Cooperative Contracts Can Deliver New Public-Sector Business to HVAC Contractors

No question, HVAC contractors participate in, win business through, and benefit from their cooperative contracts, says Andrew Jung, a cofounder of Pavilion. His firm has a search engine for state, local, and educational institutions to find existing cooperative contracts they can purchase from — without going through a new competitive process. You can search for HVAC services to get a list of existing HVAC cooperative contracts. 

Jung offers the following examples of HVAC contractors who benefit from their cooperative contracts:

• Hunton Trane has a cooperative contract for HVAC equipment, supplies, and installation of HVAC equipment;
• Carrier has a cooperative contract for HVAC systems; and
• Gordian has a cooperative contract for Job Order Contracting (JOC) services.

Jung outlines some of the basics of public sector purchasing for Contracting Business: “When a public agency needs to purchase a good or service, the use of taxpayer money above a certain threshold requires a formal bidding (competitive) process for awarding the business to a particular firm. This is the well-known RFP process — which, while being a critically important process, is extremely time-intensive and expensive!”

The Pavilion executive notes that the outcome of the RFP process is a competitively bid contract that outlines the scope of services, pricing, and term of the engagement. He explains that some of these contracts contain language within them (cooperative language) that legally allows for other public agencies (beyond the original agency that awarded the contract) to reference that same contract in their purchasing process. This language enables other public entities to use the contract without having to redo the formal RFP process. The Pavilion platform has information on over 90,000 discoverable active cooperative contracts that cover a variety of goods and services. 

Jung concludes, “Cooperative purchasing is a best practice (not a loophole) that enables public agencies to use contracts that have already been awarded to other agencies to get their procurement done compliantly, fairly, and quickly.”

He says that using a cooperative contract is a win for the public agency because they can access the goods/services they need at a fair price, without undergoing an expensive and long RFP process. He adds: “It’s a win for the business (such as an HVAC contractor) that’s been awarded that contract because they are able to extend the value of the contract they worked hard to get awarded by selling to tons of other public agency customers.”

Jung explains that the term “cooperative contract” can mean either (a) any contract that contains cooperative/piggybackable language or (b) a specific type of contract that has been awarded by one of the large purchasing cooperatives (such as OMNIA Partners, Sourcewell, etc.). Another term used in the cooperative contracting sphere is “shareable contract.” This is a phrase invented by Pavilion to avoid confusion as an umbrella term that covers all types of contracts that can be used cooperatively by other entities (cooperative contract, piggybackable contract, etc.).

Jung offers the following advice to HVAC and related contractors: “If your business offers general contracting, Job Order Contracting (JOC), HVAC-related services, or construction engineering services to public entities, and you have at least one active, publicly awarded contract, Pavilion can be a good source of new-found business for you. Every day, public entities are looking for options on Pavilion to get HVAC or general contracting projects done with six- or seven-figure budgets in mind.”

Manufacturers Tout Benefits

“Introducing Trane's cooperative contracts to clients can be a strategic way for contractors to offer value and streamline the agency’s procurement processes,” says Chris Teller, cooperative purchasing program leader, Commercial HVAC at Trane. The company’s cooperative purchasing contracts, which are available via OMNIA Partners, were competitively solicited and publicly awarded by a lead public agency using public procurement practices, processes, and procedures. The following links take you to several OMNIA Partners cooperative contracts covering Trane and Trane success stories in the public sector.

Teller outlines the benefits for contractors: “Working with Trane on cooperative agreements helps support higher win and retention rates. A team approach also helps agencies by removing duplication of efforts, helping save valuable time and resources.” He explains that the entire portfolio of Trane equipment and services is available through the OMNIA Partners contract, which can help agencies save time and money.

Teller urges contractors to let Trane representatives participate in the discussions with prospective clients. “We can provide additional insights, support, and resources to help convince your client of the value of cooperative contracts.”

He adds: “We encourage contractors to introduce Trane’s cooperative contracts to clients because they provide pre-negotiated equipment discounts, labor rates and material markups and support higher win rates and retention rates.” 

Cooperative contracts and purchasing programs deliver real value for HVAC contractors, says Rachel Waliczek, Greenheck project management specialist. She manages Greenheck’s cooperative initiative. “These programs open doors to a stable customer base, streamline the bidding process, and enhance market visibility. This structured, pre-qualified or pre-approved approach — with contracted ceiling pricing — allows our HVAC partners to spend less time on administrative tasks and more time to solve customer problems, deliver exceptional service, and build meaningful relationships.”

