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The financial challenges in higher education today have been well-documented. As college and universities leaders try to resolve funding issues, academic finance and procurement teams are under increasing pressure to deliver cost control even as prices for goods and services continue to rise.
This guide examines how higher education procurement works today, the role of GPO contracts and cooperative purchasing organizations, and the strategies institutions are using to control costs.
For academic institutions hoping to get some financial relief, the outlook isn’t looking favorable for a positive change. In fact, the major credit rating agencies that track higher education finances all gave negative guidance for 2026 in their end-of-year reports:
“Moody’s Ratings projects a difficult year ahead for the sector due to a mix of challenges driven by federal policy risks, rising costs, regulatory changes and lost grant funding.” — Inside Higher Ed
“Revenue growth prospects remain strained, particularly for net tuition as the domestic undergraduate student base shrinks and international students face multiple obstacles.” — Fitch Ratings
“Our sector view is negative, as we expect colleges and universities will struggle to navigate through mounting operating pressures and uncertainty that will require budgetary and programmatic adjustment.” — S&P Global
As such, cost pressures appear to be persistent.
At the same time, many procurement teams are operating with fewer staff while also supporting a broader range of categories and stakeholders. It’s made a challenging job even harder and forced many institutions to revisit higher education procurement and sourcing strategies.
Most institutions rely on a mix of procurement models rather than a single approach. Traditional RFP-driven sourcing remains important for specialized or high-risk purchases, but cooperative purchasing and GPO contracts are increasingly used across many categories.
A group purchasing organization (GPO) aggregates the buying power of members to negotiate better pricing, terms, and discounts from suppliers. A GPO contract is the competitively solicited agreement that results. So, instead of individual institutions having to solicit, source, and negotiate on their own, demand is aggregated and suppliers compete for access to members, typically offering bigger volume discounts than institutions could get on their own.
A higher education GPO structures contracts to meet academic procurement requirements, including public-sector compliance standards, transparency, and audit readiness. This makes GPO contracts from a higher ed-focused sourcing cooperative even more attractive, with terms that align with the unique needs of colleges and universities.
Academic institutions maintain control when working with cooperative purchasing organizations, with the option to utilize a GPO contract when it fits their needs.
The GPO contract lifecycle typically includes demand analysis, competitive solicitation, supplier evaluation, and contract award. Once contracts are in place, participating institutions can access pricing and terms without issuing their own RFPs.
This model shifts the sourcing burden to the cooperative, reducing duplication of effort. It also creates consistent pricing and contract terms across participating members.
The choice between GPO contracts and traditional RFPs is rarely binary. For most institutions, the question is not which approach is better, but how each performs under different operational conditions.
Traditional RFPs concentrate decision-making authority within the institution. This can be advantageous when requirements are highly specific; outcomes are uncertain, or risk tolerance is low. However, this concentration also magnifies internal dependency. Timelines, outcomes, and savings are directly tied to staff availability, internal expertise, and the institution’s negotiating leverage at a given moment.
Cooperative procurement in higher education distributes that effort across a broader sourcing infrastructure. Instead of optimizing for a single transaction, these contracts are designed to optimize across repeated use, multiple institutions, and extended time horizons. This distinction matters because procurement value in higher education is increasingly measured over years, not individual events.
Another critical difference lies in risk exposure. Traditional RFPs place sourcing risk, compliance risk, and market timing risk squarely on the institution. One of the benefits of cooperative purchasing is that it shifts a portion of that risk to the cooperative, which manages supplier vetting and solicitation of higher education contracts at scale. For procurement teams operating with limited capacity, this risk redistribution can be as valuable as pricing outcomes.
There is also a difference in organizational signaling. Traditional RFPs often signal a one-time sourcing decision, while a cooperative agreement signals an ongoing sourcing relationship. This affects supplier behavior, internal adoption, and contract utilization. Suppliers competing for cooperative contracts tend to invest differently when access to a long-term member base is at stake rather than a single award.
Cost savings of 10% to 15% are common, but the benefits of cooperative purchasing go beyond favorable pricing. Aggregated demand creates leverage to negotiate more favorable terms and added incentives. At the same time, centralized sourcing reduces the workload for procurement teams while broadening sourcing. Many suppliers respond to solicitations from cooperative purchasing organizations but may not answer individual RFPs.
Institutions also gain access to vetted suppliers, standardized terms, and documented competitive processes. These higher education contracts streamline procurement, enabling procurement teams to focus more energy on strategic initiatives rather than routine transactions.
Cost savings from cooperative purchasing and GPO contracts are often misunderstood. While you may see savings from a single line item or bulk discount, the real benefits come across the entire procurement process with both direct and indirect costs.
