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Third Party Procurement Strategies

Posted 6/13/2023

Procurement aggregators or Group Procurement Organizations (GPOs) have been around for quite some time.

The Province of BC has its Corporate Supply Arrangements available to the public sector in BC and there are several private GPOs as well. Many GPO contracts are for MRO type commodities.

There are benefits to participating in a third party brokered contract. The GPO does the heavy lifting to create the supply contract. Pricing, particularly for routine “as if and when required” purchases may be better than what the buyer could obtain individually. I led some co-operative procurements on behalf of several municipalities, school districts, post-secondary, and other public funded organizations in the late 90’s, early 00’s.

Lowest price, however, does not always equate to best value. When considering participating in a third party brokered contract do diligence:

  • ·         Is the GPO Canadian owned and operated?
  • ·         What are the costs, direct and indirect, and benefits of participation?
  • ·         Read and understand the terms of the supply request before committing to participation.
  • ·         How does participation in a GPO contract reconcile with organizational goals specifically for local economic, social value, and environmental goals?
  • ·         Does an association with a GPO mandate the use of their contracts?
  • ·         Is the GPO pricing structured to lower per unit costs on large volume project type procurements?
  • ·         Does the use of a GPO contract limit choice in the marketplace for you?
  • ·         Will the GPO contracted commodities integrate with existing systems and standards employed?

There are many variables and issues to consider when developing a procurement strategy. The use or not of a GPO and which GPO to associate with is one consideration amongst many. Procurement must also align with the organization’s strategic plan, goals, and objectives. By doing due diligence with procurement planning, you are better able to justify your decisions and deliver best value to your organization.