Why and how to add shareable language to your contracts
Shareable contracts can go by many names: cooperative contracts, piggyback contracts, interlocal or intergovernmental contracts. At their core, a shareable contract is a contract created by one public entity through a formal competitive process that another public entity can use to make a purchase.
There are many reasons to add shareable language to your public entity’s solicitation and contract templates as a default. Including this language supports other public entities, lowers the costs of selling into the government market for suppliers, and can even generate significant revenue for your public entity.
While many public servants associate shareable contracts with national purchasing cooperatives like Sourcewell or OMNIA Partners or state-led programs like Texas DIR or MMCAP, all public entities including local governments can create shareable contracts.
Adding this language in solicitations and contracts provides an option for other peer agencies and the supplier to work together using your contract. It does not obligate other public agencies to purchase, nor does it commit your suppliers to provide the contracted products or services to all public agencies that wish to use the contract.
By including shareable language in your solicitation and contract templates, you can help peer public entities save time and money. Since entities that are geographically close tend to share a similar supplier pool and have similar compliance needs, allowing other entities to purchase from your contracts help the region deliver outsized value. When public entities in a region share contracts, they can save up to 15% of procurement costs.
When a supplier is awarded a contract that includes shareable language, that supplier can more easily leverage that contract to generate new sales to other governments. Participating in a competitive solicitation is expensive for businesses (at the state level, it can cost up to $1.5M for a business just to submit a response to a complex RFP). Most businesses must win a new contract to generate a new sale, so subsequent sales are also expensive. Generating a sale from a shareable contract reduces the average cost of doing business– as a supplier, it’s less expensive to sell using a contract you’ve already been awarded.
Including shareable language in your contracts helps all suppliers, but especially those small-, women-owned-, local, and disadvantaged businesses, since shareable contracts enable businesses to lower the costs of selling into the government.
Keith Glatz, Purchasing and Contracts Manager at the City of Tamarac, FL and active member of the Southeast Florida Governmental Cooperative Purchasing Group, reflects on how adding shareable language to contracts can be especially helpful for diverse businesses:
"As an example, we awarded a contract for roof tarps to a small, woman-owned business in Brooklyn, NY recently. Now, they have the agreement to supply roof tarps to all agencies in our region. Roof tarps can be a very important commodity in areas like South Florida, where we are subject to hurricanes, which can cause significant roof damage in a region."
Some public entities can choose to generate revenue when other public entities use their shareable contracts. Some contracts have administrative fees written into the contract, which obligate the awarded supplier to pay a fee when the supplier generates a new sale using the cooperative contract. The fee is usually a percentage of gross sales between 0.25% and 4%. The fee is usually paid to the lead public entity that created the contract or the purchasing cooperative that is administering and marketing the contracts. Suppliers pay these fees because generating a new sale on an existing contract is less expensive than participating in a new competitive solicitation process.
For some public entities, the revenue generated from even a few contracts can be significant. In 2015, for instance, the City of New York utilized the City of Tucson's cooperative contract for IT Solutions with CDW-G. The single purchase with the City of New York generated $25,000 to $60,000 in administrative fees to the City of Tucson; the City of Tucson's cooperative contracts generated $500,000 overall in that same year. For some entities, like the City of Mesa, AZ, the revenue generated through administrative fees can effectively cover the costs of its procurement department. Mesa now generates more revenue each year for its General Fund from shareable contract fees than it spends on its procurement department.
If you’d like to add shareable language to your solicitation and contract templates, here are some tips to help you get started:
We have collected examples of shareable contract language from across the country. If you’d like to share the language that your entity uses in its solicitations and contracts, please add your contracts to Pavilion or reach out by emailing support@withpavilion.com!
Portland Public Schools
In this example, shareable language appears in the solicitation document under section 5.12:
5.12 Intergovernmental Permissive Cooperative Agreement
At the discretion of the Contractor and pursuant to ORS 279A and District procurement rules, other public agencies shall have the ability to purchase the awarded goods and services from the awarded Contractor(s), under terms and conditions of the resultant contract.
Any such purchases shall be between the Contractor and the participating public entity and shall not impact the Contractor’s obligations to the District. Any estimated purchase volumes listed herein do not include other public agencies and the District makes no guarantee as to their participation.
City of Portland
The City of Portland includes shareable language, here’s an example from this contract with Ferguson Waterworks. Note that the City of Portland also includes an administrative fee in its contracts, which can generate revenue for the City:
48. INTERGOVERNMENTAL COOPERATIVE PROCUREMENT: The Contractor having submitted a bid agrees to extend identical prices and Goods under the same terms and conditions to all public agencies. Quantities stated in this Contract/Price Agreement reflect the City of Portland usage only.
Any public entity that wishes to purchase items will execute its own contract with the awarded Contractor for its requirements. If the Contractor enters into a contract with any public entity on terms or prices other than that outlined in this contract or in conjunction with a competitive bid process, then there is no reporting requirement to City of Portland.
