Piggybacking could be next big thing in school district purchasing

On Board Online • September 22, 2014

By Jessica Goldstein
Senior Policy Consultant

“Piggybacking” has been talked about in school purchasing offices during the last few years, and not just because it’s fun to say. Piggybacking – a form of group purchasing – has the potential to save school districts and BOCES a lot of time and money.

Changes in state law have opened up new options for school districts that want to obtain better prices by purchasing certain goods and services through – or “on top of” – the contract of another entity – i.e., to piggyback on someone else’s contract. Cooperatives have sprung up that unite tens of thousands of governmental buyers.

“With economies of scale, piggybacking can result in volume discounts offered by vendors for goods and services,” said Kevin Callagy, school business official with the Livingston Manor school district in Sullivan County, who is examining options available to his rural district. “Someone else doing the work of competitive bidding saves time and effort on your part.”

Currently, it’s common for school districts to do group purchasing on a smaller scale through BOCES. The fact that a portion of these purchases are eligible for reimbursement with next year’s state aid through what’s known as a CO-SER (cooperative service arrangement) is considered a plus, but can obscure whether the price paid is the best obtainable.

School districts can use piggybacking for both smaller purchases where competitive bidding is not required, as well as larger purchases where competitive bidding is required, as long as the originating contract (the one on which your district is piggybacking) is consistent with both state law and the district’s own policies for purchasing. A school district must also determine that piggybacking is in the best interests of the district, and the originating contract must allow for piggybacking.

Under state law, competitive bidding is not required for purchase contracts of values at or below $20,000 (or under other excepted circumstances). However, school districts are still required under General Municipal Law section 104-b to purchase in a manner that:
• Uses public monies prudently and economically,
in the best interests of the taxpayers of the school district.
• Obtains goods and services of maximum quality at the lowest possible cost under the circumstances.
• Avoids favoritism, improvidence (wastefulness), extravagance, fraud and corruption.

The law requires that the school board adopt a policy for purchasing in these situations, consistent with the above obligations. This policy must include securing alternative proposals or quotations, among other components.

NYSSBA’s Board of Directors has endorsed using the services of U.S. Communities, a leading national cooperative purchasing organization for K-12 schools. It is a partnership among the Association of School Business Officials, the National Association of Counties, the National Institute of Governmental Purchasing, the National League of Cities and the U.S. Conference of Mayors.

Under various state laws, school districts can piggyback for various goods and services through contracts of New York State, state agencies or departments, the state Office of General Services, the counties of New York State, the United States government, federal agencies, the federal General Services Administration, any state, and other counties, political subdivisions or districts therein. This can be done directly or via cooperatives like U.S. Communities.

Purchasing agents say the systems used by these governmental entities can be complex, and that they have been looking for ways to shop online, much like an individual consumer. But they are also cautious, said Michael Perina, purchasing agent for the Nassau BOCES.

Perina, who is a member of the U.S. Communities’ advisory board, said a lack of clear step-by-step guidance from the state “leaves people unsure exactly how to do piggybacking the right way. Piggybacking is not yet an established practice, and district staff don’t want to do anything wrong.”

He said U.S. Communities provides a mechanism for entering group contracts with confidence that the original contract is the product of a competitive bidding process consistent with the laws of New York State and other states.

“In my experience, most states in America have enacted similar competitive bidding requirements,” says Doug Looney, regional manager for U.S. Communities. “This makes piggybacking easier, knowing that other municipal governments are playing by the same rules.”

The main tenets of competitive bidding in New York are: (1) publicly advertised bids or offers, (2) bids/offers are submitted in a sealed or secured manner to preserve confidentiality, (3) specifications or standards must have been part of the bid, and (4) awarding contracts to the lowest bidder (or best value, if the school board has authorized the district to award bids on that basis).

Looney estimates that “an average staff time required for competitively bidding something like a copy machine or furniture is about 40 staff hours per contract, and in large districts could reach 100. Multiply that by the hourly staff costs for salary and benefits (the U.S. Department of Labor sets an average just under $42 per hour) and piggybacking savings adds up fast.”

U.S. Communities uses a web application to allow its members to search for contracts that fit their needs. Currently, more than 300 New York State public school districts and BOCES have signed up for U.S. Communities. Looney estimates that 30 to 50 New York State municipalities use U.S. Communities regularly, while another 100 use the service sporadically.

Looney will deliver an educational session about piggybacking at NYSSBA’s Annual Convention in New York City. He will speak at 2:45 pm on Monday, Oct. 27.

Safeguarding public monies is one of the main responsibilities for any school district or BOCES. Spending money wisely is crucial for maintaining the public’s trust, as well as for maximizing the amount of money that can be put toward serving students.

“School districts must still do some due diligence when piggybacking,” said Perina. Callagy agreed: “You need to establish trust and faith in the originating contract, and make sure that the contract fits your needs.”