Benefits of Group Purchasing

How can MHEC’s Group Purchasing Increase Cost Savings Among Midwest Institutions?

Colleges and universities are continually being forced to find ways to contain or reduce their costs, while at the same time maintain or increase their productivity. The Midwestern Higher Education Compact (MHEC) was established in part to help institutions achieve these objectives.

One of the goals of the Compact is to help institutions enhance productivity through reductions in administrative costs. MHEC is able to further this goal through the creation of group aggregation programs that reduce costs and bring value-added benefits to the institutions in the MHEC member states. MHEC provides the needed infrastructure, staff, support, flexibility and commitment to make group purchasing programs successful. The compact statute creating MHEC makes MHEC an instrument of state government of each of its member states. This statutory language gives MHEC broad contracting authority to help carry out its mission

MHEC then enters into agreements for the benefit of its twelve member states, effectively letting institutions in one state pool their resources and expertise with different institutions in other states to gain advantages in the marketplace they otherwise would not be able to obtain.

Programs are created in response to a demonstrated or defined need of colleges and universities. In developing its programs, MHEC encourages grassroots participation and innovation. All programs are developed, implemented and overseen by volunteer committees. The committees are made up of representative groups of individuals from all sectors of higher education. The individuals are nominated to serve on the committees by their peers and are considered experts in the particular field the program is addressing

Working together, the committee members identify the criteria and standards they want included in any program that is being considered. These criteria and standards are purposefully tailored to match the requirements needed by Midwestern higher education. If a Request For Proposal (RFP) is needed, the standards and criteria identified by the committee are incorporated into the RFP. Ultimately, the committees challenge vendors to respond differently from their standard way of doing business. The vendors are asked to provide unique solutions or program offerings adapted to the needs of higher education.

All not-for-profit colleges and universities located in MHEC member states are eligible to participate in the MHEC programs, but participation is strictly at the discretion of the institution. One of the advantages of the MHEC programs is that colleges, universities and state agencies can purchase products and services using MHEC contracts without going to bid themselves.

MHEC, as an instrumentality of state government, is required to follow the same extensive competitive procurement processes as the member states. Through its committees, MHEC undertakes the time and expense of the RFP process, thereby freeing up the institution of this burden. The institution can purchase the good or service through the MHEC program knowing that the due diligence in selecting the vendor has already been done.

Once a program is implemented, a committee will work with the vendor to guide and enhance the program. As participation grows, ownership of the program is handed over to the participating institutions, with MHEC continuing to serve as staff in the oversight process. On a regular basis, MHEC will review each program’s accomplishments and will make a determination on the continuance of the program.

By working collectively, institutions are able to achieve the following outcomes through the MHEC group aggregation programs:
delineating features, standards and capabilities sought by higher education;

  1. providing independent evaluation and documentation of products and services;
  2. achieving pricing advantages and service commitments;
  3. increasing the number and range of options from which institutions can choose;
  4. increasing the quality and quantity of service offerings;
  5. reducing the duplication of efforts; and
  6. improving educational efficiency and/or effectiveness.

MHEC believes that many opportunities and benefits result from interstate and inter-institutional cooperation. With the continued assistance of institutional representatives on its committees and programs, MHEC will continue to work on developing and implementing new opportunities for Midwestern higher education.