Centralized Purchasing in Counties

Reference Number: CTAS-895

Purchasing in Tennessee counties may or may not be centralized, depending on the laws under which the county operates. Basically there are three major general laws governing purchasing in Tennessee county governments: (1) the County Purchasing Law of 1957, (2) the County Financial Management System of 1981, and (3) the County Purchasing Law of 1983. The 1957 and 1981 laws are centralized and apply only in those counties that have elected to come under their provisions. The 1983 law, which applies in counties that have not adopted any other purchasing law, is not centralized. Finally, some counties operate under private acts which may or may not centralize the purchasing functions in the county.

Before delving into the various laws that govern purchasing in county governments, we must define “centralization.” What does it mean for county purchasing to be centralized? In basic terms, centralized purchasing simply describes the type of organization in which there is some form of centralized control over the purchasing function.¹

The Council of State Governments lists some of the benefits of centralization, not the least of which is cost savings.²

“An effective central purchasing program reduces the cost of government. It inspires public confidence in government. It directly improves the quality and timeliness of services rendered by program departments and agencies. It is government’s meaningful link to the business community; it promotes honesty and integrity throughout governmental operations” (CSG, p. 10).

Some major benefits of centralized procurement include:

Cost savings e.g., volume buys.
Effective control authority for all procurement is placed in a single entity which establishes uniform procedures and oversight.
Utilization of a professional purchasing staff to support the many agencies and departments in the county.
Allowing program/agency personnel to concentrate on their areas of responsibility and expertise while allowing professional purchasing staff to make purchases.³
Allowing the purchasing office and its personnel to accumulate a solid foundation of knowledge and experience about purchasing, marketing trends, prices, and vendors. This knowledge and expertise saves the county money on prices and allows a more efficient purchasing process.⁴

The Institute of Supply Management (formerly NAPM) offers the following advantages\benefits of centralization:

A high level of buying expertise, lower operating costs through central coordination of purchasing activities, avoiding duplication of effort, better prices, and providing more time for line managers to manage (rather than engage in procurement activities) (NAPM, p. 95-96).

As stated previously, there are two major statutes that counties may adopt to centralize the county’s purchasing functions into one county purchasing department. Both of these are optional general laws of local application—they only apply to counties in where they have been approved by a two-thirds vote of the county legislative body or by a majority of voters in a referendum.

¹Clifford P. McCue, et al., The Fraud/Red Tape Dilemma in Public Procurement: A Study of U.S. State and Local Governments, Paper Presented at the Public Sector Purchasing and Supply Symposium, April 2003, 22.

²McCue, 23.

³Larry N. Wellman, CPPO, Centralization of the Procurement Function, NIGP Technical Bulletin, 1

⁴Williamson County, Texas, Purchasing Manual Policies, (Revised 2001), 10.