GPO Contracts: Insights for Educational Institutions

As colleges and universities increasingly look for opportunities to reduce costs, group purchasing organizations (GPOs) have become an increasingly attractive option. By leveraging the purchasing power of multiple institutions, GPOs can produce better pricing and more favorable terms.

The details in these contracts are important, so we will explain how GPO contracts work and what you need to know to optimize their use.

What Are GPO Contracts?

A GPO contract is an agreement a GPO makes with a supplier. The GPO will solicit bids on behalf of its members, negotiate pricing and terms, and produce a ready-to-use contract.

Colleges and universities can select these pre-negotiated contracts to streamline their procurement and reduce administrative costs.

What Colleges and Universities Need to Know About GPO Contracts

When you are evaluating GPO contracts, there are several key factors you need to consider.

Procurement Requirements

Most GPOs will offer a competitive solicitation process to secure bids from suppliers. However, you will want to ensure that their methodologies will meet your guidelines.

Contract Terms and Conditions

While some contracts offer flexibility, many fit specific use cases, so you need to decide whether a GPO contract works for your specific needs and aligns with your institutional values.

Cost-Benefit Analysis

With any contract, you will want to conduct a cost-benefit analysis to determine the potential savings. You should always consider the total cost of operation (TCO) and weigh any potential trade-offs you may have to make. For example, there may be administrative or membership fees with some GPOs. There may also be requirements about the use of certain suppliers in categories.

Supplier Vetting

You need to research supplier reputation and experience. This has become especially important over the past few years of economic uncertainty and supply chain disruptions. You want to work with suppliers that are financially stable and can meet your needs. Saving a few bucks upfront does not help if a supplier cannot deliver the goods and services you need.

However, when you work with a reputable GPO like E&I, their team of professionals does supplier vetting for you, taking an important task off your plate.

Strategic Alignment

One advantage of working with a group purchasing organization is that you can often get access to a broader selection of GPO contracts. Suppliers that might pass on an RFP from an individual institution could bid on these larger volume contracts.

Because of this, you may be able to find a cross-section of suppliers that can meet your sustainability, social responsibility, and diversity goals.

Challenges and Risks with GPO Contracts

Using GPO contracts can be a great way to lower costs and streamline the procurement process, but there are also some challenges and risks to evaluate, such as:

  • Vendor neutrality: Concerns may arise regarding the objectivity of GPO vendor selection and potential conflicts of interest.
  • Limited product choice: Some GPO contracts may limit your ability to choose from a wider range of products or services.
  • Contract complexity: Managing multiple GPO contracts with varying terms and conditions can be challenging.
  • Compliance and reporting: You must ensure compliance with GPO contract requirements and provide necessary reporting and documentation.

Switching to new GPO contracts or suppliers is often the right choice when seeking to take advantage of the best GPO contracts. However, it’s crucial to set expectations with stakeholders and maintain open communication with all involved. Performing due diligence helps identify any issues before they become a problem and helps create as smooth a transition as possible.  

GPO Contracts and E&I Cooperative Services

E&I Cooperative Services is the only non-profit, member-owned sourcing cooperative that focuses exclusively on the education sector. E&I leverages the combined purchasing power of over 6,000 member institutions to negotiate volume discounts.

With a deep understanding of the unique challenges in higher education, E&I also negotiates terms and conditions that are more favorable to the education sector. Every contract is competitively solicited to meet most procurement standards for private and public academic institutions.

Unlike many group purchasing organizations, there is no fee to become a member of E&I Cooperative Services and no minimum spend requirements. You can choose whether to opt in to available contracts or use them to compare with your existing contracts to make sure you are getting 

View available contracts through E&I Cooperative Services or contact your dedicated rep today.


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