Model Policy for Use of Cooperatives

Updated on
August 12, 2025

Civic Marketplace has developed a model policy for the use of Cooperative Purchasing Agreements for local governmental agencies. Most agencies have formal, written purchasing manuals; however, not all have chapters or sections establishing policies and procedures for the use of cooperative purchasing.

The model policy below was established using best practices and guidance from the National Institute of Governmental Purchasing (NIGP), National Association of State Procurement Officials (NASPO), the Government Finance Officers Association (GFOA), and local governmental agencies such as the cities of Dallas, McKinney, and others.

While there are many cooperative organizations across the nation, here are just a few examples of cooperatives.

Finally, we highly recommend reading Strategic Use of Cooperative Procurement by the Institute for Public Procurement (NIGP), Aug 2023. You can find the link here.

Cooperative Purchasing Agreements

Purpose

This policy establishes clear authority, guiding principles, and step-by-step procedures that enable the [City/County/District] to purchase goods and services through properly competed cooperative purchasing agreements (“Co-Ops”) when doing so is demonstrably in the public’s best interest. It aligns with nationally recognized best practices published by the National Institute of Governmental Purchasing (NIGP), National Association of State Procurement Officials (NASPO), the Government Finance Officers Association (GFOA), and local governmental agencies, while incorporating statutory requirements found in state interlocal cooperation laws and local charter provisions.

Scope

This policy applies to all [departments, divisions, boards, and grant-funded programs] of the [City/County/District] seeking to purchase goods and services through cooperative contracts, including but not limited to regional, state, national, or publicly procured contracts.

Covers the acquisition of supplies, equipment, information technology, and services (excluding those that state law specifically bars from cooperative purchase).

Does not supersede federal grant requirements; users must incorporate any additional clauses mandated by 2 CFR 200 when federal funds are involved.

Definitions

  • Cooperative Purchasing: A procurement method where multiple governmental entities join together to competitively solicit, award, and use contracts for goods and services, or utilize contracts competitively solicited by another governmental entity or cooperative organization in order to obtain improved pricing, terms, and administrative efficiencies.
  • Interlocal Agreement: An agreement between governmental agencies for the purpose of sharing resources or accomplishing projects that benefit their respective jurisdictions.
  • Lead Agency: The public entity or cooperative organization responsible for the competitive solicitation and award of a contract on which other members rely.
  • Joining Entity: The government entity that accesses or “piggybacks” onto an existing cooperative or intergovernmental contract.
  • Joint Solicitation: occurs when two or more entities aggregate their individual needs into a single solicitation process in which each entity is bound to the contract that results from this effort, giving prospective suppliers a clear understanding of the volume and service level requirements necessary to support the involved entities.
  • Piggybacking: A retrospective method that allows additional agencies to ride (“piggyback”) on an existing contract that was competitively solicited by a lead agency.
  • Purchasing Cooperative Organization: A group purchasing organization that administers cooperative contracts and charges administrative fees to members and/or suppliers.

Legal and Statutory Authority

  1. State Interlocal Cooperation Statute. Under [insert state citation —e.g., Texas Gov. Code Ch. 791] local governments may contract with one another or with a cooperative purchasing organization, provided statutory restrictions are observed.
  1. Local Charter & Ordinances. The [City/County/District] Charter and § ___ of the Code authorize the [Purchasing Officer] to participate in intergovernmental purchasing agreements, subject to Council/Board approval thresholds.
  1. Federal Programs. When federal funds are used, 2 CFR 200.318–326 apply. GSA’s Cooperative Purchasing Program may also be accessed for IT or public safety items.

Policy Statement

The [City/County/District] recognizes the value of cooperative purchasing agreements as a means to enhance efficiency, leverage economies of scale, improve access to quality suppliers, reduce administrative costs, and provide competitive pricing for goods and services. It is the policy of the [City/County/District] to maximize taxpayer value by using cooperative contracts when:

  • The contract was competitively solicited in a manner that meets the organization’s standards;
  • Pricing, terms, and delivery schedules are believed to be equal to or better than what the organization could obtain on its own;
  • Use of the cooperative does not diminish opportunities for local or diverse suppliers beyond what an in-house solicitation would entail; and All documentation, approvals, and reporting required below are satisfied.

Official Representative

The [Procurement Services Department] acts as the official representative for the [City/County/District] in all matters relating to cooperative purchasing programs, including the purchase of goods and services from a vendor under any contract.

Guiding Principles

The [City/County/District] will use the following general guiding principles to assist with decision criteria.

