Essex CC, 10 district councils and the county fire authority will make major purchases as one body when they pool their procurement budgets next April.
The agency will have a staff of three and a budget of £150,000 provided by its members, who currently spend up to £200m a year buying goods and services.
It is forecast to at least recover its costs in the first year, and its members hope that after that it could save 10% of their combined spend each year.
It will also encourage businesses to bid for council contracts by setting up a single tendering system.
The initiative comes against a backdrop of intense government interest in procurement as an area where savings cn be made to the public purse.
Procurement is one of the main areas already identified for savings by the Treasury and Cabinet Office efficiency review (LGC, 28 November).