Greenheck was recently awarded a national cooperative purchasing contract with Sourcewell, a cooperative procurement organization.

Waliczek is sold on cooperative procurement offerings, with one caveat: “Whether you're a product supplier or service contractor, these programs can be a powerful way to establish trust and credibility with public agencies — including cities, counties, school districts, and other government entities. However, it's important for each organization to evaluate whether the approach of the specific cooperative agreement aligns with the firm’s overall business model.”

She spotlights some of their advantages of participating in cooperative programs: “The benefits include access to pre-vetted buyers and reduced burden of providing individual bid responses. The programs provide a platform to showcase your capabilities without competing from a price-only standpoint. For service-oriented firms, they also offer a path to secure long-term maintenance contracts with public institutions.”

Waliczek urges contractors to research the local or national cooperative organizations in their coverage area to identify the best fit for their business. 

“If awarded a contract, it is best to assign a dedicated resource who thoroughly understands your program’s details and Master Purchasing Agreement (MPA). That person can serve as your main point of contact, managing the overall program, to include the relationship with the sourcing Co-op, educating the sales team regarding program requirements, tracking and reporting of sales, and working with Finance to ensure that any administrative fees or rebates are paid in accordance with your MPA.”

Waliczek offers this conclusion: “In summary, responding to and leveraging awarded agreements is an excellent way to expand your presence in the public sector market. Cooperative purchasing agreements are a valuable strategic tool and make a good addition to the broader business development strategy.”

Save Time and Resources

HVAC and construction industry contractors should absolutely participate in cooperative procurement agreements with the public sector, says Jessica Goforth, vice president, Public Sector Contracting-Design, Construction, & Facilities Management at OMNIA Partners. Her firm develops cooperative group purchasing contracts with leading national suppliers that deliver volume discounts and streamline the procurement process for thousands of products and services. The firm partners with organizations to optimize procurement.

“Contractors should definitely take part in them. Cooperative contracts, also referred to as Master Agreements, are available for small, medium, and large contractors and can be utilized by public agencies across the country, including cities, counties, states, special districts, K-12 schools, universities, and non-profits.”

No question, there are benefits to HVAC and construction industry contractors who participate in cooperative agreements, Goforth explains: “Holding a cooperative contract saves considerable time and resources for contractors. Instead of spending hours researching, identifying, and responding to individual solicitations across multiple governmental entities, contractors can better utilize their resources to focus their efforts on building their reputation and fostering strong relationships within their community and beyond.” 

She adds that cooperative contracts accelerate the speed to market and revenue generation process for contractors by streamlining the sales process. “When contractors are not bogged down by a one-to-one ratio of contract to client with ongoing expiration and re-solicitation dates, they’re able to home in on a small number of contracts with a much wider and diverse client base and fewer re-solicitations, making it quicker and easier to get projects started.”

OMNIA Partners, says Goforth, would like to hear from interested contractors and is always looking at state, regional, and national solutions. “We encourage contractors to first take a look to understand the cooperative contracting process.”

Now is a good time for contractors to take part in cooperative contracts, says Tammy Rimes, executive director of National Cooperative Procurement Partners (NCPP). The NCPP is the professional association of cooperative procurement.

“HVAC contractors who hold cooperative contracts have experienced great success over the past few years. With the equipment, installations, services, and consultations rolled into a contract, it's a lot easier to ‘sell’ these bundled services. In addition, those facility teams who want to choose a certain company can now standardize as they purchase from a cooperative contract,” Rimes tells Contracting Business.

And, according to Rimes, a cooperative contract can be a lifesaver for governments in a crisis situation: “Many times, HVAC purchases are made on an emergency basis, when existing equipment fails. For government entities that require a competitive process be conducted, the cooperative route ensures the solicitation process has already been completed and a ready-to-use contract makes those repairs and replacements more efficient and timely.”

Here’s how contractors can start the process, says Rimes: “For any contractor who is interested in pursuing a contract opportunity, the first step would be to reach out to cooperative organizations to ensure a better understanding of their process and any upcoming opportunities. They should register with their procurement departments or lead agency to ensure notification when an opportunity becomes available.”

Jung at Pavilion offers this conclusion: “Cooperative contracts can be a significant competitive advantage for businesses hoping to win more business with the public sector. The advantages are clear.”