HomeMy WebLinkAbout05/16/2000, C3 - COOPERATIVE PURCHASING FOR OFFICE SUPPLIES council
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CITY OF SAN LUIS OBISP�� ,,O��
FROM: Bill Statler,Director of Finance ;;,
Prepared By: Carolyn Dominguez, Accounting Manager e p
SUBJECT: COOPERATIVE PURCHASING FOR OFFICE SUPPLIES
CAO RECOMMENDATION
Approve cooperative purchasing for office supplies through the California Communities
Purchasing Program/Los Angeles County master agreement, and authorize the Mayor to sign the
contract with Office Depot.
DISCUSSION
Overview
The City currently contracts with the Office Depot for a broad range of office, computer and
paper supplies through a cooperative purchasing agreement with the County of San Luis Obispo.
Under the proposed contract, we would continue purchasing through the Office Depot. However,
this would be under a master contract arranged by the California Communities Purchasing
Program (a joint effort of the League of California Cities and California State Association of
Counties) with the County of Los Angeles, rather than through the County of San Luis Obispo.
Given the broader `umbrella" and purchasing power of the California Communities Purchasing
Program, we believe this offers the City the best overall package of pricing and services.
Background
California Communities Purchasing Program. The California State Association of Counties
(CSAC) and the League of California Cities initiated the California Communities Purchasing
Program (CCPP) to provide local governments the power to cooperatively purchase products and
services at volume discounts normally available only through large national contracts. Under this
program, the City is eligible to "piggy-back" onto the office supplies contract awarded by Los
Angeles County to the Office Depot. The National Association of Counties (NACO) is also part
of this master purchasing arrangement.
Representatives from the CCPP and the Office Depot recently met with the Director of Finance
to present their cooperative purchasing program to the City. This meeting was timely, since the
County of San Luis Obispo's contract with the Office Depot (and thus the City's piggy-back
agreement with the Office Depot)expires in June 2000.
Status of Current Cooperative Agreement with San Luis Obispo County. On January 6, 1998,
the Council authorized a "piggy-back" contract for office supplies with the Office Depot through
a cooperative purchasing agreement with the County of San Luis Obispo. The County's
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Council Agenda Report—Cooperative Purchasing for Office Supplies
Page 2
agreement with the Office Depot (and thus the City's piggy-back agreement with the Office
Depot) expires on June 30, 2000.
The CCPP/Los Angeles County master contract is also available to the County of San Luis
Obispo. However, while the terms of the contract are very competitive, the County may decide
to solicit its own bids for office supplies. The County's policy is to solicit bids every three years.
For the past 17 years, the Office Depot has emerged as the most competitive bidder. The Office
Depot has indicated that that it will not submit a bid to the County that is different from the
terms, conditions and pricing offered under the CCPP/Los Angeles County master contract.
Going Forward with the CCPP Master Contract Given the significantly larger purchasing
power of the CCPP—with the County of Los Angeles as its lead agency—we believe it is
unlikely that the County of San Luis Obispo will do better should it decide to undertake its own
bidding process. As such, we recommend going forward with the cooperative purchasing
agreement with Office Depot through the CCPP/Los Angeles County master contract at this time,
rather than waiting for a decision by the County on whether it will pursue its own bidding
process—and the results of this process if they do so. The term of this agreement is for as long
as the underlying master agreement between the CCPP/Los Angeles County and the Office Depot
remains in place.
FISCAL IMPACT
While direct comparisons are difficult to make because of differences in pricing and discount
structures, our initial analysis shows that the City should experience slightly lower costs under
the proposed contract compared with our current one. During 1999, the City spent approximately
$55,000 under our current cooperative purchasing agreement. Funding for office, computer and
paper supplies is included in each department's operating budget.