Savings Source | How It Creates Value |
Aggregated pricing leverage | Suppliers offer lower unit pricing when competing for multi-institution volume rather than individual contracts. |
Reduced sourcing cycles | Fewer institution-led RFPs lowers staff time, legal review costs, and administrative overhead. |
Standardized contract terms | Consistent terms reduce negotiation time and supplier transaction costs, which are reflected in pricing. |
Improved contract compliance | Higher utilization of negotiated contracts minimizes off-contract spend and price leakage. |
Lower supplier sales costs | Suppliers reduce marketing and sales expenses by accessing a defined member base, enabling more competitive pricing. |
Predictable pricing over time | Cooperative contracts often provide stability across budget cycles, reducing exposure to short-term price volatility. |
When you look at this collectively, you can see how quickly the savings can add up across multiple higher education contracts.
Compliance requirements do not diminish under cooperative purchasing. While cooperative purchasing organizations conduct competitive solicitations and align contract with regulatory standards, institutions are ultimately responsible for making sure higher education contracts are compliant.
Sourcing cooperatives can make it easier by providing the solicitation details and other documentation needed to make compliance and audits go more smoothly.
How well your attempts to control costs succeed depends heavily on anyone who makes purchases in your institution. Centralized buying reduces maverick spending, but most institutions still have a fair amount of decentralized purchasing. This makes it easy for departments to miss out on negotiated savings.
Procurement teams today must make sure departments know about cooperative contracts and trust that they meet departmental needs. The most favorable contract won’t produce savings if it isn’t used.
Another key to optimizing results is procurement maturity. Mature organizations leverage better spend visibility, standardized workflows, and disciplined contract management to reduce administrative overhead.
Institutions with higher maturity levels are better positioned to reduce administrative burden while maintaining control and accountability. The administrative workload is an often-overlooked part of higher education procurement but can yield significant reductions in indirect costs in mature organizations. When you can streamline your procurement processes and employ a standardized process, a GPO contract can reduce workloads.
Some institutions look at data as a reporting exercise, but analytics are central to effective procurement in higher education. Using spend data to look for opportunities to improve performance can produce significant results. For example:
Timing plays a critical role in procurement effectiveness. Institutions that rely exclusively on traditional sourcing often experience bottlenecks tied to fiscal year cycles, staffing availability, and academic calendars.
A balanced strategy staggers sourcing activity. Cooperative contracts can provide continuity for recurring needs, allowing procurement teams to plan institution-led solicitations more deliberately. This sequencing reduces peak workload periods.
One concern some stakeholders raise when considering cooperative purchasing organizations is the potential for loss of control. However, you can maintain autonomy by deciding when to use cooperative agreements. You can often customize GPO contracts to fit specific needs while still taking advantage of the greater volume discounts.
Procurement in higher education should support multi-year financial planning goals, and this is where cooperative agreements can produce big benefits. Cooperative contracts produce greater predictability into pricing and availability to help avoid budget volatility.
Most cooperative contracts span multiple years with predictable price adjustments. This helps you plan more effectively and develop deeper supplier relationships. These relationships often lead to more innovative solutions and can even influence product pipelines to fit your future needs.
By reducing the amount of time procurement teams have to spend on repetitive sourcing activities, teams can focus on higher-value work, shifting the role from transactional to strategic. This elevates the role and value of procurement teams, who can be seen as taking a significant role in addressing budget and funding concerns.
Do GPO contracts limit an institution’s purchasing autonomy?
No. Institutions choose when to use GPO contracts, and retain full control over sourcing decisions.
Are GPO contracts compliant with public-sector procurement requirements?
Yes. Higher education GPO contracts are competitively solicited and structured to meet public-sector compliance and audit standards.
How quickly can institutions realize savings through cooperative purchasing organizations?
Many institutions see immediate pricing savings, with additional value gained over time through reduced sourcing effort and better compliance.
How does cooperative purchasing reduce administrative workload?
The cooperative handles solicitation and negotiation, reducing internal staff time and administrative burden.
Effective procurement in higher education requires more than just cost-cutting. It demands thoughtful use of higher education contracts, strong governance, and alignment across campus. Cooperative purchasing and GPO contracts provide institutions with scalable tools to manage cost, reduce administrative burden, and maintain compliance.
E&I Cooperative Services supports this approach as the only nonprofit member-owned sourcing cooperative focused exclusively on education, serving more than 6,200 member institutions and managing approximately $3 billion in annual member purchasing.
For institutions seeking education-focused cooperative solutions built for long-term value, explore E&I’s contracts and learn more about how E&I Cooperative Services helps institutions fulfill their mission.