The ImmixGroup recently published an article that gave an overview of cooperative purchasing and some contract vehicles associated with it. In this overview they were able to touch on some points about the National Association of State Procurement Officers (NASPO) ValuePoint program. Immix, who has a very established presence in the federal market, highlighted advantages of utilizing cooperative purchasing contracts and the amount of dollars procured through NASPO ValuePoint. I will highlight NASPO ValuePoint from an inside perspective, as I have first-hand experience working in the program, working with State Procurement Officials and currently managing several companies within the program.
Spending through NASPO ValuePoint
According to a related Onvia article from February, NASPO ValuePoint recorded a total spend of $10.5 billion dollars in purchasing in FY 2014. Cooperative purchasing contracts only account for about 2.2% of state and local and education spend. This is a large number, considering cooperative purchasing contracts are utilized in almost all 50 U.S. states, but they don’t dive into the specifics about how cooperative purchasing, specifically why NASPO ValuePoint is so successful and why it is growing so much. Before I begin to highlight how NASPO ValuePoint works, I wanted to mention that the $10.5 billion dollars in total purchasing in FY 2014 was based off of a 15% increase from FY 2013 and this number is only going to increase for FY 2015.
How Does NASPO ValuePoint Work?
NASPO ValuePoint is a cooperative purchasing program, which utilizes a competitive bid program for multiple award contracts, similar to GSA. However, NASPO ValuePoint uses consolidated purchasing requirements, through the form of a Participating Addendum. This enables awarded vendors to engage in direct sales between the state and its various agencies, schools and municipalities. These Participating Addenda (Statewide Contracts) consolidate purchasing requirements by facilitating a quick contract framework through merging the NASPO ValuePoint Terms and Conditions and the State’s Terms and Conditions. In addition, they also lower the cost of competitions at the order level through minimal administrative fees.
The process of obtaining Participating Addenda is a pretty simple task. As an already awarded NASPO ValuePoint contractor, who has an established master contract, your pricing has already been assessed to fit the needs of the participating states. In most cases, state procurement officials will reach out to the awarded vendors with a Participating Addendum, which as stated prior, has both the Terms of the state and the NASPO ValuePoint terms already written into. Once these terms are agreed upon through negotiation and the Participating Addendum is executed (signed by both the state and the vendor) you can begin selling directly to the state. This enables you to take advantage of the 2.2% of state and local spend, highlighted above.
Advantages with NASPO ValuePoint
NASPO ValuePoint can be a very appealing contract to pursue as you are able to avoid the full-and-open competitive process for every federal contract purchase due to a Participating Addendum model. However, this is not the only advantage. NASPO ValuePoint is more widely recognized by state and local governments, because Participating Addenda allow the state to incorporate its terms within an established contract. This is not the case with GSA’s Cooperative Purchasing program, who has still failed to grab this full market.
If you are considering selling to state and local governments, you should definitely consider NASPO ValuePoint, as well as seeking guidance on how to navigate this contract. The state and local market may seem very appealing, but succeeding in it involves utilizing some subject matter expertise. Winvale is one of the only third-party consultants managing multiple NASPO ValuePoint contracts and can help you diversify your portfolio through this vehicle.