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6.1.B. - Page 11 <br />knowledge over the course of their careers, knowledge which enables them to access lower <br />prices through hidden markets.44 <br />Cooperative Purchasing Solutions <br />In the course of its investigation, the Grand Jury learned that each City could adopt three <br />practices which would improve its decentralized purchasing system without increasing staffing <br />and operations costs: (1) utilizing piggybacking to access pre -negotiated contracts, (2) <br />collaborating with other Cities to purchase goods through the use of cooperative purchasing <br />agreements, and (3) collaborating with San Mateo County's Procurement Division to negotiate <br />lower prices for common goods and services. <br />1. Utilize Piggyback Contracts <br />Piggybacking on pre -negotiated contracts with favorable pricing allows Cities to benefit from <br />those terms without changing their purchasing practices. Per the California Association of Public <br />Procurement Officials, Piggybacking (a "Piggyback Cooperative") is: <br />A form of intergovernmental cooperative purchasing in which an entity will be <br />extended the same pricing and terms of a contract entered by another entity. <br />Generally, the originating entity will competitively award a contract that will <br />include language allowing for other entities to utilize the contract, which may be <br />to their advantage in terms of pricing, thereby gaining economies of scale that <br />they would otherwise not receive if they competed on their own (Emphasis <br />added).4s <br />Piggyback contracts are widely used by public entities in California and nationwide. 46 <br />Piggyback contracts can be to the benefit of both the vendor and the public entity that <br />negotiated the original cost (the originating entity), as well as any other public entities <br />that ultimately utilize the contract (piggybacking entities). Benefits can accrue to the <br />vendor by increasing the potential volume of sales under the agreement, which results in <br />increased product sales. <br />The Grand Jury's investigation revealed that although some Cities have used piggyback <br />contracts in the past, the practice is currently underutilized.47 In fact, the Grand Jury <br />found during its interviews that City employees at the departmental level were generally <br />unaware of: (a) the existence of piggyback contracts, (b) the possible cost savings from <br />piggyback contracts, (c) the numerous piggyback contract databases, and (d) how to use a <br />piggyback contract in a decentralized purchasing system. <br />When asked why they did not make greater use of piggyback contracts, officials from <br />seven of the Cities expressed concerns about compatibility with their City's legal <br />' Interview with City Finance Officials. <br />"Principles and Practices of Public Procurement "Use of Cooperative Contracts for Public Procurement" <br />California Association of Public Procurement Officials (2017) 1. <br />46Interviews with City Finance Officials. <br />17 Interviews with City Finance Officials. <br />2017-2018 San Mateo County Civil Grand Jury <br />