49. INTERGOVERNMENTAL COOPERATIVE ADMINISTRATIVE FEE (CAF): A 1.0% annual cooperative administrative fee (“CAF”) or Eligible Revenues will be paid to the City for any Intergovernmental Cooperative Procurement contracts that Contractor agrees to enter into under identical prices and terms and conditions to this Agreement and which did not result from a competitive bid process (“Eligible Contracts”). The pricing extended to Participating Entity shall be the purchase price before promotional discount as outlined in Attachment B charged to the City of Portland under this Price Agreement (#310008XX) for each service. Eligible Revenues shall mean the revenues on Eligible Contracts. In the event that the City exercises its unilateral right to Early Termination under clause 33(b), then Contractor will no longer be liable to City of Portland for any CAF otherwise due and payable to City of Portland.
Home Forward
Home Forward, a public housing authority serving Multnomah County, the City of Portland, and the City of Gresham, and other communities has recently approved the following language for their solicitations and contracts:
Solicitation language:
INTERGOVERNMENTAL COOPERATIVE PROCUREMENT
Proposers agree to extend identical prices and services under the same terms and conditions to other contracting agencies. Requirements stated herein reflect only those of Home Forward and any other contracting agencies identified in this solicitation. A contracting agency wishing to utilize like services will execute its own contract with the successful Proposer(s) for its requirements. The successful Proposer(s) shall provide usage reporting of Home Forward as well as that of other contracting agencies to Home Forward Procurement as listed in the resulting contract on a quarterly basis. The successful Proposer(s), by written notification included with their proposal submittal, may decline to extend these services, prices, and terms and conditions to any other contracting agency.
Contract language:
PERMISSIVE COOPERATIVE PROCUREMENT
Pursuant to ORS 279A.215, as additional consideration for this Contract, Contractor agrees to extend an option to purchase any Products or Services covered under this Contract at the same prices as are specified in Exhibit A: Contractor’s Price, and under the same terms and conditions, to other contracting agencies. Each contracting agency shall execute its own contract with Contractor. Contractor shall provide usage reporting of Home Forward as well as that of other contracting agencies to Home Forward on a quarterly basis.
The Kansas City Regional Purchasing Cooperative (KCRPC)
The Kansas City Regional Purchasing Cooperative (KCRPC) creates contracts that its member agencies can utilize, so it includes shareable language in its solicitations and contracts. Here’s an example from KCRPC’s contract with Ka-Comm for Public Safety Radios. Note that language can be found both in the solicitation document and the contract document, which outlines the administrative fee obligation for the supplier. This language also constrains utilization of contracts to agencies in the KCMO metro area.
Solicitation language:
Cooperative Purchasing
Respondents shall agree to extend agreement and terms of contract to any Municipal, County, Public Utility, Hospital, Educational Institution, or any other non-profit organization located within the Greater Kansas City Metropolitan Trade Area. Eligible agencies include members of MARC, or members of any chapter affiliate of The Institute of Public Procurement (www.nigp.org) and located within the Greater Metropolitan Kansas City trade area. All sales will be made in accordance with the terms, and conditions of the Request for Proposal, and any subsequent contract. There shall, however, be no obligation under the cooperative procurement agreement for an agency to use the contract. All sales shall include the 1.5 percent administrative fee.
Contract language:
3. Administrative Fee
All payments of administrative fees are due 30 calendar days after the closing of each quarter. A late penalty of 18 percent will be assessed to the Contractor, by MARC/KCRPC, each month the payments are not received. Payment of the 1.5 percent administrative fee to MARC/KCRPC shall be based on gross sales. If no sales were conducted during a quarter, a report reflecting this shall be sent to the Program Coordinator. The Contractor shall have no claim or right to all or any portion of the administrative fee. All payments shall be made payable to: Mid-America Regional Council, referencing “KCRPC RFP 83” and the quarter of sales on each payment. Payments shall be mailed to MARC, Attn: Finance Department, 600 Broadway Suite 200, Kansas City, Missouri 64105-1659. The composite report of all sales shall be sent electronically to the Program Coordinator. The report shall include, at a minimum; ordering agency, detail of items sold including description, quantity, and price. The report shall be totaled for the accumulated dollar amount sold within the quarter for each ordering agency. Failure of the Contractor to provide quarterly reports as required, may be deemed breach of the contract.
The City of Lee's Summit, MO
Local agencies like City of Lee’s Summit in Missouri include cooperative language as a default in bid solicitations. In this case, City of Lee’s Summit provides the supplier an opportunity to opt in or out of cooperative purchasing in their bid response. If the supplier checks the “yes” box, and their bid is accepted, the bid document with this language becomes part of the final contract. Note that this language also restricts piggybacking agencies to the agencies in the Greater Kansas City Metro area.
Here’s an example from a City of Lee’s Summit contract with Schendel Pest Services:
5.0 COOPERATIVE PROCUREMENT WITH OTHER JURISDICTIONS:
This section is optional, it will not affect bid award. If the City of Lee’s Summit awarded you the proposed contract, would you sell under the prices and terms of this Contract to any Municipal, County, Public Utility, Hospital, Educational Institution, or any other non-profit organization having membership in the Mid-America Council of Public Purchasing (MACPP) or Mid-America Regional Council (MARC) and located within the Greater Kansas City Metropolitan Trade Area? (All deliveries shall be F.O.B. Destination and there shall be no obligations on the part of any member of said Council to utilize this Contract.) Sales will be made in accordance with the prices, terms, and conditions of the Invitation for Bid and any subsequent term contract.