  • Transparency: Openly sharing information about procurement processes, decisions, and outcomes to ensure that all stakeholders understand how contracts are awarded and used.
  • Competition: Encouraging broad participation from qualified suppliers to ensure that contracts are awarded based on merit and competitive pricing.
  • Due Diligence: Carefully reviewing and assessing cooperative contracts to ensure that they meet legal, ethical, and operational standards before use.
  • Value: Maximizing benefits for taxpayers by seeking the best combination of price, quality, service, and innovation.
  • Strategic Fit: Ensuring that the cooperative agreement aligns with the organization’s goals, policies, and operational needs.
  • Compliance: Adhering to all applicable laws, regulations, and internal policies throughout the procurement process.

Eligibility & Thresholds

[Note: this table will be completed by the City/County/District based on their state and local laws and regulations.]

(Agencies may set lower limits if federal or grant rules require.)

Due Diligence Requirements

Before issuing a Purchase Order or entering a service agreement under a cooperative contract, the requesting department must complete the following checklist and file it in the official procurement record:

  1. Verify Solicitation Method – Confirm that the lead agency used a competitive process (IFB/RFP/RFQ) advertised publicly and evaluated per published criteria.
  1. Confirm Contract Validity – Check that the contract term is active and that the [City/County/District] is named as an eligible participant.
  1. Conduct Price Reasonableness Review – Compare cooperative pricing with recent in-house bids, relevant state term contracts, or market indices.
  1. Assess Vendor Performance – Review any available scorecards, references, or dispute history; contact the lead agency if needed.
  1. Check Socio-Economic Goals – Determine whether local, minority-, woman-, veteran-, small-business, or historically underutilized business (HUB) subcontracting quotes are required.
  1. Legal Review – Ensure indemnity, insurance, and governing-law clauses comply with local requirements; attach special conditions if needed.
  1. Funding Verification – Obtain budget unit confirmation that funds are available.

Procedures

1. Identification and Evaluation of Cooperative Agreements

  • [Departments, divisions, boards, and grant-funded programs] may identify cooperative agreements through organizations such as:
  • State Agencies [Note: list those state-sponsored agencies your organization allows its employees to purchase from (e.g., Texas Buyboard, DIR, etc.)]
  • Other regional or national government procurement alliances [Note: list those cooperatives your organization allows its employees to purchase from (e.g., Alliance for Innovation (AFI), TXShare, Sourcewell (formerly NJPA), National Cooperative Purchasing Alliance (NCPA), etc.)]
  • Other public agencies (e.g., cities, counties, and districts that are eligible under state statutes or with which the organization has a cooperative interlocal agreement).

Staff must verify that the lead agency conducted a competitive solicitation in compliance with all applicable procurement laws and regulations (see Due Diligence requirements above).

[Departments, divisions, boards, and grant-funded programs] shall review the contract terms and ensure the agreement meets the [City/County/District’s] requirements for scope, pricing, contract term, and compliance obligations (such as insurance, indemnification, and local preference policies where applicable).

2. Approval Process

  • All requests to utilize a cooperative contract must be submitted to the [Procurement Services Department] for review and approval prior to any purchase or contract execution.
  • The requester must provide documentation that includes:
  • Copy of the cooperative contract or agreement
  • Lead agency’s competitive solicitation documentation (e.g., RFP, bid tabulations, award documentation, proof of advertisement)
  • Justification memo explaining why the cooperative contract is in the best interest of the City (e.g., price savings, expedited procurement, specialized goods/services, etc.)

The justification memo (see Appendix A) should include the following:

  • Describes the procurement need and estimated value;
  • Identifies at least one cooperative contract evaluated;
  • Explains why the Co-Op offers best value (e.g., 12 % lower unit cost, 60-day schedule savings);
  • States any socio-economic impacts and mitigation steps;
  • Affirms completion of the due-diligence checklist; and
  • Requests Council/Board authorization to “piggyback” on contract #____ awarded by ____ (lead agency).

The [Procurement Services Department] will review submissions for compliance and either approve or deny the request in writing.

3. Contract Execution and Documentation

  • Once approved, the [department, division, board, or grant-funded program] may proceed with the purchase using the cooperative contract.
  • All cooperative contract documentation, approval records, and supporting materials must be retained in accordance with City records retention policies.
  • [Departments, Divisions, Boards, or grant-funded programs] must ensure that all purchases made through cooperative agreements are encumbered and tracked in the City’s financial system as required for audit and reporting purposes.

4. Reporting and Monitoring

  • The [Procurement Services Department] will maintain a master list of all cooperative agreements used by the [City/County/District] and will review their effectiveness and compliance on an annual basis.
  • [Departments, Divisions, Boards, or grant-funded programs] are responsible for monitoring contract performance and notifying Purchasing of any issues or changes in scope, pricing, or vendors.

