Piggyback Contract

A piggyback contract is an informal term for cooperative purchasing where one government entity places orders under a contract competitively solicited and awarded by another entity, "riding" or "piggybacking" on the original competition rather than conducting its own separate procurement.

What is a Piggyback Contract?

Piggybacking is one of the oldest informal cooperative purchasing practices in U.S. government procurement. The concept: if Agency A competitively solicited and awarded a contract with good pricing, why should Agency B spend the time and money running its own competitive procurement for the same requirement? Instead, Agency B joins Agency A's contract, "piggybacking" on the competition already done.

Piggybacking is distinct from formal cooperative purchasing organizations (like NASPO ValuePoint or Sourcewell) in that it typically refers to less formal arrangements, one agency simply adding itself as an authorized user of another agency's contract. In practice, piggybacking takes several forms:

Intergovernmental cooperation agreements: Formal authorization for government entities to use each other's contracts. Most states have interlocal cooperation statutes (like Texas Government Code 791) that authorize any political subdivision to purchase from contracts let by any other political subdivision in the state.

Informal piggybacking: An agency contacts a vendor holding another agency's contract, asks to use the same pricing, and the vendor extends the contract terms. This practice varies in legality depending on whether the original contract authorized such extensions and whether applicable purchasing laws permit it.

State term contract piggyback: Local governments within a state using the state's master agreements, typically explicitly authorized by the state contract and state purchasing law.

Legal requirements vary significantly by state and locality. Some jurisdictions require that piggybacking authority be explicitly included in the original contract. Others allow it under general interlocal cooperation statutes. Procurement officers must verify their jurisdiction's legal authority before using a piggyback arrangement.

Why piggyback contracts matter for government contractors

From a vendor perspective, piggybacking extends a contract's revenue-generating potential well beyond the original customer. When a county wins a favorable price and the contract permits piggybacking, surrounding municipalities and school districts may join, multiplying revenue without additional competition. Vendors should explicitly authorize piggybacking in contract documents where their customer's purchasing law permits it, and proactively market this capability to potential piggyback users. Companies that have successfully used piggybacking in one state often expand it as a strategy across multiple states.

Example

A city in California competitively solicits and awards a contract for cybersecurity monitoring services. The contract explicitly includes a "cooperative purchasing" clause authorizing any California public agency to purchase under the same terms and pricing. The cybersecurity vendor alerts its sales team that the contract allows piggybacking. Within 12 months, three neighboring cities, one county, and a school district each issue purchase orders referencing the original city contract, without running their own RFPs. Total piggyback revenue for the vendor: $1.8M, against the original city contract of $600K. The California interlocal cooperation statute authorized each piggyback without any additional competitive process.

Frequently Asked Questions

Is piggybacking legal everywhere?

Not universally. Most states have interlocal cooperation statutes that authorize some form of piggybacking, but the specifics vary. Some states require that the original contract explicitly authorize piggybacking. Others require that the piggybacking entity's governing board approve the arrangement. Federal acquisition regulations have their own specific rules for interagency ordering that differ from state interlocal rules. Always verify applicable law before relying on a piggyback arrangement.

Can the piggybacking entity negotiate different prices than the original contract?

Generally no, the point of piggybacking is to use the existing terms and pricing. However, some vendors offer additional volume discounts to piggybacking entities that represent large orders. Any price modification must be consistent with the original contract's terms and the applicable interlocal purchasing law.

What is the difference between piggybacking and using a cooperative purchasing organization?

Formal cooperative purchasing organizations (NASPO ValuePoint, Sourcewell, OMNIA Partners) conduct solicitations specifically designed for multi-agency use from the start, the contracts are structured to be adopted by members. Piggybacking typically refers to using another entity's contract that was originally let for that entity's own needs. The legal and operational structures differ, but the procurement efficiency benefit is similar.

How does a vendor know when piggybacking is authorized?

Vendors should look for cooperative purchasing language in their contracts, phrases like "this contract may be used by other public agencies," "cooperative purchasing addendum is authorized," or references to interlocal cooperation statutes. When the contract is silent, the vendor should ask the contracting agency and the prospective piggyback user to confirm their legal authority before extending contract terms to new entities.