So You Wanna Piggyback?

/in , /by

Carolyn H. Connelly

From our Fall 2015 e-newsletter

More and more clients are asking about “piggybacking” onto a prior contract for the purchase of some item without going through a formal solicitation process. This authority was clearly granted by the legislature in 2005, with the adoption of joint, permissive and interstate cooperative procurement statutes (ORS 279A.210, 279A.215, and 279A.220, respectively).

While it is true that cooperative procurements can save your local government time and money by avoiding a formal solicitation process, they are not as easy as some vendors might lead you to believe. Rather, each type of cooperative procurement has its own discrete set of requirements. If not met, a cooperative procurement is not legal.

Joint Procurements are the least common, as they require coordination between interested purchasing entities at the outset. In addition to other requirements, the original solicitation and contract must identify the procurement group and/or each participating purchasing contracting agency. Further, it must specify all estimated contract requirements.

In contrast, permissive and interstate cooperative procurements can be used after the original solicitation is issued and the original contract is executed. However, certain technical requirements still must be met under either approach.

Permissive Cooperative Procurement (PCPs) are allowed only if:

  1. The original solicitation and award process was substantially equivalent to a formal procurement conducted under ORS 279B. (i.e. either a formal, published Invitation to Bid or an RFP).
  2. Both the original solicitation and contract must allow other contracting agencies to establish contracts or price agreements under the terms, conditions and prices of the original contract.
  3. The vendor must also agree to extend those terms, conditions and prices to the second purchaser.
  4. “No material changes” are allowed between the terms, conditions and prices of the original contract and those in the tag-on contract. The fewer changes made from the original contract, the more likely your entity will meet this undefined standard of “no material change.” As this standard has yet to be interpreted by any court, it is difficult to know how narrowly or broadly to apply this limitation.
  5. If the tag-on purchase is over $250,000, an advertisement of the intended contract must be published. (See, below).

Interstate Cooperative Procurements (ICPs) require the same elements as 1-3, above. Further, your entity must either: a) be listed in the solicitation of the original agency as a party allowed to piggy back and the original solicitation must have been advertised in Oregon; or b) advertise notice of its intent to establish an ICP.

The notice for both PCPs and ICPs must describe the procurement, its estimated amount and the name of the original contracting agency. It must also provide a time, place and date by which comments may be submitted to your entity regarding the intended contract. Publish notice at least once in at least one newspaper of general circulation in the area where the contract is to be performed, at least seven days prior to the deadline for submission of comments. Additional publication is allowed, but not required. Lastly, notice must also be provided to vendors who otherwise might be interested in responding to your entity’s RFP or Invitation to Bid, if one were issued.

While these requirements are not terribly onerous, it is surprising how few original solicitations and contracts include the required “magic language.” A number of intergovernmental agencies and purchasing cooperatives aim to solve this problem. Their members may piggyback upon various listed contracts which are “guaranteed” to meet all state cooperative procurement requirements. However, always double check that all of Oregon’s statutory requirements have been met before entering into a contract with any particular vendor.

In conclusion, for those of you going out for formal solicitations, especially for large purchases, consider whether you want the resulting contract terms to be available to other entities. If so, be sure to specifically permit piggybacking within the terms of your solicitation and resulting contract. For those of you assured by a vendor that your entity can simply buy its product by piggybacking onto a prior contract, be sure to check with legal counsel before plunging ahead. Lastly, even if all cooperative procurement requirements are met, be sure to carefully review the contract prior to signing on the dotted line. No interstate contract will include all ORS 279B required provisions. Further, the vendor’s terms rarely provide sufficient or appropriate protections to the buyer. Make sure the “back” you’re jumping on is solid enough to catch you!

Note: This update is informational only and is not intended as legal advice. If you have questions about any of the information in this update, please contact your legal counsel.