ALTERNATIVES
■ Conduct our own master agreement bidding process. Rather than using cooperative
purchasing, the Council could direct staff to conduct our own competitive bidding
process. However, there are significant administrative cost savings in piggy-backing onto
the efforts of others. Preparing detailed specifications that adequately address the broad
range and variety of the types of office supplies that we purchase would be a very time-
consuming project—one that would our keep limited staff resources from concentrating
on other important City issues.
More importantly, since their purchasing volume and power is so much greater than ours,
it is highly unlikely that the City could receive more favorable service terms, contract
conditions, performance standards or pricing than the CCPP/Los Angeles County master
contract. For example, in addition to very competitive pricing (even for small, individual
orders), the City can requisition supplies on-line, and receive next-day delivery for most
orders. This significantly reduces storage space and the need for complex inventory
systems. In short, whether via the CCPP, San Luis Obispo County or other piggy-backing
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Council Agenda Report—Cooperative Purchasing for Office Supplies
Page 3
opportunities, we should always use cooperative purchasing for office supplies in order to
reduce administrative costs, improve service and pay lower prices. This is consistent with
past Council policy encouraging the use of cooperative purchasing whenever it is feasible
to do so.
■ Do not use a master purchasing agreement at all. As noted above, we purchase about
$55,000 annually in office, computer and paper supplies. Given the dollar volume of
these purchases and the savings available to us under a master, organization-wide
contract, it would be more costly for each department to purchase supplies from various
sources on a case-by-case basis. On the other hand, this is not an exclusive agreement. If
departments can find a better combination of pricing, service or delivery by purchasing
elsewhere, they have the discretion to do so.
■ Wait for the results of the San Luis Obispo County bidding process for office
supplies. The County has not yet determined that it will pursue its own bidding process;
they may also choose to contract with the Office Depot via the CCPP/Los Angeles
County master contract However, should the County decide to go forward with its own
bidding process, we believe it is unlikely that they will secure better terms, conditions,
performance standards or pricing than the CCPP/Los Angeles County master contract.
As such,we do not recommend waiting for the County to make these decisions.
ATTACHMENT
NACO/CSAC/Los Angeles County Contract No.56296"Piggy Back" Addendum
G:Office Supplies/CUP Contract Council Agenda Report
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NACO/CSAC/LOS ANGELES COUNTY CONTRACT# 56296
"PIGGY BACK"ADDENDUM
This Office Supplies and Services "PIGGY BACK" Addendum to Los Angeles County, Califomia
Master Contract Agreement# 56296 (hereafter "Addendum' is made and entered into by and
between City of San Luis Obispo (hereafter"AGENCY, and OFFICE
DEPOT BUSINESS SERVICES DMSION (hereafter"VENDOR'.
WHEREAS, AGENCY and VENDOR agree that VENDOR will offer to provide
AGENCY employees and others as previously and more fully described within the Los Angeles
County Master Contract Agreement {hereafter "Master Agreement") with Office Supplies and
Services, sometimes referred to within the Master Agreement as the ("Product/Equipment and
Services", and/or"Services", or"Product/Equipment7.
WHEREAS, VENDOR Is in the business of selling and supplying Office Supplies
and Services; and
WHEREAS, VENDOR is willing and able to offer, deliver, service and support the
products/equipment it offers to AGENCY departments/divisions, AGENCY offices/organizations,
AGENCY employees, and any other entities as set forth in the Master Agreement. This
document, together with the Master Agreement on file at CSAC, Los Angeles County and at the
NACO FSC offices in Washington D.C.,defines the scope of this'PIGGY BACK"Addendum.
IN WITNESS WHEREOF, AGENC has
City of San Luis Obispo (AGENCY)
caused.this Agreement to be subscribed by its Purchasing Agent, and VENDOR has caused this
Agreement to be subscribed In its behalf by its duly authorized officer, this 16th
day of May. 2000
City of San Luis Obispo
(AGENCY)
By:
Name: Allen Settle
Title: Mayor
OFFICE DEPOT BUSINESS SERVICES DIVISION
(VENDOR)
By:
Name:
Title:
Office Depot Business Services Divisiqn
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