Cooperative Purchasing

This analysis addresses the validity and permissibility of utilizing expired cooperative contracts, which has been a recent topic of discussion on our listserv, with particular focus on the legal framework governing cooperative purchasing agreements. While I was unable to find a case in which a court had said using an expired contract is prohibited, I did find some cases which might provide you with perspective on how to answer the end-user that demands that you allow a piggyback.

The legal issues and potential penalties surrounding the invalid use of a cooperative purchasing contract option by local government entities, such as city, school board, or county governments, can vary significantly across different states and court jurisdictions. The cases provided offer insights into how different jurisdictions approach the regulation, use, and challenges associated with cooperative purchasing agreements.

1. Regulatory Framework and Compliance: In Maryland, the case of Building Materials Corporation of America d/b/a GAF Materials Corporation v. Board of Education of Baltimore County¹ highlights the regulatory framework governing cooperative purchasing agreements. In this case, GAF challenged the whether the Board of Education had the authority to use a cooperative contract issued by the Baltimore County Consortium. The Maryland Court of Appeals emphasized the importance of compliance with state regulations governing school construction and procurement, including those permitting intergovernmental cooperative purchasing. The case underscores that local school boards must adhere to state regulations, which may authorize cooperative purchasing as an alternative to competitive bidding under specific circumstances. Non-compliance with these regulations could potentially lead to legal challenges and the invalidation of contracts.
    
2. Standing and Notice Requirements: The New Jersey Superior Court, Appellate Division, in the matter of the protest of the award of a New Jersey State Contract² addressed issues of standing and notice in the context of cooperative purchasing agreements. The challenge of New Jersey award of an auto parts contract to Auto Zone, through the U.S. Communities national co-operative(2) focused on weather a non-bidder had standing to challenge an award to Auto Zone, through the U.S. Communities national co-operative. In this case Auto Zone was awarded a national contract by the city of Charlotte, North Carolina, and New Jersey piggy-backed the master agreement. The protest challenge was made by three suppliers who did not bid on the underlying Charlotte master agreement. The court found that appellants lacked standing as they had not bid and could not sufficiently show an adverse effect.
    
3. Competitive Bidding Requirements: The Accela, Inc. v. Sarasota County³ case delves into the specifics of competitive bidding and the exceptions, including the piggyback provision. This case emphasizes that local governments must adhere to competitive bidding laws unless a valid exception applies. The piggyback provision allows for the utilization existing contracts under certain conditions, highlighting the need for procedural compliance and the potential legal challenges when these conditions are not met.

In summary, local governments engaging in cooperative purchasing must navigate a complex legal landscape that includes compliance with specific regulatory frameworks, adherence to procedural requirements such as notice and competitive bidding, and readiness for potential judicial review. The legal issues and penalties for invalid use of such contracts can vary, but generally involve challenges to the contract's validity, potential for contract cancellation, and scrutiny of the procurement process's fairness and transparency. Local governments should ensure compliance with state-specific regulations and statutory requirements to mitigate legal risks associated with cooperative purchasing agreements.

1. 666 A.2d 1153 (Pa. Cmmw. Ct. 1995)
2. In re New Jersey State Contract 2011, N.J. Super., 422 N.J. Super. 275, citing Jen Electric
3. Accela, Inc. v. Sarasota County 2008, Fla. Dist. Ct. App., 993 So. 2d 1035