YES ___ NO ___ INITIALS: ___
There shall, however, be no obligation under the cooperative procurement agreement for any organization represented by MACPP or MARC to utilize the bid or contract unless they are specifically named in the invitation for Bid as a joint bidder. The principal contracting officer (PCO) is responsible to handle the solicitation and award the contract. The PCO has sole authority to modify the contract and handle disputes regarding the substance of the contract. The PCO is the Procurement Officer of Record, City of Lee’s Summit, Missouri. Each jurisdiction that is a party to the joint bid has authority to act as Administrative Contracting Officer with responsibility to issue purchase orders, inspect and receive goods, make payments and handle disputes involving shipment to the jurisdiction.
King County, Washington
This example does not mention “cooperative procurement,” “piggyback” or “intergovernmental use” in its description, but it nevertheless broadly establishes the ability of other public agencies to utilize the contract.
3.15 Other Public Agency Orders
Other federal, state, county, and local entities may utilize the terms and conditions established by the Contract if agreeable to all parties. The County does not accept any responsibility or involvement in the purchase orders or contracts issued by other public agencies.
Dorchester County, South Carolina
Dorchester County, SC includes cooperative language as a default in solicitations.
UTILIZATION BY OTHER PUBLIC AGENCIES CLAUSE
The use of this solicitation and resulting contract shall be made available to other local governmental agencies and agencies established for the public benefit (“Public Agencies”). The parties agree to allow other governmental agencies to enter into separate agreements with the Contractor under the terms and prices in effect between the County and the Contractor. The parties also agree that any other agency utilizing the terms and prices of this agreement shall not be deemed to be an agent or employee of the County of Dorchester for any purpose whatsoever. The parties further agree that any Public Agency will enter its own separate contract with the Contractor.
The County is not otherwise responsible for the Public Agencies’ performance of the Contract between the individual Public Agencies and the Contractor or for any obligation or liability accruing to the Public Agencies in the performance thereof. The Public Agencies and the Contractor further agree to waive any rights they may have in making the County of Dorchester a party to a dispute between a Public Agency and the Contractor.
Miami-Dade County, Florida
COUNTY USER ACCESS PROGRAM (UAP) IN ACCORDANCE WITH CFR 200.319(B), PARAGRAPH 1.37, COUNTY USER ACCESS PROGRAM (UAP), SHALL NOT APPLY TO FEDERALLY FUNDED PURCHASES
1. User Access Fee
Pursuant to Section 2-8.10 of the Code of Miami-Dade County, this Contract is subject to a user access fee under the County User Access Program (UAP) in the amount of two percent (2%). All sales resulting from this Contract, or any Contract resulting from the Solicitation, and the utilization of the County Contract price and the terms and conditions identified herein, are subject to the two percent (2%) UAP. This fee applies to all Contract usage whether by County Departments or by any other governmental, quasi-governmental or not-for-profit entity.
The Awarded Bidder providing goods or services under this Contract shall invoice the Contract price and shall accept as payment thereof the Contract price less the 2% UAP as full and complete payment for the goods and/or services specified on the invoice. The County shall retain the 2% UAP for use by the County to help defray the cost of the procurement program. Bidder participation in this invoice reduction portion of the UAP is mandatory.
2. Joint Purchase
Only those entities that have been approved by the County for participation in the County’s Joint Purchase and Entity Revenue Sharing Agreement are eligible to utilize or receive County Contract pricing and terms and conditions. The County will provide to the approved entities a UAP Participant Validation Number. The Awarded Bidder must obtain the participation number from the entity prior to filling any order placed pursuant to this Paragraph. Awarded Bidder participation in this joint purchase portion of the UAP, however, is voluntary. The Awarded Bidder shall notify the ordering entity, in writing, within three (3) business days of receipt of an order, of a decision to decline the order.
For all ordering entities located outside the geographical boundaries of Miami-Dade County, the Awarded Bidder shall be entitled to ship goods on an “FOB Destination, Prepaid and Charged Back” basis. This allowance shall only be made when expressly authorized by a representative of the ordering entity, and prior to shipping of goods. The County shall have no liability to the Awarded Bidder for the cost of any purchase made by an ordering entity under the UAP and shall not be deemed to be a party thereto. All orders shall be placed directly by the ordering entity with the Awarded Bidder and shall be paid by the ordering entity less the 2% UAP.
3. Bidder Compliance
If an Awarded Bidder fails to comply with the aforementioned provisions, that Contractor may be considered in default by the County.
City of Tamarac, Florida
OTHER GOVERNMENTAL ENTITIES
If a Proposer is awarded a contract as a result of this RFP, Proposer will, if Proposer has sufficient capacity or quantities available, provide to other governmental agencies, so requesting, the products or services awarded in accordance with the terms and conditions of the Invitation for Bid and resulting contract. Prices shall be F.O.B. Destination to the requesting agency.
