Public Contract Law Journal

No Compete Contracting in Cooperative Purchasing? Proposed Solutions to Resolve Gaps in Competition, Transparency and Socioeconomic Policy at the State & Local Level

by Eric P. Roberson

Eric P. Roberson is a 2016 graduate of The George Washington University Law School and currently serves as judicial law clerk in the U.S. Bankruptcy Court for the Eastern District of Virginia. The views expressed in this Article are solely those of the author and do not reflect the official policy or position of the U.S. Bankruptcy Court, the Judiciary, or the U.S. government.

I.   Introduction

Federal contractors face difficult business challenges with shrinking federal procurement budgets and increasing competition.1 As a result, many contractors seeking new business opportunities in the government marketplace turn to state and local markets.Some experts calculate that “subentral” procurement spending (which includes state, regional, and local government purchases) exceeds the federal market by approximately two-fold — spending over $1 trillion annually on the procurement of goods, services, and construction.3 Thus, state contracting prospects provide new growth opportunities, especially for contractors that operate exclusively in the federal space. However, the state marketplace is not without its drawbacks and pitfalls. For example, while federal and state procurement systems operate parallel to each other in many ways, including by promoting competition, transparency, and efficiency, each functions in near independence and under vastly different rules, especially between different states.4

One procurement method virtually all states may employ and the majority of states use to meet their contracting needs is cooperative purchasing.5 Cooperative purchasing involves contracting authorities combining their purchasing power to obtain better pricing for goods and services they need.6 Although total spending under all cooperative purchasing vehicles is unknown, current spending from one particular cooperative purchasing vehicle, NASPO ValuePoint,7 exceeds $13.6 billion and may be increasing.8 Consequently, and as discussed below, more reporting and tracking of cooperative purchasing is required to truly understand its impact.

In addition to the lack of transparency on spending data, many cooperative purchasing procedures, or lack of procedures, invite the evasion and circumvention of competition, transparency, and the socioeconomic policies underpinning a robust procurement system.9 Therefore, to promote these goals and maintain the integrity of these systems, states should unify, modernize, and update their cooperative purchasing procedures.

Accordingly, this Article explores the different methods of cooperative purchasing employed across several states, specifically interstate cooperative purchasing, and makes recommendations for these systems, focusing on updates to the Model Procurement Code (MPC), which predicates many of these systems. Additionally, this Article examines possible international solutions by analyzing the procedures implemented in the European Union (EU) that have addressed similar cross-border purchasing issues at multinational and subnational levels.

Part II of this Article focuses on the definition of cooperative purchasing and explores the framework of cooperative purchasing expressed in the Model Procurement Code, which many states have adopted either in full or in part. This part also examines several states’ cooperative purchasing methods that deviate, or differ, from the MPC.

Part III identifies the shortcomings of both the MPC and the cooperative purchasing systems and procedures in many states. Specifically, the current structure and procedures create substantial tensions among the goals of competition, transparency, and socioeconomic remedies upon which the procurement system is based.

Part IV proposes revisions to the MPC fashioned after solutions implemented by certain states that have attempted to address the risks identified in Part III. These proposed revisions also draw upon federal solutions found in FAR 17.5. Additionally, this part reviews international examples, specifically the solutions implemented by the EU, in addressing similar competition and transparency concerns across its national and subnational procurement units.

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