Using a shareable contract – also known as cooperative procurement or piggybacking – is when one public entity buys a product or service using another public entity’s competitively awarded contract. Pavilion helps governments across the country find and buy from suppliers that have been awarded shareable contracts and helps businesses like yours sell more using contracts you’ve already won. Using shareable contracts:
- Satisfies the formal solicitation requirement: Since your business has already gone through a formal solicitation process for the particular products or services in the scope of the contract, you are qualified to sell “above threshold” to other public entities under the same terms of the contract without going through another formal solicitation process.
- Is a legal, well-established best practice: Shareable contracts are not a workaround or legal loophole. Most state and local entities, with very few exceptions, are authorized to use shareable contracts based on joint powers, intergovernmental cooperation, or cooperative procurement laws in their respective jurisdictions.
- Is a huge and growing sales tactic: More and more suppliers are using shareable contracts to expedite their sales cycles and achieve broader distribution. Already, 20% of local government purchasing spend flows through shareable contracts. Pavilion can help your business get a slice of this growing market.
We’ve covered the basics about shareable contracts below.
What is a shareable contract?
A shareable contract is very similar to a normal government contract, except the contract is created with the expectation that it may be used in the future by other public entities. As a supplier, you should be aware of the following components of a shareable contract:
- Shareable language: In order for a contract to be used by other governments (known as “piggybacking”), the contract typically must contain shareable language that permits other public entities to use it under the same, or similar, negotiated terms. Shareable language comes in many different forms, and may be found in the official contract, original solicitation, or (preferably) both.
- Participating agencies: It’s also typically made clear which public entities are allowed to utilize the contract. In some cases, any public entity is allowed to participate, leaving it up to the supplier to accept or decline future business depending on geographical limitations or order sizes. In other cases, the contract may outline specific geographic restrictions (i.e. “Agencies within the State of Kansas”) or even list specific intended entities.
- Pricing structure: Pricing on shareable contracts is generally a ceiling price; depending on the terms and conditions of the contract, purchasing entities may expect to be able to negotiate additional discounts. Do not commit to pricing in a contract that is so low that you would not be able to offer that pricing to a range of public entities. Many suppliers structure pricing as a discount off of a list or offer aggregated discounts based on volume. Remember, if the contract includes shareable language, you’ll want to be able to offer the price listed or even a slightly better price (according to deal size and other factors that impact margins) to future government customers buying off the contract.
How do government procurement staff diligence shareable contracts?
Most government entities will conduct a due diligence process to confirm that a shareable contract meets their own compliance requirements. Generally, purchasing entities will want to confirm:
- Formally solicited: In order to piggyback on a contract, most public entities need to confirm that the contract was completed in a way that complies with their entity’s competition requirements. To diligence this process, procurement professionals generally check the source documentation, including the solicitation, contract, and any amendments or modifications.
- Active: The contract cannot expire. It needs to still be active. Some public procurement professionals may prefer to use a contract that still has a few months or years of time left, or a few renewals available.
- Includes shareable language: Public procurement professionals will generally want to confirm that the solicitation and contract include shareable or permissive language.
- Contract scope: Governments can only purchase goods and services from shareable contracts that cover the scope of what they’d like to purchase. For instance, in order to purchase fencing materials and installation through a shareable contract, the government entity must confirm that both materials and services are covered in the contract scope. If only materials are covered, the government cannot purchase installation services through the contract.
- Pricing: Public procurement professionals will need to confirm that the contract pricing matches the quote you provide. To confirm pricing, governments will often request to see contract documentation with their quote.
Some public entities have additional due diligence requirements. For instance, some need to see proof that the solicitation was advertised to suppliers in their home state. These documents are typically provided by the public entity, not the supplier. Pavilion collects all these due diligence materials so government procurement professionals can see everything they need in one place.
Who creates shareable contracts?
Public entities at all levels of government can create shareable contracts:
- Local public entities and states. State agencies often add shareable language to their statewide contracts for the purposes of enabling more efficient procurement options for local entities within their state and fostering local business growth. Some local entities also create shareable contracts, especially if the awarded supplier is open to it or specifically asks for it. Creating shareable contracts can also be a source of revenue for these entities if they decide to include administrative fees.
- National and regional purchasing cooperatives. Purchasing cooperatives are governmental, nonprofit, and/or for-profit entities that create shareable contracts for local government memberships. They typically have broad audiences and well developed marketing channels to government entities. Most purchasing cooperatives generate revenue by charging administrative fees to the awarded suppliers. Purchasing cooperatives like Sourcewell or HGACBuy are government entities, so they create and distribute their own contracts. Others can be for-profit or nonprofit entities that must partner with governments to create shareable contracts. In this instance, the administrative fee paid by the supplier is typically shared between the government that serves as a lead agency on the contract and the purchasing cooperative.
- The federal government. The federal government’s General Services Administration (GSA) creates contracts intended for use by federal agencies; some of these contracts are also available for cooperative use by state and local governments, as well as public universities and schools. Previously, GSA only allowed state and local governments to utilize certain contract categories, known as “schedules,” for cooperative purchasing. These were IT, security, and law enforcement products and services - Schedules 70, 84, and 1122. As of September 2019, GSA released a single MAS Contract that incorporates all products and services covered under the 24 legacy GSA Schedules.
Are there costs to selling off of shareable contracts?
Shareable contracts creators that are helping to distribute your contract will usually charge an administrative fee to suppliers. Here’s what you need to know about these fees:
- Not all shareable contracts have administrative fees, but most contracts from national cooperatives do.
- Administrative fees are usually calculated as a percentage of the gross total sale - kind of like a finder’s fee.
- Fees can range anywhere from 0.25% - 4% of gross sales.
- If there are administrative fees, they will be clearly laid out in the terms of the contract with instructions on how to pay them.
- Suppliers are usually prohibited from passing on the administrative fee to be paid by local government entities. However, these fees, like other costs of doing business, are generally taken into account when the supplier responds to the solicitation.
What goods or services can I sell using shareable contracts?
You can only sell the goods and/or services that are covered by the particular scope of the original solicitation. Some solicitations are structured with wider scopes, which allow for the supplier to offer a full catalog or specific categories of offerings. Others are more narrowly scoped, limiting the products/services that may be sold. It benefits you, as the seller, to quote as broad of a range of products/services as possible within the scope of the RFP or ITB. This makes your contract an eligible purchasing vehicle for a much wider range of needs for public entities.
The range of goods and services that can be purchased and sold off of shareable contracts is broader than you might think. From asphalt resurfacing and school food, to temporary staffing and IT consulting services, most goods and services can be purchased and sold using shareable contracts.
Still have questions? Pavilion is here to help. You can reach out to our team at email@example.com.
You can also access your local APEX Accelerator for additional resources. APEX Accelerator locations across the country provide individualized counseling and informative training seminars about timely contracting issues and the latest guidelines to help businesses learn how the government procurement system can work for them.
This guide was edited and reviewed by procurement professionals Kelly Mickelson, Karri Burgess, and Rita Parker, and Sharon Reed.