What has billions of dollars to spend on goods and services and a purchasing power greater than the federal government?
The more than 89,000 units of local government, a group that includes counties, cities, townships and special districts.
Realizing this, local governments are leveraging their buying power more now than ever. By entering into purchasing cooperatives, these local governments are able to take advantage of economies of scale, to effectively increase their access to goods and services and reach a larger vendor market. While these types of purchasing cooperatives have been around for some time, local government participation has grown tremendously over the last decade.
All 50 states have authorized their local governments to enter into purchasing cooperatives. Compare that to only 30 states having the same authority in 1998. The units of local government that could be considered for inclusion in a particular purchasing cooperative include counties, cities, towns, districts, boroughs, plantations, villages and school districts. Each purchasing cooperative sets its own parameters for the types of local government participation, the process to enter into the cooperative and the supplier selection process.
These purchasing cooperatives are similar to the federal GSA schedule, only specifically focused on the needs of localities. With a market this large and growing, the trend is to see smaller, more specific, purchasing cooperatives being created. These smaller organizations often include a smaller regional subset of states, but can be comprised of any combination of public agencies and/or states. While these smaller purchasing cooperatives are entering the market, twelve of the largest purchasing cooperatives already comprise approximately $10 billion in market share.
One of those cooperatives, U.S. Communities Government Purchasing Alliance represents approximately 25% of the market share, making it the largest of the local government purchasing cooperatives. Founded and owned by National Association of Counties (NACo), National League of Cities (NLC), The Association of School Business Officials, International (ASBO), The National Institute of Governmental Purchasing (NIPG) and U.S. Conference of Mayors (USCM), it represents more than 55,000 public agencies and has 28 suppliers with 23 contracts for goods and services amounting to annual sales of approximately $1.5 billion.
Why is this so important?
By combining their purchasing power, localities have shifted the balance of power from the seller to the buyer. By making a single contract at the local level the basis for a larger multi-jurisdiction cooperative contract, local governments can leverage the opportunity and capitalize on concessions from companies.
Likewise, companies that still rely on selling to local jurisdictions on an individual basis and that don’t capitalize on the benefit these local government purchasing cooperatives provide are missing out on business opportunities.
How does a company make sure they are best positioned to win local business?
The relationship between local government Groups and local public sector sales is apparent beyond the fact that NACo, NLC and USCM founded and own a local government purchasing cooperative. Tapping into both universes, that of local Groups and local government purchasing cooperatives, will provide the greatest foundation for your public sector sales divisions to capitalize on opportunities within local governments.
Winning a contract to become a supplier to U.S. Communities, or any other of the numerous purchasing cooperatives, is not dependent on participation in local government Groups. But it does help.
For example, a Stateside client joined a local officials Group as part of an overall local government affairs strategy. With a large local government purchasing cooperative opportunity on the horizon, our client is able to use their work with the Group as one component of a much larger strategic plan to best position the company to win the contract.
With the increasing role state government affairs programs are playing in the local government arena, finding strategic engagement opportunities is essential. Working with the appropriate Groups provides opportunities to build brand awareness and create positive relationships with their staffs and local government officials themselves. These strategic opportunities can add value and help navigate through a complex and ever-evolving world of local government public sector sales and can help ensure a state government affairs program is providing the support and value an organization’s sales team needs.