When Does Cooperative Purchasing Satisfy Competitive Bidding Requirements?

School officials often inquire about whether they can use “cooperative purchasing” to satisfy statutory competitive bidding requirements. Cooperative pur­chasing typically involves piggybacking on an inter­governmental pool, bid cooperative, purchasing consortium, or group purchasing organization. If au­thorized by board policy, cooperative purchasing is permissible to procure supplies, materials, and equip­ment under competitive bidding requirements. Cooper­ative purchasing, however, is not a substitute for the competitive bidding procedure required for construc­tion projects. Revised School Code Section 1274 requires schools to obtain competitive bids for the procurement of sup­plies, materials, and equipment when the price of items in a single transaction meets the annually determined state threshold, which is $25,288 for the current 2020-2021 fiscal year. Schools must “adopt written policies governing the procurement of supplies, materials, and equipment,” but Section 1274 does not mandate specific purchasing procedures that must be included in board policies. Sec­tion 1274 thus grants schools significant discretion to craft board policies describing the bid process for pur­chasing, which may include cooperative purchasing. Even if a purchasing policy authorizes cooperative pur­chasing, however, schools remain responsible to en­sure that: (1) the cooperative purchasing procedure was fair and open; (2) the procedure resulted in the bid award to the lowest responsible bidder; and (3) the procurement price is comparable to current market rates. Regardless of whether board policy includes cooperative purchasing language, Section 1274 allows schools to use MiDEAL, the cooperative bulk purchas­ing program operated by the Michigan Department of Technology, Management and Budget (DTMB), without obtaining competitive bids. Separately, Revised School Code Section 1267 governs school building construction projects (includ­ing renovations, repairs, remodeling, and energy im­provement projects) and requires competitive bidding for projects that meet the same $25,288 threshold. Nonetheless, Section 1267 has specific procedural re­quirements that cooperative purchasing does not sat­isfy, e.g., posting an advertisement for bids for at least two weeks on either the DTMB’s website or a school website approved by the DTMB. In sum, cooperative purchasing authorized by board policy may be an appropriate, time- and cost-sav­ing measure for the procurement of supplies, materials, and equipment – but not for construction projects that hit the threshold amount. The Thrun Law Firm Policy Manual includes Policies 3301 (“Purchasing and Procurement”) and 3306 (“Construction Bidding”), which authorize cooperative purchasing and comply with the above-described guidelines.