Owner Direct Purchase (ODP) is an arrangement where the owner contracts directly with a vendor for specific materials or equipment, then provides them to the contractor for installation. The most common reason in commercial work: sales tax exemption. Many states exempt owner purchases by tax-exempt entities (governments, schools, hospitals, nonprofits) from sales tax, which the contractor cannot capture if it buys the same items. On a $20M project with $4M in equipment, ODP can save $200K to $400K depending on local tax rates.
ODP introduces coordination risk. The contractor is no longer responsible for delivery timing, condition on arrival, warranty, or defect resolution on owner-purchased items. Contracts should explicitly handle: who receives shipments, who stores material before installation, who installs, who is responsible for damage between delivery and installation, and who manages the warranty. Mishandled ODP is a frequent source of dispute. Best practice: detailed ODP language in the contract identifying every owner-purchased item, plus a delivery and storage protocol agreed in advance.