Establishing a Purchasing Cooperative in the Southern New Hampshire Region

By David J. Preece

In the summer of 2008, New Hampshire municipalities got word that the New Hampshire Departments of Administrative Services (DAS) and Transportation (DOT) were revising the way the state requests bids for purchasing winter road salt. In the past, both departments had guaranteed that cities and towns would pay the same price the state pays for salt.

In response to this reality, several southern New Hampshire region municipalities are considering negotiating with salt vendors as a collective group instead of as individual communities. The reasoning behind this is that it could present a vendor with an opportunity to sell a lot of salt for this winter in bulk, up front. For each community, such an effort puts the municipality in a stronger negotiation position because they are part of a larger consumer base articulating their needs. Short of such an approach, each community would need to negotiate salt prices individually from a considerably weaker negotiating position.

In recognizing the strain that this could put upon Southern New Hampshire Planning Commission (SNHPC) municipalities’ budgets, the Planning Commission staff decided to work with its region’s communities to explore the possibility of negotiating with vendors collectively. SNHPC invited representatives from their municipalities to join them in a discussion. If, at this meeting, municipalities felt it would be in their best interest to pursue an effort to collectively negotiate with vendors, SNHPC would assist with facilitating that process.

Our first meeting was held on August 27, 2008, and the majority of the SNHPC municipalities attending agreed to explore the possibility of collectively negotiating with vendors.

Soon after the first meeting, the New Hampshire Departments of Administrative Services and Transportation rescinded their revised bidding procedure and allowed the municipalities to be part of the state contracts for winter road salt. Even though the winter road salt “crisis” had subsided, the municipalities’ representatives felt that it would be in their best interest to continue the discussions about providing regional services and collectively negotiating with vendors.

A series of meetings were held throughout the year, facilitated by SNHPC. By taking a regional approach to address development concerns, SNHPC believed that we could attempt to craft cost-effective and efficient solutions that will preserve the special character and valuable resources of the region. Kevin Sheppard, public works director, and Melinda Salomone-Abood, purchasing agent, both from the City of Manchester, took leadership roles in the purchasing cooperative organization, and agreed to take the lead by allowing the communities to piggyback on City contracts.

This purchasing cooperative would allow municipalities to come together and buy into joint purchases of materials and services that the municipalities need, such as large bulk purchases of road construction materials, heavy machinery, tires and other commonly used construction materials. By participating in a purchasing cooperative, municipalities would be able to take advantage of acquiring materials at a lower cost when it is bought in multiples or large bulk. This ultimately saves all parties money and helps make good connections with suppliers.

We surveyed each municipality so that the SNHPC and the City of Manchester could get a clearer understanding of existing needs and priorities around the region. In May of 2009, the purchasing cooperative committee reviewed the findings from the survey. After reviewing the committee’s feedback and consulting with the City of Manchester, spreadsheets were developed documenting the quantities and specifications of requested supplies and materials.

SNHPC staff asked the municipalities to provide a list of recommended vendors they had used in the past, and/or vendors they would like to ensure received a bid. We also requested that municipalities advise SNHPC of any item not on the list that they typically use in large quantities.

Finally, if a community would like to participate in a purchasing cooperative, the City of Manchester requested a letter of commitment from the community before any purchases were made. This requirement presented a stumbling block, as we were not able to get a letter of commitment from any of the participating municipalities. In hindsight, we realize now that we should have involved selectmen and budget committee members as well as managers, to ensure that all would be well-informed and we would receive the documentation we needed.

It was our hope and intent to provide those municipalities wishing to participate in the purchasing cooperative with supplies and services they need in a convenient manner and at a more affordable price. We continue to meet with the representatives on forming energy/natural gas cooperatives and explore ways that municipalities could share a joint fire station or library with each other. While defining a new process like this can be difficult at times, the potential benefits are great. We all agree that it is in everyone’s benefit to work together in a cooperative and collaborative manner; there is a lot of money to be saved by doing so.

David J. Preece, AICP, is executive director and CEO of the Southern New Hampshire Planning Commission. For more information on this topic, he can be reached by phone at 603.669.4664 or by e-mail at dpreece@snhpc.org.

Online Resources for Intergovernmental Sharing

Government Finance Officers Association of the United States and Canada

An Elected Officials Guide: Intergovernmental Service Sharing
By John Ruggini
Available for purchase

Michigan Government Finance Officers Association
The following white papers are available to download:

The Business Case for Interlocal Cooperation

Justifying Interlocal Cooperation: Feasibility Studies, Financing and Cost Allocation

Selling Stakeholders on Interlocal Cooperation

New York State Comptroller, Division of Local Government Services and Economic Development
The following resources are available to download:

Intermunicipal Cooperation and Consolidation: Exploring Opportunities for Savings and Improved Service Delivery

ICMA Profile of Local Government Service Delivery Choices 2007

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