such as schools, that share a common goal, to leverage their combined purchasing power and spread out administrative burden of managing contracts. School Food Authorities (SFAs) should review the differences of each group to determine which type best benefits the SFA. Determine if the buying group (or cooperative):
- consists of only schools, or if the group is a mix of government and/or nongovernment organizations.
- has membership fees. If the fees are negligible, competitive procurement is not required and costs to the nonprofit school food service account are allowable.
purchases through the buying group need to be competitive.
Benefits and Drawbacks of Group Purchasing
- Combined purchasing power
- Lower costs (in most cases)
- Sharing core competencies
- Spread out administrative duties
- Market efficiencies to regional supply chains
- Procurement Review (school co-ops)
- Less room for self-preference
- Less flexibility
- No guarantee of lowest price (depends on product mix)
Types of Buying Groups
In general, buying groups (or cooperatives) fall into two categories:
- School Cooperative and School Buying Group (purchases do not need to be competitively procured)
- Group Purchasing Organization (GPO) (purchases must be competitively procured)
Schools do not have to competitively procure membership into a buying group (or cooperative) if membership fees are negligible.
School Purchasing Association
While technically not a school cooperative or buying group, this form of collective purchasing may consist of an informal association of schools, government and/or non-government organizations that come together to purchase goods or services. The awarded contract is between each SFA and the vendor.
|Contract Ownership||Types of Members||Fees||Purchasing off contract(s):|
Contract held individually be each school
Multiple contracts may be awarded
No membership fees
Possible clerical fees
Competition takes place during initial procurement
No additional procurement needed after contract award because contract ownership remains with the school
“Piggybacking” can benefit SFAs, but it is only allowable if the state or local government agency included this provision in their contract when that agreement was procured and awarded. SFAs must carefully review the solicitation issued by the state or local government agency to ensure compliance with applicable Federal and State procurement regulations, while ensuring that the additional scope in services does not create a material change.