Politics in Bulk
Joint-purchasing deals are a win-win proposition--except for those who lose.
Have you ever asked your neighbor to pick up a bargain for you when she went shopping at a big warehouse store? Municipalities are turning to their neighbors in just this way, hoping they can get better deals if they buy their office supplies or fire engines collectively. But joint-purchasing arrangements remain a tough sell politically, because if someone is saving, someone else is likely to feel threatened.
States often give their localities access to purchasing lists, arranging a discount for them by proxy. Cities should take full advantage of these arrangements, says David Akers, a purchasing consultant in the Cleveland area. It makes no sense to try to beat the state's price on a few items. That time could be better spent trying to arrange some sort of discount on the other 90 percent of the things your city needs.
Toward that end, Akers has set up a nonprofit that coordinates purchases among Northeastern Ohio municipalities, getting better prices by agreeing to buy all the same goods from a single vendor. He negotiated, for instance, a 10 to 15 percent discount on auto parts. More important than the money, Akers says, was the staff time the deal will free up. Mechanics can now concentrate on fixing cars, rather than spending hours on the phone getting multiple quotes for each set of spark plugs.
Desirable as it may be, the idea that cities are saving time and simplifying procedures has made some public workers nervous. "The bureaucratic part is complicated," admits Georgine Welo, mayor of South Euclid, a town of about 24,000 that saved $100,000 last year by using Akers' cooperative to buy road sealant and workers' compensation insurance. Welo says some town engineers worried that the deal put them at risk of losing their jobs. When people frown upon cooperative efforts, she says, "it's because they're going to lose money in their pockets." Welo, incidentally, has become something of a cheerleader for regionalism in general. "Collectively, we're great," she says. "Separately, we're not going to be able to exist."
Aside from Akers' grassroots model, there's another approach at cooperation, which is for cities to participate in a national group, such as U.S. Communities, a partnership of the National League of Cities, the National Association of Counties and several other organizations. Under this scheme, a large jurisdiction can negotiate its own contract on a widely used commodity such as office furniture, and any other government agency anywhere should be able to obtain the same terms.
But some states, particularly in the Northeast, want to hold on to their position as lead coordinators of discount purchasing. The use of more broadly based cooperatives bleeds their ability to collect the administrative fees they count on from localities who buy from their lists. The prospect of cities buying from vendors halfway across the country has also led many local businesses to lobby against giving localities the right to participate in the large-scale purchasing alliances that are beginning to spring up.
The touchiness of states, city employees and close-to-home businesses is the reason why neither regional nor national purchasing cooperatives have really caught fire, despite their obvious benefits. That's why Akers began his work in Ohio with just 13 towns as part of his program. "The purpose of the pilot project was to see if we could come up with a politically viable model," he says, "because if we couldn't, the rest of it doesn't matter."