States leveraging group purchasing for procurement efficiency
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An analysis of state and local spending finds that although the number of bids has declined, overall spending is equal to or higher than last year.
A recent analysis of state and local government and education spending finds that although the number of bids has declined, overall spending has increased.
The Onvia State & Local Procurement Snapshot for Q3 2014 analyzes contracting activity across the nation.
Compared with the same quarter last year, the Q3 2014 analysis finds a 3.2 percent decline in opportunity volume, or the number of state, local and education bids and RFPs submitted for open bidding by government agencies, which indicates slowing growth.
However, a decrease in opportunity volume does not necessarily indicate a decrease in state and local government spending, according to Paul Irby, a market research analyst at Onvia. "What we're seeing happen much more often now is one agency awarding a contract to a vendor, then several agencies purchasing off of that single contract for future purchases."
The firm analyzed procurement activity of a sample of cooperative purchasing agencies across the country and saw a 16 percent increase in their procurement volume over the prior year. “Many of these contracts will be purchased off of many times, resulting in a decrease in opportunity volume even if spending is equal to or higher than last year," Irby said.
Onvia's Snapshot analyzed several other trends in state, local and education agency procurement for the period, including:
- A noted decline in telecom contract volume compared to last year, which could be related to both an ongoing migration to VoIP services and the shift from agency-provided wireless devices to government agency BYOD adoption.
- A 10.5 percent decline in opportunity volume among education agencies. Education is one of the sectors most strongly impacted by cooperative purchasing initiatives as districts aim to pool purchasing activity in an effort to negotiate better pricing and increase procurement efficiency.
With an increase in cooperative purchasing activity resulting in fewer contracts of greater potential value and with higher state and local tax revenues expected to increase overall government spending in 2015, competition among government vendors is also on the rise, the report said.
Readers can download the full report from Onvia.