Prohibited or Limited Uses

Under State or local statutes and regulations, certain commodities and services are not eligible to be acquired through cooperative agreements. These include the following list. [Note: this list will vary state-to-state]

  • Professional Design Services – Engineering and architectural services must be procured through Qualifications-Based Selection or other methods prescribed by [State Statute].
  • Split Purchases – Departments may not split requirements to stay under approval thresholds.
  • Non-Competitive Co-Op “Add-ons.” Any materials or services outside the original scope of the cooperative contract require separate competition unless specifically allowed by the lead agency’s solicitation and contract documents.

---Optional----

[Note: these are procedures or policies that may be found elsewhere in the organization’s purchasing manual]

Federal Supply Schedules

[Note: the references in this section will vary state-by-state. This is a Texas example.]

[Texas Local Government Code Section 271.103] states that a local government that purchases goods and services available under Federal supply schedules of the United States General Services Administration, to the extent permitted by federal law, satisfies the requirement of the local government to seek competitive bids for the purchase of those goods and services.

Under the Cooperative Purchasing Program, state and local government entities may purchase a variety of Information Technology (IT) products, software, and services from contracts awarded under GSA Federal Supply Schedule 70, Information Technology.

State and local government entities may also purchase alarm and signal systems, facility management systems, firefighting and rescue equipment, law enforcement and security equipment, marine craft and related equipment, special purpose clothing and related services from contracts awarded under GSA Federal Supply

Schedule 84, Total Solutions for Law Enforcement, Security, Facility Management Systems, Fire, Rescue, Special Purpose Clothing, Marine Craft, and Emergency/Disaster Response.

Small & Local Business Considerations

In alignment with the [City’s/County’s/District’s] local economic-development policy, [Departments, Divisions, Boards, or grant-funded programs] shall:

  • Evaluate whether an in-house solicitation could yield equivalent pricing while enhancing local-business participation;
  • Where practicable, set subcontracting goals or require prime-vendor outreach to local suppliers;
  • Track diverse-business spend on Co-Op purchases for inclusion in quarterly reports.

Training & Compliance

  • Mandatory Training. All procurement professionals and department buyers must complete the online “Cooperative Purchasing Fundamentals” module within 90 days of adoption and every three years thereafter.
  • Updates. The Procurement Officer will revise this policy to reflect changes in state law, federal guidance, or best-practice publications (e.g., NIGP, NASPO, GFOA, NCPP roadmaps).

Appendix A – Sample Justification Memo for Utilizing a Cooperative Contract

To: [Procurement Services Department, City Manager, etc.]

From: [Title/Department]

Date: [Date]

Subject: Justification for Utilizing Cooperative Purchasing Contract

The purpose of this memorandum is to provide justification and documentation to utilize a cooperative purchasing contract (“Co-Op”) in lieu of conducting a formal competitive bid process for the procurement described below.

Procurement Need and Estimated Value

  • Procurement Need: Acquisition of [describe goods/services], necessary for [briefly state purpose, e.g., operational efficiency, replacement of outdated equipment, compliance with legal requirements, etc.].
  • Estimated Value: $[insert amount], based on market research and available contract pricing.

Cooperative Contract(s) Evaluated

  • Contract: [Name of Cooperative], Contract #[insert number], awarded by [Lead Agency Name]
  • Evaluation: Reviewed terms, pricing structure, vendor qualifications, and compliance with applicable statutes.

Best Value Analysis

  • The selected cooperative contract offers significant advantages:
  • Cost Savings: Unit pricing is approximately 12% lower than recent solicitations for comparable goods/services.
  • Schedule Savings: Projected to save 60 days in procurement schedule by avoiding a full bid cycle.
  • Quality Assurance: Contract vendor has demonstrated performance and offers robust warranties/service provisions.

Socio-Economic Impacts and Mitigation Steps

  • Potential impacts on local/disadvantaged/small businesses were considered. While cooperative contracts may limit direct local supplier participation, the following steps are recommended:
  • Encourage prime vendors to subcontract with local businesses where feasible.
  • Monitor contract performance for continued community benefit.

Due Diligence Affirmation

  • The required due-diligence checklist has been completed, including verification of contract compliance, vendor responsibility, and statutory requirements.

Recommendation and Request

  • Based on the factors above, I respectfully request authorization to “piggyback” on Contract #[insert contract number] awarded by [lead agency]. This approach is in the best interests of [Entity Name], providing expedited, cost-effective, and compliant procurement of needed goods/services.

Please let me know if additional information or clarification is required.

[Signature Block]

[Procurement Officer Name, Title]

[Contact Information]